Orissa HC Rejects Revenue’s Appeal on Iron Ore Export Duty Based on CRCL Test

M/s Essel Mining and Industries Ltd. exported iron ore fines in March 2021 on the basis of a pre-shipment inspection report issued by an NABL-accredited private laboratory certifying Fe content below 58%, attracting NIL export duty. Customs authorities relied on CRCL test reports from separately drawn samples showing Fe content above 58% and raised a duty demand of over Rs. 13.50 crore.

The Commissioner (Appeals) and the CESTAT accepted the exporter’s case, holding that Fe content for the relevant period was to be determined on a Wet Metric Tonne (WMT) basis and that the private lab report was reliable. The Revenue carried the matter to the Orissa High Court.

Core Issue Before Court: Whether rejection of an NABL-accredited private laboratory report in favour of a CRCL report for determining Fe content of iron ore exports raised a substantial question of law under Section 130 of the Customs Act, 1962.

HC’s Decision: The Hon’ble High Court dismissed the Revenue’s appeal, holding that no substantial question of law arose for consideration. The Court observed that for exports made prior to the Finance Act, 2022, Fe content was required to be determined on a Wet Metric Tonne (WMT) basis, which included moisture content, unlike the Dry Metric Tonne (DMT) method introduced later. It found that the NABL-accredited private lab reports correctly reflected the Fe content at the time of export.

The Court further held that choosing between two conflicting test reports is essentially a question of fact. Since the findings of the appellate authorities were supported by evidence and settled precedents, and no perversity was shown, the Revenue’s appeal was held to be devoid of merit.

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