Essel Mining And Industries Ltd Vs Commissioner of Customs (CESTAT Hyderabad)
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Hyderabad Bench, has dismissed an appeal filed by M/s Essel Mining and Industries Limited, affirming the levy of export duty on the full Free On Board (FOB) value of exported iron ore. The core dispute centered on whether the FOB value should be treated as the price inclusive of export duty (a ‘cum-duty’ price), which would require the duty amount to be deducted before calculating the final assessable value.
The Dispute: FOB Value as Cum-Duty Price
Essel Mining and Industries, an exporter of iron ore, contended that the FOB value used for customs valuation should be considered the price cum duty. Under this approach, the export duty itself should be netted off from the FOB price to arrive at the statutory assessable value, arguing that failing to do so constitutes taxing “duty on duty.” The company also referenced a Board’s Circular dated November 10, 2008, suggesting that deductions made from the Cost, Insurance, and Freight (CIF) value to arrive at FOB could be extended to cases based on Cost and Freight (CFR).
Conversely, the Customs Department maintained that the FOB value, as the transaction value, must be taken as is for assessment, with no statutory provision under Section 14 of the Customs Act to treat it as a cum-duty price for deduction. The department had raised a demand for additional duty by assessing the duty on the entire declared FOB value.
