The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no export duty payable on Indian Refractory Mortar.
The respondents/assessee, Alliance International, engaged in the export of a product designated as “Indian Refractory Mortar” by classifying it under CTH 38160000, which exempts it from export duties. The product exported by the respondent and declared as “Indian Refractory Mortar” under CTH 38160000 was actually Chrome Ore Concentrate, which should properly and lawfully be classified under CTH 2610, which is subject to 30% export duty under Schedule II of the Customs Tariff Act, 1975, according to an intelligence report from the Directorate of Revenue Intelligence, Bangalore Zonal Unit, Bangalore. Furthermore, it seems that the respondents had developed such a system in terms of export policy.
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Chromium ore and concentrate of different grades that are designated as “restricted” by the Export Policy in accordance with the General Notes to Export Policy-Schedule 2-Export Policy may be exported under license in accordance with the Directorate General of Foreign Trade’s (DGFT) Export Policy-ITC (HS) 2018. Along with the general licensing need for all prohibited items, compliance with the procedures and conditions listed against the restricted items may be necessary.
DRI launched an investigation and carried out search operations at the respondents’ locations on September 10 and 11, 2020, based on the aforementioned intelligence. Statements were also recorded during these operations. Additionally, several documents were found. The respondents were accused of intentionally and willfully misclassifying under CTH 38160000 instead of the correct CTH 2610, and of exporting “Chrome Ore Concentrate” under the name and guise of “Indian Refractory Mortar” based on their email addresses.
As a result, the respondents received a show-cause notice. The adjudicating authority determined that the goods exported by the respondents are “Indian Refractory Mortar,” which is classified under CTH 38160000, and not “Chrome Ore Concentrate,” which is classified under CTH 2610. The respondents challenged the show-cause notice.
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Export duties are not due. Therefore, there is no interest due. In accordance with the Foreign Trade Policy 2015-2020, MEIS benefits are permitted, and Section 28AA of the Customs Act of 1962 prohibits MEIS from being subject to export duties at the time of import. Section 114AA of the Customs Act, 1962, mandates the release of the seized goods and imposes a penalty of Rs. 10,000,000 on Shri Amandeep Singh Bal, Director of M/s Falcon Exports.
The respondents are accused of exporting “Chrome Ore Concentrate,” which is categorized under CTH 2610, under the pretense of “Indian Refractory Mortar,” by classifying it under 3816.
The two member bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) has observed that the goods, Indian Refractory Mortar cannot be classified under CTH 2610, therefore, no export duty payable by the respondent/assessee.
The export product, according to the tribunal, is not really utilized in the metallurgical sector for the extraction of Section XV metals (chromium is covered in Chapter 81). It will go to M/s ITACA Spain, which manufactures ceramic additives, frits, glazes, pigments, and inks. It is not common practice in the metallurgical sector to combine chromite with bentonite and magnesite. Based on the HSN explanatory notes and chapter note 2 of chapter 26, it is clear that the exported product does not come under category 2610.
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