CESTAT Hyderabad Remands Iron Ore Export Valuation Dispute After AO Ignored Contract Addendum

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 2 April, held that the assessing authority must consider contractual modifications and supporting documents while finalizing export valuation and refund claims.

A Division Bench comprising Technical Member A.K. Jyotishi and Judicial Member Angad Prasad set aside the order of the Commissioner (Appeals) and remanded the matter for fresh assessment, observing that it had failed to appreciate modifications to the original contract, including an addendum reflecting changes in Fe content and price.

The Bench noted:

“We find that the assessing officer could not appreciate the modifications made in the original contract by way of an addendum… and therefore, has not considered the revised unit price based on actual moisture content, etc.”

Kalinga Commercial Corporation Ltd, the appellant, had exported iron ore fines under a contract dated 2 August 2010 at a declared price of USD 136 PDMT. Since parameters like Fe content and moisture were provisional, the shipping bills were initially assessed provisionally. Upon submission of final documents, the assessment was finalized, and a refund was granted.

During re-assessment, the Department relied on the originally declared values and imposed higher duty on part of the consignment, treating it as iron ore lumps. The Commissioner (Appeals) upheld the reassessment, noting that the reduction in price to USD 111 PDMT was not substantiated by proper documents and was based solely on a buyer's letter. The Commissioner also rejected the contention regarding classification of iron ore fines.

Before the Tribunal, the appellant submitted that the contract had been modified through an addendum due to variation in Fe content, justifying the reduction in price.

The Tribunal agreed, noting that if the proportion of lumps in a consignment is within permissible limits, the entire consignment should be treated as fines. The Bench also relied on its earlier decisions in similar matters.

Accordingly, the Tribunal set aside the impugned order and remanded the matter to the original authority to re-finalize the assessment.

Appearance for the Appellant: Shri Kishore K. Acharya & Shri Narendra KV Dash,

Appearance for the Respondent: Shri A. Rangadham, AR for the Respondent.