Moorgate Industries (I) Pvt. Ltd. Vs Commissioner of Customs (Port), Kolkata (CESTAT Kolkata)
CESTAT Kolkata in the matter of valuation of iron ore held that inordinate delay in testing the sample is virtually suicidal to the outcome of the test results. Hence, valuation set aside.
Facts- The present appeal, that has been filed by the appellant is in the second round of litigation in respect of exports of 24203MT(WMT) of Iron Ore Fines. The appellant contends that in terms of the said agreement, the value of iron ore fines was to be determined on the basis of Certificate of Inspection and Quality (CIQ) analysis conducted at the port of discharge as to the wet quantity of shipment and the dry quantity shall be determined by deducting the free moisture from such wet quantity. In case of variation between the weight at the point of discharge and the load port the average thereof would be arrived at, for all purposes.
Dispute in the present appeal concerns the ‘Fe’ content in iron ore fines exported vide the above referred Shipping Bill and the consequent determination of value for purposes of levy of export duty. The appellant filed the Shipping Bill intimating the iron content therein as 57.30% and moisture content as 8.98%. This was said to be based on the load port analysis, report obtained from a duly recognised testing concern- M/s. Mitra S.K. Pvt. Ltd. (MSK). As per record the discharge port report/CIQ indicated the iron content as 57.53% and moisture. The appellant submits that both the load port and the discharge port report confirms the iron content as below 58% whereby the product was classifiable under heading 26011142, attracting NIL rate of duty in terms of Notification No. 15/2016-Cus dated 01.03. 2016.
During the earlier round of litigation, the proper officer had finalised the assessment, based on the test report of the CRCL, which had determined the iron content as 62.4% and moisture content as 5.5%, thereby denying the benefit of NIL rate of Customs export duty.
Conclusion- Coordinate bench in case of M/s. Vedanta Ltd. vs. Commissioner of Customs (Preventive) Bhubeneshwar has held 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.
FULL TEXT OF THE CESTAT KOLKATA ORDER
M/s. Moorgate Industries Pvt. Ltd. have filed the present appeal assailing the Order in Appeal No. KOL/CUS(PORT)/KS/474/2023 dated 15 June 2023. The present appeal, that has been filed by the appellant is in the second round of litigation in respect of exports of 24203MT(WMT) of Iron Ore Fines made vide Shipping Bill No. 7545595 dated 24.07.2017. The said exports were made in terms of an agreement entered into with the overseas buyer bearing No. MIL/SINO/01 dated 13.07.2017. The appellant contends that in terms of the said agreement, the value of iron ore fines was to be determined on the basis of Certificate of Inspection and Quality (CIQ) analysis conducted at the port of discharge as to the wet quantity of shipment and the dry quantity shall be determined by deducting the free moisture from such wet quantity. In case of variation between the weight at the point of discharge and the load port the average thereof would be arrived at, for all purposes.
2. Dispute in the present appeal concerns the ‘Fe’ content in iron ore fines exported vide the above referred Shipping Bill and the consequent determination of value for purposes of levy of export duty. The appellant filed the Shipping Bill intimating the iron content therein as 57.30% and moisture content as 8.98%. This was said to be based on the load port analysis, report obtained from a duly recognised testing concern- M/s. Mitra S.K. Pvt. Ltd. (MSK). As per record the discharge port report/CIQ indicated the iron content as 57.53% and moisture. The appellant submits that both the load port and the discharge port report confirms the iron content as below 58% whereby the product was classifiable under heading 26011142, attracting NIL rate of duty in terms of Notification No. 15/2016-Cus dated 01.03. 2016.
3. During the earlier round of litigation, the proper officer had finalised the assessment, based on the test report of the CRCL, which had determined the iron content as 62.4% and moisture content as 5.5%, thereby denying the benefit of NIL rate of Customs export duty. The appellant therefore 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 Agarwal1, wherein the Hon’ble Court has held that for the assessment of iron ore fines the determination of iron content shall be on WMT basis. The appellant also relied upon the Hon’ble Bombay High Courts decision in the case of M/s. V.M Salgaonkar Brothers and Others Vs. Commissioner2 as well as the decision of this Tribunal in the case of M/s. Bagadia Brothers Pvt. Ltd. Vs. Commissioner3 in support of their contention. On the aspect of the wide variation in the moisture content reported by the load port, as well as in the discharge port report at 9% vis a vis the CRCL report at 5.5%, the appellant submits that the same is on account of delay in testing as well as incorrect sampling. The following chart indicates the position in this regard:
