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TMI Blog2024 (8) TMI 1525X X X X Extracts X X X X X X X X Extracts X X X X ..... agadiya Brothers Pvt. Ltd Vs. Commissioner of Customs (Port) Calcutta Commissioner of Customs of Bhubaneshwar [ 2023 (9) TMI 827 - CESTAT KOLKATA] , wherein this Tribunal observed as under: held that The issue stands decided as early as 1997 by Hon ble Supreme Court in the case of Union of India Vs Gangadhar Narsingdas Aggarwal [ 1995 (8) TMI 73 - SUPREME COURT] and subsequent CBEC Circular No. 4/2012- Cus dated 17.12.2012 which was issued for adoption of uniform Customs procedure in all Customs Houses. In the said Circular, it was stipulated that for the purpose of charging of export duty the assessment of Iron ore, determination of Fe contents is required to be made on Wet Metric Ton (WMT) basis which in other words mean deducting the weight of all impurities (inclusive of moisture) out of the total weight/Gross Weight to arrive at Net Fe contents. Thus, By following the decisions and Board Circular cited above, We hold that the Fe content is to be calculated on the basis of WMT and the Fe content is calculated on WMT basis same for 5 consignment involved. Following the order of M/s. Global Associates Vs. Commissioner of Customs (Preventive), Bhubaneshwar, we hold that the consig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 5 3A Pacific Pride 5932026 08.05.2017 7700 Bagadiya Brothers Singapore Pte. Limited 56,42,580 87,50,786 6 3B Pacific Pride 5932766 08.05.2017 2684 0 7 3C Pacific Pride 5932571 08.05.2017 9616 0 8 3D Pacific Pride 6005016 11.05.2017 18850 1,51,09,618 1,23,16,625 9 3E Pacific Pride 6001201 11.05.2017 19700 0 10 4A Jewel of Shinas 8626453 11.09.2017 38000 M/s KTP Exports Pte. Limited, Singapore 0 3,15,74,010 11 4B Jewel of Shinas 8626464 13.09.2017 17000 1,42,25,558 12 5A St. Cergue 1179674 28.11.2017 24200 M/s KTP Exports Pte. Limited, Singapore 2,00,18,543 1,69,64,286 13 5B St. Cergue 1172290 27.11.2017 35400 2,71,25,604 TOTAL 11,10,17,364 16,18,15,695 • Shipping bills mentioned at Sl Nos. 1-4 and 8-13 were filed at the Paradip port. • Shipping Bills mentioned at Sl. Nos. 5-7 were filed at the Haldia Port. 2.1. It is the case of the Revenue, based on DRI investigation, that the respondent exported 5 consignments of high-grade IOF (Fe> 58%) by artificially splitting them into 7 Shipping bills of high-grade IOF (Fe>58%) wherein customs duty at the rate of 30% was discharged and 6 Shipping bills of low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V Anarita 56633 54.79 2 3,4 2A+2B AP Drzic 51960 54.35 3 5,6,7,8,9 3A+3B+3C+3D+3E MV Pacific Pride 58550 56.53 4 10,11 5A+5B Jewel of Shinas 53139 56.02 5 12,13 6A+6B MV St. Cergue 59600 54.94 Further the charge with respect to undervaluation was also categorically dropped by the Ld. Adjudicating Authority in the favour of the respondent. In any event, when the FE content on WMT basis for all the 5 consignments is less than 58 there is no export duty in view of Notification No. 27/2011 - Cus. dated 01 March 2011. 2.4. Although the demand for differential duty was dropped by the Ld. Adjudicating Authority, penalty under Section 114AA of the Customs Act, 1962 (hereinafter referred to as the "Customs Act") was imposed on the respondents Company and the Correspondents. Further the Ld. Adjudicating Authority rendered an extraneous observation with respect to one of the Shipping Bills bearing No. 6005016 dated 11 May 2017, comprised in the consignment exported vide MV Pacific Pride that the Fe Content (WMT Basis) when calculated on isolated basis for the said shipping bill was more than 58 percent and as such the duty of customs was rightly paid by the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Customs (Preventive), Bhubaneshwar in Customs Appeal Bearing No. 75107 of 2020 vide final order no. 75227523/2022 dated 11th March, 2024. To say that the Fe content on WMT treating the whole consignment as one consignment. Therefore, the allegation of the Department is not sustainable and no Excise duty is payable. 7. It is his submission that in their own case, if the Fe content on WMT basis is computed on the basis of single consignment then the Fe content would come out less than 58%. Therefore, no export duty is payable by the appellant and the same has been upheld by the Ld. Adjudicating Authority. 8. He further submitted that without prejudice the department cannot pick evidence which are against the assessee and reserve those which are in their favour. He further submitted that the proposal of imposition of penalty under Section 114AA cannot be segregated from the demand of duty and the same cannot be sustained when there is no duty implication. 9. He also submitted that imposition of penalty under Section 114AA on the respondent solely on the basis of statement of the accused which is unsustainable. 10. In view of this it is prayed that impugned order qua conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stom House Laboratory (CHLR) on the ground that it does not show impurities percentage which is vital for assessment and that various appellate authorities have observed that testing by Customs House Laboratories is not as per mandatory BIS standard and that acceptance of Customs Lab Report may result in lower Customs Duty; ii) For assessment , the Transaction Value on DMT price as per contract was accepted. iii) Duty was charged @ 30% Adv, since the Fe content was more than 58% as per Load Port Test Report (LPTR), which was determined on dry Metric Ton basis and not on as received basis (WMT) resulting in levy of duty at higher rate . 4. In Appeal No. C/75450/2023, the Commissioner(Appeals), Bhubaneswar upheld the Order of Finalisation of Assessment of S/B No. 8825745 Dated 22.09.2017 & 8881700 dated 25.09.2017 by the Assistant Commissioner of Customs, Dhamra, inter alia, holding that - "the transaction value of the Iron Ore Fines had been rightly arrived at on DMT basis in terms of the contract, though the goods were presented for export in moist condition and therefore, for the purpose of classification to determine the rate of export duty, the Fe percentage has also to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted ought to have been calculated following the well-recognised international practice and the duty calculated on basis of the said iron contents in the moist ore exported. By ignoring the moisture contents in the exported ore, the Customs Authorities arrived at a manifestly erroneous conclusion that cannot be sustained, as they were bound to consider; all the relevant circumstances ". ii) In the case of Mineral Enterprises Ltd. Vs CC Mangalore - 2010 (253) ELT 241 (Tri. - Bang.), the Tribunal has explained that the departmental chemist has reported the goods 64.6% on moisture free basis whereas the export was in moist condition. Report submitted by exporter stating Fe content as 63.00% is accepted. (No further Appeal) iii) Similarly, while determining the rate of duty under Notification No. 62/2007-Cus Dt. 3.5.2007, the Tribunal in the case of CC (Port) Kolkata Vs Sesa Goa Ltd. - 2014 (310) ELT 915 (Tri.-Kol.) has observed[ Para 5] "On a plain reading of the said Notification, it is clear that the conditions, in which the goods are exported, become relevant in determining Fe content; for application of the said Notification". The same issue was again agitated before the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining Fe content in WMT is elaborately by discussed by Hon'ble High Court of Bombay in Para 47 of its judgement in WP No. 216/2022 in case of V M Salgaokar Brothers. The Court mentions that it is universally recognised and followed for determination of Iron content in natural iron fines. 9.5 If the above formula is applied, in both the above cases under appeal, the Fe content of Iron Ore Fines exported on WMT basis would be more than 55% but less than 58% and hence would fall under CTSH 2601 11 42 as per the Tariff structure of the relevant period and would attract Nil rate of duty in terms of Notification No. 27/2011-Cus Dt.1-3- 2011 (Sl. No. 20A) as amended by Notification No. 15/2016-Cus Dt. 01.03.2016. 9.6 The Ld. Commissioner (Appeals) have only focussed on the valuation of the Iron Ore Fines, which is not in dispute. Here, classification of Iron Ore Fines exported and how the Fe %age is to be determined (as the classification is based on Fe content), is the question which the Commissioner (Appeals) have not addressed in their Orders. Therefore, the Orders in Appeal are not legal, proper and correct. 9.7 Meanwhile, with effect from 1.5.2022, by a Supplementary Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Assistant Commissioner of Customs, who shall hear the petitioners and pass a fresh order in accordance with law, in the light of the principles of laws as discussed by us in this judgement. Such exercise shall be undertaken within a period of three months from today. 64. Rules is made absolute in the above terms, No costs". Signed - BHARAT P. DESHPANDE, J. G.S. KULKARANI, J." 9.10 The Assessing Officer for the impugned Shipping Bills have adopted the Test Report of Griffith India Pvt. Ltd. as it provides details of all types of impurities including moisture, even though they said report is arrived at on DMT basis. 10. In view of the above discussions, we pass the following orders : i) direct the assessing officers to determine Fe content on WMT basis by deducting the moisture given in the test reports of NABL accredited government approved Private Laboratory ; ii) convert the %age of Fe on DMT basis to %age of Fe on WMT basis by applying the universally recognised formula for determination of classification of IOF exported. The formula is :- Iron content = Fe x (100-M) / 100 (on as received basis) Where Fe is % age of iron content on dry basis, M is moist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % is prohibited. In the following test reposts, the Fe content are reported at less than 58%. The details of the reports certifying the Fe content are asunder Sl. No. Name of the Lab/ Quality Control Fe Results 1. Office of the Deputy Director of Mines, while issuing the Transit Passes 56.14%- 56.56% 2. Pre-shipment quality test done at TCRC on 23.12.2020 56.87% 3. Pre-shipment quality test done at TCRC on 24.02.2021 56.72% 4. Report of Discharge Port dated 24.03.2021 56.70% 16. All other reports indicate that the Fe content was less than 58%. Thus, we observe that the main issue to be decided is whether the Fe content is to be determined on Wet Metric Ton basis or Dry Metric Ton basis. Revenue's case is entirely based on the CRCI, report dated 15.01.2021, wherein Fe content was found to be 58.89% on Dry Metric Ton basis, le after removing the moisture and not on "as is"/ "Wet Metric ton" basis. We find that the adjudicating authority has given a clear finding on this issue. He has relied upon the Board Circular No. 04/2012-Cus dated 17th February, 2012 states that for the purposes of charging export duty, the Fe (Iron) content in the Iron Ore Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and moist lampy iron ore has to be dried for finding out the iron contents. It was urged by him that this is the only method of analysis accepted by the Indian Standard Institute, and hence the result of that analysis must be made applicable directly or straightway to determine the percentage of iron contents in the iron ore exported by the petitioners. In our view, the submission has no merit whatever. Although it is true, as submitted by Mr. Rege, that moist lumpy iron ore and moist iron ore fines have to be dried for the purpose of determining the iron contents, there is a mathematical formula by which, on the basis of the results of these aforementioned analysis, the iron content in moist lumpy iron ore and moist iron ore fines can be easily determined. That formula has been in fact explained in a Letter dated 23rd June, 1978 addressed by Toman Trading Co. Ltd, a copy of which is at Exh. A to the petition. It appears that following this very method, Italab (Goa) Pvt. Ltd. have Issued certificates as to the iron content in the moist iron ore fines and moist lumpy iron ores exported by the petitioners, and these certificates show that the iron content in these iron ores was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods in question which have not been disputed by either of the sides, the Fe content on WMT treating the whole consignment as one consignment works out to 57.48% which is less than 58%, therefore, we hold that the appellant is not liable to pay any duty on the export of the said consignment treating as single consignment. 14. In view of this, the impugned order is not sustainable in the eyes of law. Consequently, no penalty is imposable on the appellants. 15. Therefore, we aside the impugned order and allow the appeals with consequential relief, if any." 19. Therefore, we hold that the consignment are required to be considered as consolidated consignments and in all the consignments the Fe content is less than 58%. In that circumstances, the Respondent are not required to pay any duty. 20. With regard to observation made by the Ld. Adjudicating Authority with respect to shipping bill no. 6005016 dated 11th May, 2017 is contrary to the observations made by the Adjudicating Authority in the impugned order. Therefore, the said observation made by the Adjudicating Authority is bad in law and not sustainable. Therefore, we hold that in all the 5 consignment which has been splitte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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