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2022 (9) TMI 1306 - HC - CustomsDetermination of method by which the iron (Fe) content in the iron ore is required to be determined for the purposes of levy of duty on the petitioners' export under the bills - Legality of the General Alert Circular no. 02/2019 dated 12/15th April 2019 (GA Circular), issued by the Directorate of Revenue Intelligence (DRI) - finalization of assessments of the five Shipping Bills under consideration filed by the Petitioner No. 1 - Seeking declaration that no liability of export duty can be imposed upon the exports of Petitioner No. 1 - enforceability of Provisional Duty Bonds and Bank Guarantees furnished by the Petitioner No.1. HELD THAT:- The petitioners in the present context are correct in contending that in the process of determination of the appropriate rate of export duty on iron ore, it entails a determination of three issues, firstly, the classification of the iron ore under the Second Schedule of the Tariff Act to be undertaken based on the scheme of classification namely the headings and sub headings under the First Schedule to the Tariff Act, secondly, the classification under the First Schedule would enable determination of the appropriate sub headings of classification, which is based on the percentage of Fe (iron) content in the iron ore. This is the stage where the Wet method would be required to be adopted; thirdly, based on the appropriate classification (headings or sub headings), the appropriate prescribed basis of levy under the Second Schedule to the Tariff Act is required to be determined; and fourthly, it would be required to be examined whether there is applicable exemption notification related to either description of the goods and/or the classification (headings or sub headings) of the goods as regards the levy of export duty on the export of iron ore. There are much substance in the contention as urged on behalf of the petitioners that the Fe (iron) content of the iron ore was required to be determined at the second stage as noted above, to be undertaken on the basis the iron ore as it naturally stood at the time of export, namely, on the Wet method as in such condition the iron ore would contain moisture and other impurities. The respondents thus could not have discarded the wet (WMT) method purporting to co-relate the same to the rate of levy namely, the tariff rate being changed which earlier was on a per ton basis to the ad valorem basis. On a comparison of the tariff headings as it stood earlier and at present which we have already noted above, there is no change whatsoever in the “description of the goods” except for a minor variation in the percentage of iron ore (Fe) classified in different categories. What has undergone a change is only the rate of the duty which, when the Courts decided in Gangadhar Agarwal's case, it was at a rate per ton basis and which has now been changed to an ad valorem duty. Except for such change, not only the classification but the basis of classification as appearing in the different headings and sub-headings appears to have remained the same - there is a reason for the Revenue to do so inasmuch as when the legislature has found it appropriate that the goods are required to be classified on dry weight basis, it has been accordingly categorically provided for in the relevant schedule under the Tariff Act. This is clear from the fact that the iron ore as categorized under 2601 and the sub headings thereunder, there is no mention whatsoever of any “dry weight” as being canvassed on behalf of the Revenue. The principles of law as laid down in Gangadhar Agarwal's case [1995 (8) TMI 73 - SUPREME COURT] were in regard to classification of the iron ore under heading 2601 for the purpose of determination of export duty on iron ore being on the wet (WMT) method basis and the dry (DMT) method would be applicable with effect from 1 May 2022 by virtue of the Finance Act, 2022. The Assistant Commissioner in passing the impugned orders in accepting the dry method, has acted contrary to the settled principles of law as laid down by the Supreme Court in Gangadhar Agarwal's case - the orders-in-original cannot be sustained being contrary to the basic tenets of law as laid down by the Supreme Court in Gangadhar Agarwal's case. Petition allowed in part.
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