OCL Iron and Steels Limited Vs Union of India (Orissa High Court)
Conclusion: For export transactions occurring before the Finance Act, 2022 amendment, the determination of iron ore fines (Fe content) must be done on a Wet Metric Tonne (WMT) basis, rejecting the Dry Metric Tonne (DMT) method adopted by the Adjudicating Authority.
Held: The writ petition assailed the Order-in-Original passed by the Commissioner of Customs (Preventive) whereby the export transactions of iron ore fines effected by assessee during the period prior to 01.05.2022 were finally assessed by determining Fe content on Dry Metric Tonne (DMT) basis, resulting in denial of exemption and consequential demand of duty, interest and penalty. Assessee, an exporter of iron ore fines, contended that as per CBEC Circular No. 04/2012-Cus dated 17.02.2012 and settled judicial precedents, Fe content for the purpose of export duty was required to be computed on Wet Metric Tonne (WMT) basis, and that the adoption of DMT basis by the adjudicating authority was contrary to binding circulars, established practice and the legal position prevailing on the date of export. It was further urged that the transactions in question having occurred prior to the amendment introduced by the Finance Act, 2022, the revised regime could not be applied retrospectively, and that the findings of fraud, misdeclaration and reliance on third-party evidence were vitiated by breach of principles of natural justice. Revenue opposed the writ petition on the ground of availability of alternative remedy and justified the impugned order by alleging deliberate suppression of Fe content by assessee, contending that the transaction value and contractual terms based on DMT warranted assessment on dry basis and that the circular would not apply in cases involving fraud. The Court, while entertaining the writ petition for the limited issue of determination of the appropriate methodology, held that the taxable event being export, the applicable law was that which prevailed on the date of export and not subsequent amendments. It was observed that prior to the amendment brought by the Finance Act, 2022, the consistent statutory framework, circulars and judicial pronouncements mandated determination of Fe content on WMT basis, and that the CBEC circular being binding on the Department could not be disregarded. The Court found that the adjudicating authority had erroneously proceeded on DMT basis, conflated valuation with classification, and failed to consider relevant materials and replies, rendering the findings perverse and legally unsustainable. While clarifying that allegations of fraud were matters of factual adjudication requiring proper evidentiary examination, the Court held that such allegations could not justify deviation from the legally prescribed method of assessment. Accordingly, the impugned Order-in-Original was set aside and the matter was remitted to the Commissioner of Customs (Preventive) for fresh adjudication by determining Fe content on WMT basis, after affording reasonable opportunity of hearing and adhering to principles of natural justice, with a direction to complete the exercise within four months. The writ petition was thus allowed to the extent indicated.
Assailed in the writ petition is the Order-in-Original No.02/ CC(P) /BBSR/ CUS/ Commissioner/2025, dated 24.09.2025 passed by the Commissioner of Customs (Preventive), Bhubaneswar-opposite party No.2 (Annexure-11) finally assessing the transactions of export of iron ore fines under the Customs Act, 1962, in connection with the direction of this Court vide Order dated 11.07.2025 passed in W.P.(C) No.6323 of 2025. The petitioner, beseeching invocation of power under Articles 226 and 227 of the Constitution of India, prayed for grant of following relief(s):
“In view of the aforesaid facts and circumstances, it is humbly prayed that this Hon’ble Court may kindly be pleased to:
A. Admit the writ petition and issue appropriate writ(s) quashing the impugned Order-in-Original dated 24.09.2025 passed by the opposite party No.2 under Annexure-11, and all consequential penalty and other proceedings arising therefrom;
B. Pass such other order (s) as may be deemed just and proper in the interest of justice;
And for this act of kindness, the Petitioner as in duty bound shall ever pray.”
Facts:
