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TMI Blog2023 (12) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... testing, it is noticed that the appellant sought to cross examine the Customs Officer who had drawn the sample and the Chemical Examiner who had tested the sample. It is thus evident that the CRCL test report is not only cryptic, but it is also not clear whether the same was in accordance with the prescribed standards. The fact that the sample was tested nearly two months after its drawal and had not been stored in accordance with the prescribed conditions, the reliability of the test result, therefore is not only doubtful but also unreliable - It is also noted that the Board s Circular- 12/2014-Cus clearly states that the sample is to be drawn in accordance with the BIS standards. The coordinate bench of the Tribunal in M/s. Vedanta Ltd. Vs. Commissioner of Customs (Preventive) Bhubeneshwar [ 2023 (8) TMI 947 - CESTAT KOLKATA ] had held in that case that the samples were required to be tested as early as possible and had held the inordinate delay of over a hundred days as unforgivable. There are no legal substance in the order of the learned Commissioner (Appeals), and are of the view that the learned Commissioner was in error of law in passing the impugned judgement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore states that the valuation of export consignment was worked out ignoring the actual monetary value received as per the BRC and an export duty of 30% was confirmed by the department. In short, the plea taken by the appellant is that the assessment of goods exported was carried out, ignoring the test report of the load port as well as the discharges port, the bank realisation certificate submitted by the appellant and assessment done, based merely on the test report drawn by the Custom House Laboratory, Kolkata indicating the iron content as more than 58% classifying the same under 26011131, attracting export duty, at the rate of 30% ad valorem, and confirming the demand of duty on the grounds of the iron content as determined on the basis of dry metric ton. They also point out that the test results of the Custom House Laboratory, based on which the assessment was undertaken, was never disclosed to them nor a copy of the said test report made over to them. 4. It has been argued by the appellant that the issue relating to valuation of iron ore fines, is no longer res integra and has been settled by the Hon ble apex court, in the case of Union of India Vs. Gangadhar Narsinghdas A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight basis and moisture content being 5.5% (that is more than 58% of iron content), the tariff entry for export goods automatically changed from RITC 26011142 (iron ore fines with a Fe content 55 to 58%) to RITC26011131. 7. The primary issue, therefore, to be decided is whether the CRCL report can be accepted and the assessment of the export goods carried out based thereon. We note that the appellant has challenged the acceptability of the CRCL report only for the following two reasons. a. That the said report had not been supplied to them despite the same being available with the authorities way back in 2017, thereby depriving them to effectively argue, on the said issue, in the first round of litigation and b. That the CRCL samples were not drawn and tested in accordance with the procedure as set out in BS1405 -2010 8. It is an accepted position that the aforesaid CRCL report was not supplied by the department to the appellant and has been only supplied to them now during the second and present round of litigation. For this reason of non supply of the test report alone, the acceptability of the CRCL test report can be safely given a go by. However, we note and as poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontent. On the other hand, the sample had been drawn by M/s. Mitra S.K. Private Limited, following the procedure laid down in BIS 1405-2010 as stated in the said Board s Circular No. 12/2014-Cus dated 17.11.2014, issued from File No. 465/8/2013-Cus V. 8.2. The appellant have placed on record a copy the detailed Test Report showing the % of Fe, Al2O3, Sio2, S.P and Moisture. They have also shown test protocols against every chemical composition. For ready reference, the contents of the said Test report issued by Mitra S.K. Pvt. Ltd. is reproduced below: CERTIFICATE OF OUALITY JOB REF:JH/IEC/10-2017/00049- DATE : NAME OF COMMODITY : IRON ORE FINES QUANTITY : 23,650 WMT PACKING : IN BULK COUNTRY OF ORIGIN : NAME OF CARRYING VESSEL : MV. AKIJ HERITAGE INSPECTION DATE : 02.08.2017 TO 04.08.2017 PORT OF LOADING : HALDIA PORT, INDIA PORT OF DISCHARGE : THIS IS REPORT that we have attended loading of Iron Ore Fines per MV JOSCO SUZHOU for the purpose of drawing samples as per BIS 1405-2010 to determine the quality parameters. Analysis result reported by our laboratory is as under: SPECIFICATIONS: R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to be kept in plastic bags and not in air tight containers with appropriate lids. As the sample has not been drawn in accordance with laid down standards, the test results thereof cannot form the basis of any decision making process. On the aspect of drawal of sample and it s reliance the Hon ble Apex Court, in the case of M/s. Tata Chemicals Ltd. Vs. Commissioner of Custom (Preventive) Jamnagar 2015(320) ELT 45 SC , had the following to say: Clearly the samples drawn by the Inspector in the present case, have been drawn contrary to the express provisions of IS 436. On this count also, the samples being drawn not in accordance with law, test reports based on the same cannot be looked at. 11. It is a settled position of law that when the goods are tested after considerable delay from the date of drawal, the same cannot be accepted. Further, for reasons not to reject the load port certificate given by reputed professionals, reliance in this regard can be derived from the ratio of the law in the following cases. (i) M/s. Alpine international Vs. C.C, Mangalore 2008 (224) ELT 332 (Tri-Bang) , 5. On a careful consideration of the issue, I find that the samples ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned Counsel on the above said case has strong force. In that case also an identical issue was decided by this Bench and upheld that testing of a sample after 6 months will not give same iron content, which was found at the time of export. 12. The fact of the case that both the load port and discharge port test report confirm that the samples have been drawn in adherence to the procedure laid down under the BIS, we find that the discharge port/CIQ in the present case would be the decisive factor for the determination of the iron content in the export product. This stand is substantiated by the fact that the remittance has also been received in proportion thereof only. 13. A perusal of the records indicates that the sample of iron ore meant for export was got tested at the port by M/s. S.K Mitra Pvt. Ltd. in accordance with the contractual obligations. Following the test protocols as prescribed by the BIS, the iron ore fines were found to contain iron as 57.30% on Dry Weight Basis and moisture content as 8.98%. At the port of discharge, the iron content upon testing on dry basis was found to be 57.53% and moisture at 9.35%. There is near harmony in the said test re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment of iron ore fines for determination of Fe content shall be on Wet Metric Ton (WMT) basis, after deducting the weight of impurities (inclusive of moisture) out of the total weight/gross weight, to arrive at the net Fe content. In the present case the Fe content of iron ore fines has been determined by the Custom House, Laboratory, Kolkata on dry basis and therefore, the said report cannot be relied upon for the purpose of finalization of the subject shipping bill. 13.2. In support of his contention, that when the samples were tested on dry basis, then the percentage of the Fe content cannot be relied upon for the purpose of determination of export duty, the learned Advocate also placed reliance upon the judgement of the Tribunal in the case of General Nice Mineral Resources (I) Pvt. Ltd. Vs. CCE, Vijayawada 2017 (352) ELT 94 (Tri-Hyd). 14. We note that a very strong observation made by the learned Advocate is that the test report of a reputed laboratory had certified the Fe content as 57.30% and moisture content at 8.98% at the load port while similarly the discharge port report indicated the Fe content as 57.53% and moisture content as 9.35%, which samples were test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mists and others concerned. The relevant extract thereof is reproduced hereunder : 40. The Revenue carried Gangadhar s case to the Supreme Court. The Supreme Court observed that the duty was required to be determined on the weight of the commodity at the relevant point of time, namely, in the case of lumpy iron ore where the percentage of iron was 60% or more but less than 63%, the duty was restricted to Rs. 6/- per metric ton; where it was 58% or more but less than 60%, it was restricted to Rs. 5/- per metric ton and where it was less than 58%, it was restricted to Rs. 4/- per metric ton. It was observed that under both the notifications i.e. notification dated 24.07.1967 and notification dated 31.08.1968, the Government exempted lumpy iron ore duty relatable to weight depending on the iron content in iron ore fines. The Supreme Court observed that the question before the High Court was whether the percentage of iron content had to be determined after ignoring moisture in the lump or the percentage had to be determined taking into account all the impurities including moisture. The Supreme Court observed that the Revenue opted for the first method whereas Gangadhar/the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- (i) The iron ore when subjected to export, is exported in its natural condition so as to include impurities and moisture. (ii) It is not in dispute that there is no method or formula to determine the iron contents while the goods are in moist condition. The percentage of iron content in the iron ore is calculated by adopting a certain formula such formula has no scientific backing and the formula is based on approximate conclusion. Such formula is recognized not only in our country but also universally. (iii) It is a recognized practice to determine iron content in the goods (iron ore) in moist condition on an appropriate basis by finding out the iron content in dry sample analysis. What is relevant is the condition in which iron ore is presented to the Customs Authorities for export namely, the condition of the goods on the date of the export. It the condition of the goods on the date of the export is such, that it contains impurities and moisture and that it is not purely only iron ore then, in that regard, the universally applied formula would become applicable to determine the percentage of iron ore in the condition of the goods on the date of the export. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he iron content from rest of the impurities inclusive of moisture and thereafter to be ascertained in which category the lumpy iron ore would fall for the purpose of charging duty under the Tariff items/notification. (ix) The percentage of iron ore content is determined after ignoring the moisture, the percentage would not be relatable to the lumpy iron ore weighed at the relevant time for the purpose of charging duty. 18. We also note that the factual matrix of the present case is quite similar to that of M/s. Vedanta Ltd. Vs. Commissioner of Customs (Preventive) Bhubeneshwar 2023 (8) TMI 947 CESTAT, Kolkata . The coordinate bench of the Tribunal had held in that case that the samples were required to be tested as early as possible and had held the inordinate delay of over a hundred days as unforgivable. We note and as pointed out earlier, even in the present case, there was inordinate delay in testing the samples which is virtually suicidal to the outcome of the test results. 19. In view of aforestated findings and observations and the pronouncements of the Apex Court and the Hon ble Bombay High Court and the law as laid down, referred to in earlier paras, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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