For ad valorem export duty, the transaction value (price actually paid or payable) is the primary basis for assessment. Moisture content or quantity is not determinative if the transaction value is not doubted and principles of natural justice are followed.

[Order per: ANGAD PRASAD]

M/s Mangilall Rungta (herein after referred to as Appellant) are engaged in export of Iron Ore fines. They have filed the Shipping Bill No.GP- 400 dt.05.12.2011 for the export of 7,700 WMT of Iron Ore Fines of 63.5% Fe content under contract dt.04.11.2011 to one M/s Sinosteel International Macao Commercial Offshore Ltd., Macau totally valued at Rs.5,41,64,707/- FOB. The declared price was assessed provisionally, pending test and submission of final documents on execution of PD bond and securing revenue deposit towards differential moisture content between declared content of 8% and 5%, as ordered by the Commissioner. On finalization, by OIO dt.04.09.2012, the Original Authority accepted the declared price of USD 165 CFR PDMT and adopted the same for finalization of the shipping bill. Accordingly, he ordered for recovery of Rs.1,02,082/- along with applicable interest from the appellant on account of difference in moisture content. The appellant filed an appeal against the said OIO before the Commissioner (Appeals), who, after personal hearing and considering the relied upon case laws, dismissed the appeal filed by the appellant. Being aggrieved, the appellants filed the present appeal.

Learned Advocate for the appellant has submitted that the issue in the present case is whether to accept the transaction value calculated on basis of load port test report given by the Customs House Lab or the transaction value given in final invoice calculated on the basis of discharge port analysis as per the contract. He has submitted that the issue is squarely covered by precedent judgments of the Tribunal, wherein it was held that if the department does not allege that the appellants has realized any amount more than what is indicated in the final invoice, which has been received by them through Bank then that is the transaction value on which dutyhas to be paid. He has further contended that Commissioner (Appeals) has not followed any prescribed procedure and his decision of rejecting the declared moisture is legally untenable. He has relied on Board’s Circular No. 12/2014 dt.17.11.2014, which provides that when the variation between the load port and discharge port test reports is within tolerance limit provided in the contract and do not impinge upon declared price, the proper officer shall finalize the assessment as per transaction value. Accordingly, he has prayed for setting aside the impugned OIA and direct the finalization of assessment as per transaction value as reflected in BRC.

Learned AR, on the other hand, has reiterated the findings of the Commissioner (Appeals) in the impugned order.

Heard both sides and perused the records.

On perusal of the impugned order, it is clear that the dispute is not regarding the Fe content or unit price but it relates to the variation in moisture content in load port test report and discharge port test report.

It is an admitted fact that crucial documents such as documents or other evidence on which relied by assessing officers were not provided to the appellant. Learned Commissioner (Appeals), has himself accepted this violation. However, despite such finding he proceeded to decide the matter on merit. In this regard, it is relevant to cite the relevant paras of impugned order for ready reference:

“5.2 The only dispute here is in respect of weighment calculation taking into account moisture content. The moisture content determination has been done by Chemical Examiner as well as load port analysis and both differ widely. The load port test report submitted by appellant has a value of 8% moisture, whereas the one submitted by Custom House Laboratory is 4.1% moisture.

5.3 Furthermore, when the respondent doubted the moisture content basing on Chemical Laboratory Report, it was incumbent upon him to follow the conditions and procedure prescribed include issuing query memo to the appellant to furnish further information including documents or other