‘Issue Already Settled’: Orissa HC Rejects Customs Appeal on Iron Ore Fe Content Dispute, confirms WMT Basis for Duty Assessment [Read Order]

The Division Bench comprising Chief Justice Harish Tandon and Justice Murahari Sri Raman upheld the findings of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata, which had earlier rejected the department’s contention and set aside penalties imposed under the Customs Act, 1962.

A series of appeals filed by the department challenging the orders passed by the Commissioner of Customs (Preventive), Bhubaneswar against M/s S.M. Niriyat Pvt. Ltd. and its directors, including Ajay Gupta and Manish Khemka, in connection with exports of iron ore fines from Odisha ports.

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The department alleged that the exporters had misdeclared the Fe content by splitting consignments into two categories below 58% and above 58% Fe, to evade higher duty, though the combined average Fe content exceeded 58%.

The department also relied on data extracted from mobile phones seized during investigation to assert that duty liability arose due to such manipulation.

The CESTAT, however, found no evidence to substantiate the department’s claims. It ruled that the mixing of cargo after the issuance of the “Let Export Order” could not justify reclassification or reassessment, especially when Fe content was determined on the accepted WMT basis, as per prevailing industry and legal standards.

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The Tribunal also held that there was no justification for penalties imposed under Section 114AA of the Customs Act, as no material misrepresentation or deliberate falsification had been established against the exporter or its officers.

Before the High Court, the customs department sought to reopen the issue, framing questions on whether Fe content should be determined on DMT basis and whether the Tribunal had erred in applying the WMT formula, claiming that such a method lacked statutory basis.

The respondent’s counsel, Mr. Saswat Kumar Acharya, opposed the appeal, pointing out that the issue was no longer res integra and had already been conclusively decided by the same High Court in Commissioner of Customs (Preventive) v. Chamong Tee Exports Pvt. Ltd. (2025), which categorically held that Fe content must be computed on WMT basis for the purpose of customs duty.

Agreeing with this submission, the Bench noted that no new material or legal basis had been presented to revisit the settled issue, and the department’s appeal did not raise any substantial question of law under Section 130 of the Customs Act, 1962.

Accordingly, the court dismissed the appeal filed by the customs department and concurred with the findings of the CESTAT.

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