Orissa High Court directs Customs authorities to reassess iron ore exports on WMT basis

The petitioner, OCL Iron and Steels Limited (formerly S.M. Niryat Pvt. Ltd.), challenged an Order-in-Original dated 24.09.2025 passed by the customs authorities concerning export duty liability on iron ore fines. The dispute revolved around the method adopted for determining Fe (iron) content in exported goods for transactions that took place prior to the Finance Act, 2022. The department had calculated the Fe content on a Dry Metric Tonne (DMT) basis, which effectively enhanced the duty liability.

The petitioner contended that such an approach was contrary to the applicable legal position and the binding CBEC Circular No. 04/2012-Cus, which mandated determination on a Wet Metric Tonne (WMT) basis. It was further argued that relevant laboratory reports, including those from CRCL, were ignored and that the adjudicating authority failed to properly consider the petitioner’s submissions.

Central Issue: Whether Fe content of iron ore fines for export duty purposes, in respect of pre-May 2022 transactions, should be determined on a WMT or DMT basis.

HC Decided: The High Court allowed the writ petition and set aside the impugned Order in Original, holding that the adoption of the DMT basis for pre-2022 exports was legally unsustainable. The court clarified that prior to the amendment brought by the Finance Act, 2022, the correct method for computing Fe content was on a WMT basis, as expressly clarified by CBEC Circular No. 04/2012-Cus. It held that departmental circulars are binding on revenue authorities and cannot be disregarded on the assumption that subsequent legislative changes operate retrospectively.

The Court found the approach of the adjudicating authority to be flawed, particularly as it failed to deal with relevant material such as CRCL reports and did not properly address the petitioner’s objections. Terming the order as perverse and inconsistent with settled legal principles, the court remanded the matter back to the Commissioner of Customs (Preventive), Bhubaneswar, for fresh adjudication. The authority was directed to reassess the liability strictly on WMT basis and complete the exercise within four months after granting an adequate opportunity of hearing.

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