The Orissa High Court has ruled that export duty on iron ore fines for transactions undertaken prior to the 2022 amendment must be assessed on a Wet Metric Tonne (WMT) basis, and not on a Dry Metric Tonne (DMT) basis, setting aside a substantial customs demand raised against OCL Iron and Steels Limited.
The bench of Chief Justice Harish Tandon and Justice Murahari Sri Raman has observed that valuation and classification must align with the condition of goods at the time of export, including moisture content, reinforcing the relevance of WMT methodology.
The case arose from a writ petition challenging an Order-in-Original passed by the Commissioner of Customs (Preventive), Bhubaneswar, which had re-assessed export transactions of iron ore fines by computing iron (Fe) content on a DMT basis. The reassessment led to a massive duty demand of approximately ₹256.95 crore along with interest and penalties.
The petitioner company, engaged in export of iron ore fines through multiple ports, had consistently declared Fe content based on WMT in line with CBEC Circular No. 04/2012-Cus dated February 17, 2012. The dispute began when the Directorate of Revenue Intelligence (DRI) alleged misdeclaration of Fe content, claiming that the exported material had Fe content exceeding 58%, thereby attracting higher export duty.
Customs department relied on foreign inspection reports and other evidence to conclude that the petitioner had understated Fe content in shipping bills to evade duty. On this basis, the adjudicating authority recalculated the value and duty liability using DMT methodology.
The central question before the Court was whether Fe content—and consequently export duty—should be computed on WMT basis (as per prevailing circulars and earlier legal regime) or on DMT basis (as adopted by the department).
The petitioner argued that the applicable legal framework at the time of export mandated WMT-based assessment. The shift to DMT methodology stemmed from later statutory changes and could not be applied retrospectively. The adjudicating authority ignored binding circulars and judicial precedents.
The Court emphasized that customs duty liability must be determined based on the law prevailing at the time of export (taxable event), not on subsequent amendments. It held that prior to the amendment introduced by the Finance Act, 2022, the accepted method for determining Fe content was WMT, consistent with CBEC Circular and judicial precedents.
The Court rejected the department’s attempt to apply DMT-based computation to earlier transactions, noting that tax statutes must be applied prospectively unless expressly stated otherwise.
The Court also took note of the inconsistency in the department’s approach, where similar transactions were earlier assessed on WMT basis.
Concluding that the adjudication was based on an erroneous application of law, the High Court held that the computation of Fe content on DMT basis for pre-2022 exports was legally unsustainable. The customs authority failed to apply the correct legal framework and binding circulars. The demand raised through the impugned Order-in-Original was liable to be set aside.
Case Details
Case Title: OCL Iron and Steels Limited Versus Union of India
Citation: JURISHOUR-988-HC-2026(ORI)
Case No.: W.P.(C) No.32424 of 2025
Date: 27.04.2026
Counsel For Petitioner: V. Sridharan
Counsel For Respondent: Satyanarayan Pattanaik
Read More: Former Director Can’t Be Prosecuted for Company’s Fraud After Exit; Karnataka High Court Quashes LOC
