The Karnataka High Court has held that manufacturers of pig iron and steel employing COREX technology are entitled to exemption from anti-dumping duty on imported metallurgical coke (Met Coke) for the period during which the exemption notification expressly referred only to manufacturers using blast furnaces.

The bench of Justice Mohammad Nawaz has observed that the controversy was no longer res integra, since the functional equivalence between blast furnace technology and COREX technology had already been recognised in an earlier round of litigation. Consequently, the Court held that the benefit of exemption from anti-dumping duty was available for the intervening period from May 19, 2000 to October 1, 2002.

The dispute arose from the import of Met Coke from China for use in the manufacture of pig iron and steel. The petitioner manufactured pig iron using COREX technology and contended that Met Coke constituted an essential input in its manufacturing operations.

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The Union Government had issued Notification No. 69/2000 on May 19, 2000 imposing anti-dumping duty on imports of Met Coke originating in or exported from the People’s Republic of China. However, the notification carved out an exemption for imports made by manufacturers of pig iron or steel using a blast furnace, subject to compliance with the prescribed concessional-duty procedure.

The notification stipulated that its anti-dumping duty provisions would not apply to imports of Met Coke by manufacturers of pig iron or steel “using a blast furnace” if they followed the procedure prescribed under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996.

The petitioner, however, operated a COREX furnace rather than a blast furnace. It was therefore initially denied the exemption.

Before the High Court, it was contended that COREX technology, although a modern and more efficient process, was functionally equivalent to blast furnace technology.

According to the petitioner, the technological process employed for producing pig iron through a COREX furnace was substantially similar to the process employed through a blast furnace, with no material difference in the ultimate use or output. The petitioner relied on certificates issued by the Indian Institute of Science and MECON Limited, a Government of India enterprise, in support of this position.

The dispute had originated when the Deputy Commissioner of Central Excise took the view that the petitioner was not eligible for exemption from anti-dumping duty solely because it employed a COREX furnace instead of a blast furnace. An order dated July 31, 2000 was consequently passed and a show-cause notice followed on August 1, 2000.

The petitioner approached the High Court challenging the notification insofar as it confined the exemption to manufacturers employing blast furnace technology. Among other reliefs, it had also sought refund of ₹2,62,75,672 collected as anti-dumping duty.

The department subsequently accepted the position that COREX technology was equivalent to blast furnace technology. The anti-dumping duty exemption was accordingly extended to the petitioner as well as other similarly situated manufacturers through Notification No. 100/2002.

As a result, the dispute before the High Court narrowed considerably.

The Court observed that the surviving question concerned the intervening period between May 19, 2000 and October 1, 2002, before the anti-dumping duty exemption was formally extended to manufacturers employing COREX technology.

The High Court found that the issue was squarely covered by an earlier Division Bench decision involving the petitioner itself, although that litigation concerned Basic Customs Duty (BCD).

In that case, a concessional BCD rate of 5% had been made available on imports of metallurgical coke by manufacturers of pig iron or steel using blast furnaces with effect from April 26, 2001. The concession was subsequently extended to manufacturers using COREX technology with effect from March 1, 2002.

The question in the earlier proceedings was whether manufacturers employing COREX technology could receive the concessional rate for the period before the concession was expressly extended to them.

The High Court had held in those proceedings that blast furnace technology and COREX technology were functionally equivalent and that the benefit of the concessional BCD rate was required to be extended retrospectively to manufacturers employing COREX technology from April 26, 2001.

Significantly, that decision was subsequently confirmed by the Division Bench of the Karnataka High Court in W.A. No. 5/2004 through an order dated July 30, 2010. The Special Leave Petition challenging the decision was thereafter dismissed by the Supreme Court on January 18, 2018.

Applying the earlier ruling to the anti-dumping duty dispute, the High Court held that the question was no longer open for reconsideration.

The Court specifically observed that “the issue involved in this writ petition is no longer res integra and stands squarely covered in favour of petitioner No.1.”

Accordingly, it concluded that the petitioner was entitled to exemption from anti-dumping duty for the period from May 19, 2000 to October 1, 2002. There was no dispute regarding entitlement for the subsequent period after the exemption had formally been extended to COREX-based manufacturers.

The ruling effectively applies the previously settled principle of functional equivalence between COREX and blast furnace technologies to the anti-dumping duty exemption for the intervening period.

The High Court declared that the petitioner was entitled to anti-dumping duty exemption with effect from May 19, 2000 to October 1, 2002.

The Court further permitted the company to submit the requisite application seeking refund of the anti-dumping duty paid during the relevant period.

Importantly, the authorities were directed to grant the refund along with applicable interest expeditiously.

The order thus resolves the long-pending dispute by extending the anti-dumping duty exemption to the COREX-based manufacturing process for the period preceding its express inclusion in the exemption regime.

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