Export Duty on Iron Ore Must Be Based on Wet Metric Tonne for Pre-2022 Shipments: Orissa High Court

The Orissa High Court has held that export duty on iron ore must be based on wet metric tonne for pre-2022 shipments. The bench of Chief Justice Harish Tandon and Justice Murahari Sri Raman has dismissed an appeal filed by the Commissioner of Customs (Preventive), Bhubaneswar, challenging a Customs, Excise and Service Tax Appellate Tribunal (CESTAT) order that had set aside a Rs. 13.5 crore export duty demand on iron ore fines exported by M/s Essel Mining and Industries Ltd. Essel Mining had exported iron ore fines of Indian origin through Gopalpur Port in March 2021 under two shipping bills, declaring iron content below 58% and claiming exemption from export duty under Notification No.27/2011-Cus. The exports were provisionally assessed on the basis of test reports issued by M/s Mitra S.K. Pvt. Ltd., an NABL-accredited private laboratory, which analysed the samples on a Wet Metric Tonne (WMT) basis. Subsequently, samples drawn by Customs officers were tested by the Central Revenues Control Laboratory (CRCL), Kolkata. The CRCL reports showed iron content exceeding 58% when calculated on a Dry Metric Tonne (DMT) basis. Relying on the CRCL reports, the assessing authority finalised the assessment and raised an export duty demand of over ₹13.50 crore. Essel Mining challenged the demand before the Commissioner (Appeals), who allowed the appeal and set aside the duty demand. The appellate authority noted that the sales contract with the foreign buyer specifically required iron content below 58%. Final invoices and foreign remittances were based on load-port test reports issued by the NABL-accredited laboratory. Prior to 1 May 2022, iron content for export duty purposes was required to be assessed on a wet weight basis, including moisture. The Commissioner (Appeals) held that CRCL reports prepared after a delay and based on dry samples could not override contemporaneous load-port test reports that formed the basis of pricing and payment. The department’s appeal before CESTAT was dismissed in December 2024. The Tribunal relied on consistent judicial precedent holding that, prior to the statutory amendment introduced by the Finance Act, 2022, iron content had to be determined on a WMT basis. It further observed that the valuation of exported goods must follow the terms of the contract between buyer and seller, particularly when foreign exchange realisation matched the contractual price. CESTAT also emphasised that test reports generated closer to the time of shipment were more reliable, especially in commodities like iron ore where moisture content materially affects results. The department argued that CRCL reports should prevail over private laboratory reports, as CRCL samples are drawn in the presence of Customs officers. NABL-accredited laboratory reports could not be relied upon for levy of government duty. The Tribunal erred in disregarding CBIC Circular No.12/2014-Cus on representative sampling. The department framed multiple questions of law seeking reconsideration of the evidentiary value of CRCL reports and the methodology for determining iron content. The court held that the dispute was essentially factual and related to the method of determining iron content applicable in 2021. Prior to 1 May 2022, the settled legal position—affirmed by the Supreme Court—required iron content to be determined with reference to the condition of goods at the time of export, including moisture. The Finance Act, 2022 amendment mandating DMT-based calculation was prospective and could not be applied retrospectively. Contractual terms, final invoices, and bank realisation certificates clearly demonstrated that the transaction was executed and settled on the basis of WMT-based iron content. The Court held that the concurrent findings of the appellate authority and CESTAT were neither perverse nor contrary to law, and therefore did not give rise to any substantial question of law under Section 130 of the Customs Act. Case Details Case Title: Commissioner of Customs (Preventive) Versus M/s. Essel Mining and Industries Ltd. Case No.: OTAPL No.50 of 2025 Date: 15.01.2026 Counsel For Petitioner: Senior Standing Counsel Bismay Anand Prusty Counsel For Respondent: Senior Advocate Rudra Prasad Kar Click Here To Read Order Read More: FinMin Invites Retired Officers for Multiple Consultant Posts in GSTAT

Export Duty on Iron Ore Must Be Based on Wet Metric Tonne for Pre-2022 Shipments: Orissa High Court

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