Case Law Details
Vedanta Ltd. Vs Commissioner of Customs (Preventive) (CESTAT Kolkata)
The Appellants have exported Iron Ore Fines declaring the Fe content therein to be less than 64%. Under seven Shipping Bills exports were completed for different overseas importers during the period 2010-2011. Before the shipment, samples were drawn by Customs officials in the presence of the representative of the exporter, which was sent to the Deputy Chief Chemist Chemical Laboratory Customs House, Kolkata-700001 (CRCL for short) for testing. Based on the Test Report, received from the CRCL, the Department issued the Show Cause Notice on the ground that in all the seven cases, the „Fe‟ content was more than 64% whereas the Appellant was claiming that in all these cases, the Fe content was between 63 to 63.97, hence less than Fe content of 64%. As per the Department, if the Fe content was more than 64%, no export can be taken up by the parties directly and the same had to be exported through Channelizing Agency MMTC Ltd. Only. Therefore, taking the view that the consignment exported were illegally exported by resorting to gross mis-declaration about the ‘Fe’ content, the Show Cause Notice was issued to the Appellant. In the due course, the Adjudicating Authority held that 161625 MT of Iron Ore Fines having Fe content of more than 64%, valued at Rs.368,21,722/- are liable to be confiscated. He ordered for confiscation of these goods. He gave the option to pay Redemption Fine of Rs. 1 crore. He also imposed penalty of Rs.50,00,000/-. Being aggrieved, the Appellant is before the Tribunal.
2. The Learned Chartered Accountant appearing on behalf of the Appellant submits that at the time of exports, the Appellant could not directly arrive at the ‘Fe’ content of Dry Metric Ton (DMT for short). Therefore, they had shown in the Shipping Bill, the DMT value of Fe at 63 for all the seven consignments. In case of all the seven consignments, the ‘Fe’ content on Wet Metric Ton (WMT for short) basis was between 55.44 to 57.33. When the Department has drawn samples and sent it to the Government Laboratory for testing the same, even the Appellant also has taken the samples and sent the same to reputed Government recognized Private laboratories. The samples drawn by the Appellant from these seven export consignments were sent to three different reputed Government Recognized laboratories. These laboratories have tested the material and have given the report that the Fe content on DMT basis is between 63.33 to 63.80. As per the Test Reports of these laboratories, the Fe content on WMT basis is between 57.31 to 58.71. The Learned Chartered Accountant submits that after drawing the samples, the Department failed to provide the Test Reports of CRCL to the Appellant for the next six years. As a matter of fact, these Test Reports were given to the Appellant along with the Show Cause Notice issued by the Department in 2016. The Show Cause Notice was issued on 18/08/2016 for the consignments which were exported in 2010-11. Between the period 2010-12 to 2016, the Appellant has made several representations before the officials for finalization of provisionally assessed Shipping Bills. For completing the finalization of assessment, the Appellant has provided all the documentary evidence including the copies of the Test Reports issued by the Private laboratories. He submits that inspite of various representations and regular follow up, no action was taken by the Department to complete the finalization of the provisionally assessed Bills of Exports. Finally, the Department issued the Show Cause Notice on 18/08/2016 along with the Test Reports of the CRCL (Government Laboratory) which was provided to the Appellant for the very first time. He submits that on going through the Test Reports of the CRCL, it is seen that in all the cases, the Tests were completed between 105 days to 138 days after the samples was drawn at the Port. He submits that when the samples were drawn, the Iron Ores were in wet condition. There is a specific formula to arrive at the Fe values on DMT. From the Test Reports provided by the Department, it is not clear as to what procedure or formula they had adopted to arrive at the Fe value of the Iron Ore on DMT condition. He submits that CRCL has taken more than 100 to 138 days to submit their Test Reports whereas in case of the Private Parties engaged by the Appellant all the Test Reports were made available to the Department within 7 to 9 days time, which makes the Test Reports of Private Lab more reliable. He further submits that the moisture content alone is not sufficient to arrive at Dry Matric Tone Fe value basis. The other impurities also have to be considered to arrive at the DMT Fe content. From the Test Report of the Government Lab, it is not clear whether they have considered such impurities while computing the „Fe‟ value of DMT.
3. He further submits that in all the seven cases, the Appellant has realized the amount from the overseas importer based on the Fe content on DMT basis based on the Test Reports given by the Private Laboratories recognized by the Government of India. The Appellant had indicated in their earlier Shipping Bills that the „Fe‟ content of DMT was 63 and the same turned out to be between 63.33 to 63.92 in most of the consignments as per the Test Reports of the Private Labs. The overseas importer has paid higher amounts to the Appellant in such cases. On higher amounts realized by them, the Appellant has calculated the amount of Export duty involved and paid the same. The Export realizations which are based on the Fe value arrived at by the Private Labs, have been duly certified by the Chartered Accountant and they have been enclosed along with the Appeal Paper Book. He submits that at no point of time, the Department has questioned the BRCs submitted by the Appellant towards the realization of export proceeds. The Learned Chartered Accountant produces the Table containing the sequence of event right from 2010 onwards for finalizing the provisionally assessed Shipping Bills. He draws attention to the grievance filed in CPGRMCBOEC by them on 19/11/2014 and on 03/04/2015. He submits that inspite of having all the documentary evidence with them, the Customs Department never tried to complete the finalization of the seven Shipping Bills of Export. He submits that as per Para 12.1 of Iron Ore Sampling and Sampling Preparation Manual method, BIS1405S2010 issued by Bureau of Indian Standards prescribes “that to avoid any change in the moisture content the moisture determination shall be done as quickly as possible after the sample is taken.” He also draws attention to Para 56 of Manual of Revenue Laboratory under CBEC which provides that “expeditions testing is the vital requirement of laboratory and all samples should be tested and reported as quickly as possible.”
4. The Learned Council relies on the following case law:
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