2024 (6) TMI 1016 - AT - Customs

Dispute over moisture content in exported Iron Ore - Finalisation od assessment based on increased value - huge variation in weight due to moisture content - actual DMT of Iron Ore exported higher than what were declared in the invoices made by the appellant. While the appellant has been claiming the moisture content of about 8% when the goods were exported the test analysis by CRCL at the load port arrived at the moisture content between 4.60% to 6.8%. HELD THAT - Since the quantity arrived at by the Revenue is on the higher side the appellant has been granted lesser refund in these cases. On going through the Circular No. 12/2014-CUS dated 17.11.2014 it is observed that this Circular has been issued specifically to address the problems faced in respect of the valuation and assessment of Iron Ore which are subjected to various tests - the Circular specifies about the declared price in the contract and the provisions provided in the contract should be considered. In the present case it is seen from the contract Clause 3 that moisture content is allowed to a maximum extent of 10% this means that the consignment will not be accepted if the percentage exceeds 10%. There is no minimum moisture content specified. Apart from this Clause 9 Sampling and Analysis clearly specifies that the CIQ shall analyse the sample at the port of discharge and its analysis shall be final. From the documentary evidence provided by way of invoices it is seen that based on the moisture content arrived at by CIQ the appellant has reduced the quantity and arrived at the DMT quantity. There is no dispute that the appellant has realised only the value shown in the total value shown in the invoices. Therefore it is clear that the transaction value has been followed by the appellant. This also meets the requirement as specified in the Circular No. 12/2014 dated 17.11.2014. Hence on this count the Appeal stands allowed. Export duty is on advalorem basis which is dependent on the value of the consignment exported - the value for Export Duty has to be taken as per Transaction Value only. Admittedly the transaction value is not doubted. Hence even on considering this fact the impugned order cannot be sustained. Decision in the case of Steer Overseas Pvt Ltd. Vs Commissioner of Customs Vijayawada 2020 (4) TMI 246 - CESTAT HYDERABAD cited by the Learned AR is considered - In this case the test report at the load port was obtained by Revenue from CRCL and was also obtained separately from independent agency by the appellant. These two were in variance. This case is different from the present matter. In the present case the difference in test report is between the test report given by CRCL at load port and the test report given by CIQ at the port of discharge. Therefore this case law has no application in the present appeal. Since the contract itself specifies that the appellant is required to bill based on the CIQ test report and there is no dispute that they have raised the bill and realised only as per this Clause with the transaction value and BRC provided by the appellant not being doubted there are no reason to uphold the impugned orders. The impugned order set aside - appeal allowed.

Summary

Issues Involved:
1. Discrepancy in moisture content of Iron Ore Fine between CRCL and CIQ reports.
2. Determination of the correct transaction value for export duty.
3. Compliance with CBIC Circular No. 12/2014-CUS dated 17.11.2014.

Detailed Analysis:

1. Discrepancy in Moisture Content:
The primary issue revolves around the moisture content of the Iron Ore Fine exported by the appellants. The appellants claimed moisture content between 6.48% to 10.13%, while the CRCL tests at the load port showed 4.20% to 6.20%. The CIQ tests at the port of discharge reported moisture content between 6.48% to 10.13%. The Revenue used the CRCL's lower moisture content to argue that the appellant exported a higher quantity of Iron Ore, thus increasing the total value of the goods.

2. Determination of the Correct Transaction Value:
The appellants argued that the transaction value should be based on the CIQ test report at the port of discharge, as specified in their contract. They provided evidence through invoices and Bank Realization Certificates (BRC) to show that the payment was made based on the CIQ's moisture content. The Revenue did not dispute the per tonne USD value but argued that the lower moisture content found by CRCL meant a higher quantity of Iron Ore was exported, thus increasing the value.

3. Compliance with CBIC Circular No. 12/2014-CUS:
The appellants relied on CBIC Circular No. 12/2014-CUS, which outlines the procedure for valuation and assessment of Iron Ore exports. The Circular states that the declared value should be scrutinized in relation to the provisional invoice and contract terms. It also specifies that the load port test report should be compared with the discharge port test report, and where variations are within tolerance limits, the declared price should be accepted. The appellants argued that the Revenue did not follow this Circular, as the contract specified that the CIQ test report would be final.

Judgment:
The Tribunal found that the Revenue did not dispute the transaction value or the per tonne price. The main issue was the moisture content, which affected the net quantity of Iron Ore. The Tribunal noted that the appellants had billed and received payment based on the CIQ test report, as specified in their contract. The CBIC Circular No. 12/2014-CUS supports the appellants' position that the CIQ test report should be used for finalizing the shipping bills.

The Tribunal also considered the case law of Steer Overseas Pvt Ltd. vs. Commissioner of Customs, Vijayawada, but found it not applicable as the facts differed. In the present case, the discrepancy was between the CRCL and CIQ reports, whereas in Steer Overseas, the discrepancy was between CRCL and an independent agency.

Conclusion:
The Tribunal set aside the impugned orders and allowed the appeals, stating that the appellants' transaction value based on the CIQ test report should be accepted. The Tribunal emphasized that the appellants complied with the contract terms and the CBIC Circular, and there was no evidence of mis-declaration of value. The appellants were granted consequential reliefs as per law.

(Order Pronounced in open court on 21.06.2024)