Determination of iron ore content for customs duty purposes must be based on Wet Metric Ton (WMT), not Dry Metric Ton (DMT).

JUDGMENT :

HARISH TANDON, CJ.

1. The appellant has filed an appeal under Section 130 of the Customs Act, 1962 assailing the judgment and order dated 30^th August 2024 passed by the Customs, Excise and Services Tax Appellate Tribunal, Eastern Zonal Bench, Kolkata whereby and whereunder, the demand raised by the appellant upon issuing the show cause notices alleging that there has been a conscious avoidance of the customs duty by splitting one consignment into different components, was rejected.

2. The counsel for the appellant advanced his argument raising an issue which according to him involves a substantial question of law.

3. In order to ascertain whether the points so urged comes within the periphery of the “substantial question of law”, the genesis of the dispute is required to adumbrated as discerned from the records.

4. The respondent herein exported the iron ore fines (IOF) under the cover of 13 shipping bills to different overseas buyers depicting the value and quantity of the said iron ore fines. The revenue authorities, on the basis of DRI investigation found that 5 consignments of high grade iron ore fines containing more than 58% of the iron (Fe) by splitting them into 7 shipping bills of high grade iron ores which attracts the customs duty @ 30% and discharged their obligations upon payment of the same, but 6 shipping bills of iron ore fines which contain less than 58% of Fe being exempted from the customs duty under law, no duty was paid and, therefore, they have undervalued such 5 consignments with an intend to evade the custom duty.

5. 2 show cause notices were issued demanding the differential custom duty on the basis of a test report of the independent testing agency inviting the respondent to file the reply thereto. The respondent took a defence that the said demand in unsustainable as the Fe content is required to be determined on the basis of Wet Metric Ton (WMT) and not on the basis of Dry Metric Ton (DMT). It was the specific stand of the respondent that it has been held by several High Courts that Fe content has to be evaluated on the basis of WMT and not DMT and, therefore, the stand of the revenue authority is not sustainable.

6. The adjudicating authority dropped the demand of the revenue with categorical finding that the Fe content of the aggregate/consolidated consignment exported through a single vessel was less than 58% on WMT basis, but imposed certain penalties on the respondent company and its authorised person. Since the demand of differential amount of custom duty was rejected by the adjudicating authority, the department preferred an appeal before the Tribunal, wherein the respondent also filed the cross objection challenging imposition of the penalty.

7. A stand was taken by the appellant in the appeal filed before the Tribunal that the respondent intentionally split 5 consignments of high grade iron ore fines containing more than 58% Fe into several shipping bills, some of which contains more than 58% Fe, where the custom duty @ 30% was discharged, but did not pay the custom duty by undervaluing the consignment on the premise that it contains less than 58% of Fe, which does not attract the custom duty in law. A further plea was taken by the appellant that the Fe content is to ascertained on the basis of DMT and not WMT and the test report would reveal that IOF contains more than 58% of Fe in aggregate which was rejected by the Tribunal with categorical finding that the Fe content is to be ascertained on the basis of WMT and not on the basis of DMT.

8. The c