Custom, Excise & Service Tax Tribunal
-Bhubaneswar(Preventive) vs Kashvi Power And Steel Private Limited on 16 October, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH: KOLKATA
REGIONAL BENCH - COURT NO. 2
Customs Appeal No. 75043 of 2022
(Arising out of Order-in-Original No. CC(P)/BBSR/CUS/No. 05/PR. Commissioner/2021
dated 30.09.2021 passed by the Principal Commissioner of Customs (Preventive),
Bhubaneshwar GST Bhawan, Rajaswa Vihar, Bhubaneshwar-751007)
The Commissioner of Customs (Preventive) : Appellant
Commissionerate, Bhuwaneswar,
C. R. Building, Rajaswa Vihar,
Bhubanwswar-751007
VERSUS
M/s. Kashvi Power And Steel Pvt. Limited, : Respondent
Plot No. 1234-P,Govindaprasad,
Bomikhal, Bhubaneswar-751010
APPEARANCE:
Shri S. Debnath, Authorized Representative,
For the Appellant
Shri Tarun Chatterjee, Advocate
Shri Raju Mondal, Advocate
Ms. Shena Das, Authorized Representative
For the Respondent
CORAM:
HON'BLE SHRI R. MURALIDHAR, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO.77553/ 2025
DATE OF HEARING: 22.09.2025
DATE OF PRONOUNCEMENT: 16.10.2025
ORDER:[PER SHRI K. ANPAZHAKAN] The facts of the case are that M/s. Kashvi Power and Steel Private Limited, Plot No.1234-P, Govindaprasad, Bomikhal, Bhubaneswar, Odisha 751010, having IEC 2309002704 (hereinafter referred to as 'M/s KPSPL'/ Respondent) are engaged in trading of iron ore (Tariff Item 2601) in domestic Page 2 of 32 Appeal No.: C/75043/2022-DB as well as overseas market. Information gathered by the officers of Directorate of Revenue Intelligence (DRI), Goa indicated that M/s. KPSPL were evading Export Duty by mis-declaring 'Fe' content in their shipments of Iron Ore Fines exported through Paradip Port in India, by manipulating test reports and submitting the same to the Customs Authorities at the time of export.
1.1. Pursuant to the aforesaid information, enquiries were conducted by the officers of DRI, which revealed that:-
(i) M/s KPSPL is a Private Limited company wherein Shri Debabrata Behera is the Managing Director and Smt. Susmita Behera, wife of Shri Debabrata Behera is the other Director of M/s KPSPL.
(ii) Primary activity of M/s KPSPL was trading of iron ore in domestic as well as overseas market and Shri Debabrata Behera negotiated with their overseas buyers for consignments of iron ore exported by them.
They exported most of the iron ore shipments through Paradip Port to their overseas buyers i.e. M/s Global MinorePte Ltd., Singapore, M/s Synergy Resources HK Ltd., Hong Kong, M/s KTP Exports Pte Ltd., Singapore, etc.
(iii) Vide Notification No. 15/2016-Customs dated 01.03.2016, Export duty on Iron Ore Fines (below 58% Fe content) was reduced to NIL, whereas Export duty on Iron Ore Fines (58% Fe content and above) still remained the same i.e. 30% ad valorem.
Page 3 of 32Appeal No.: C/75043/2022-DB
(iv) Owing to difference in the duty structure between two grades of iron ores, M/s KPSPL appeared to have artificially split on paper into two consignments i.e. filing one Shipping Bill for iron ore fines cargo having high grade 'Fe 'content more than 58% and another Shipping Bill for iron ore fines cargo having low grade 'Fe 'content less than 58%, even though the average 'Fe 'content of the combined cargo of Iron Ore Fines was more than 58% attracting 30% export duty ad valorem.
1.2. Scrutiny of documents recovered during the search of the office premises of M/s KPSPL and private testing laboratories viz. M/s. Inspectorate Griffith India Private Limited, Paradip (M/s IGIPL), M/s SGS India Private Limited, Paradip (M/s SGSIPL), M/s Cotecna Inspection India Private Limited, Paradip (M/s CIIPL), M/s Leon Inspection & Testing India Private Limited, Chennai (M/s LITIPL) and the documents submitted during the course of recording of various statements revealed that M/s KPSPL had exported iron ore fines vide 10 Shipping Bills during the period 2016 to 2018. Shri Debabrata Behera, Managing Director of M/s KPSPL in his various statements dated 01.06.2018, 02.06.2018, 04.06.2018, 06.06.2018, 04.03.2019 and 19.08.2019, recorded under Section 108 of the Customs Act, 1962, admitted that the 'Fe' content of iron ore fines exported per vessels 'M.V. PRABHU MIHIKAA', 'M.V. MENALON' and 'M.V. ITHOMI' had been mis-declared below 58%, even though the actual 'Fe' content of the same was above 58%. Shipping Bills were filed by M/s KPSPL for the aforementioned vessels declaring 'Fe' content of the Page 4 of 32 Appeal No.: C/75043/2022-DB impugned cargo below 58%, thus claiming NIL rate of export duty. Shri Debabrata Behera, Managing Director of M/s KPSPL, further stated that, iron ore fines exported per vessel 'M.V. FORTUNE WING' was artificially split i.e. one consignment having high grade (>58%) 'Fe' content and other consignment having low grade (<58%) 'Fe' content, even though the average 'Fe' content of the combined cargo was more than 58%. Accordingly, two Shipping Bills were filed by M/s KPSPL i.e. one for consignment having 'Fe' content more than 58% and export duty@ 30% was paid and second for consignment having 'Fe' content less than 58% wherein export duty paid was NIL.
1.3. Pursuant to the Contract No.IOP/KP/003-A dt. 10.03.2017, M/s KPSPL filed Shipping Bill No. 4801526 dt. 17.03.2017 for export of 30,910 WMT of iron ore fines per vessel 'M.V. FORTUNE WING', under Customs Tariff Item (CTI) 2601 1142. Similarly, for Contract No.IOP/KP/003 dt. 10.03.2017, M/s KPSPL filed Shipping Bill No.4810523 dt. 17.03.2017 under CTI 2601 1131for export of 22,950 WMT of iron ore fines for the aforesaid vessel at Paradip Port. As per Certificate of Quality issued by M/s SGS India Pvt. Ltd. for 30,910 WMT (28,548.476 DMT) iron ore fines, the 'Fe' content was 57.94% and for 22,950 WMT (21,217.275 DMT) of iron ore fines, the 'Fe' content was 63.92%. It is pertinent to note that these two artificially separated Shipping Bills for different weight and Fe content i.e. 30,910 WMT- Fe 57.94% & 22,950 WMT-Fe 63.92%, were exported to the same buyer in the same vessel.
Page 5 of 32Appeal No.: C/75043/2022-DB 1.4. The investigation conducted revealed that M/s. KPSPL has paid duty @ 30% for the Shipping Bill with Iron Ore Fines having high grade 'Fe 'content more than 58% and claimed NIL rate of duty for the other Shipping Bill for iron ore cargo having 'Fe ' content less than 58%. The overall Fe content in the combined cargo being more than 58%, export duty @ 30% ad valorem appeared payable by the exporter. With this modus operandi, M/s KPSPL appeared to have evaded payment of appropriate export duty @ 30% on the shipment of Iron Ore Fines exported by them.
1.5. On completion of the investigation, a Show Cause Notice, bearing C.No. VIII (10)128/SCN/KPSPL/CUS(P)/BBSR/2020/2208-13 dt. 30.03.2021 was issued to M/s KPSPL, calling upon to Show Cause to the Principal Commissioner of Customs (Preventive)/Commissioner of Customs (Preventive), Bhubaneswar, GST Bhawan, Rajaswa Vihar, Bhubaneswar-751007, as to why: -
i. The Shipping Bills No. 4801523 & 4801526 both dated 17.03.2017 and 5384026 dated 12.04.2017, wherein the assessment is provisional, should not be finally assessed by classifying the exported goods, under the Chapter/Heading/sub- Heading/Tariff Item "26011149" and by charging the goods to appropriate Customs duty @ 30% adv under the provisions of Section 18(2) of the Customs Act, 1962 read with Section 17 of the Act ibid;
ii. The Shipping Bills No. 8320143 dated 29.08.2017, 8387522 dated 01.09.2017 and 8472055 dated 05.09.2017, wherein the assessment is provisional, should not be finally Page 6 of 32 Appeal No.: C/75043/2022-DB assessed by classifying the goods exported under the Chapter/ Heading/sub-
Heading/Tariff Item "26011131" and by charging the goods to appropriate Customs duty @ 30% adv under the provisions of Section 18(2) of the Customs Act, 1962 read with Section 17 of the Act ibid;
iii. Subsequent to such final assessment, the differential export duty amounting to 17,59,77,496/- payable in respect of the aforesaid 6 (six) Shipping Bills should not be recovered from them under the provisions of Section 28(4) of the Customs Act, 1962 along with appropriate interest under Section 28AA of the Customs Act, 1962;
iv. Rs.2,50,00,000/- paid by M/s KPSPL on 17.05.2018, 03.07.2018, 08.08.2018 and 26.10.2018, should not be appropriated as part payment against the aforesaid differential Customs duty of `17,59,77,496/-.
v. 217892.00 WMT of Iron Ore Fines already exported under the aforementioned Shipping Bills, should not be held liable for confiscation under Section 113(i) of the Customs Act, 1962; and vi. Penalty under Section 114A & 114AA of the Customs Act, 1962 should not be imposed on them.
1.6. The aforesaid SCN has been adjudicated by the Pr. Commissioner, Customs (Preventive) Bhubaneswar vide Order-in-Original No. CC(P)/BBSR/CUS/NO.05/PR.COMMR/2021 dated 30.09.2021, wherein the Ld. Principal Commissioner Page 7 of 32 Appeal No.: C/75043/2022-DB has dropped the proceedings initiated vide show cause C.No. notice VIII(10) 128/SCN/KPSPL/CUS(P)/BBSR/2020/2208-13 dt. 30.03.2021 against the following, considering the same to be unsustainable on merits:
(1) M/s. Kashvi Power and Steel Private Limited, Plot No.1234-P, Govindaprasad, Bomikhal, Bhubaneswar, Odisha 751010, (2) Shri Debabrata Behera, Managing Director, M/s Kashvi Power and Steel Private Limited, Plot No.1234-P, Govindaprasad, Bomikhal, Bhubaneswar, Odisha 751010, (3) M/s. Inspectorate Griffith India Private Limited, HIG-34, Gourav Vihar, Jagannath Marg, Madhuban, Paradip, Odisha - 754142 and (4) M/s. SGS India Private Limited, Unit No. MU 33, Madhuban Market Complex, Paradip, Odisha -
754142, 1.7. Aggrieved against the dropping of the demands, the Revenue has filed this appeal.
2. In their Grounds of Appeal, the Revenue has raised the following points:
(i) The Adjudicating Authority (AA) while dropping the entire proceeding initiated vide SCN dated 30.03.2021 has solely relied upon the test reports issued by the Central Revenue Control Laboratories (CRCL) Kolkata and did not consider test reports issued by SGS India Pvt. Ltd (SGSIPL) - an, independent authorized testing agency appointed as per the terms of Contracts between M/s Kashvi Power &Steel Ltd. (KPSPL) Page 8 of 32 Appeal No.: C/75043/2022-DB and its foreign buyers. The test reports issued by SGSIPL for Iron ore shipments exported per vessel M. V. Prabhu Mihika, M. V. Menalon and M. V. Ithiomi show more than 58% Fe content. Here it is pertinent to mention that KPSPL or its Managing Director Shri Debabrata Behera have never challenged these test reports.
(ii) The AA appears to have erred while inferring at para 7.5.5 of the impugned O-1-0 that analysis of 'Fe' content of Iron ore cargo at discharge port (In China), done by CIQ doesn't have any bearing for the purpose of assessment. In this regard, an attention is invited to the CBIC Circular No. 12/2014 dated 17th November, 2014 issued for clarifying Valuation / Assessment Practice in respect of export of Iron Ore. Para 3 of the said circular states that
(c) Upon receipt of the load port test report and discharge port test report the proper officer shall compare the two reports with the terms set out in the contract. Where variations in the two test reports are within tolerance limits provided in the contract and do not impinge upon the declared price, the proper officer may proceed to finalize the provisionally assessed shipping bill in terms of the provisions of Section 14 and the Customs Valuation (Determination of Value of Export Goods) Rules, 2007.
(d) In cases where the load port test report and discharge port test report show a variation, so as to impinge upon the price, the proper officer shall proceed to re- determine the value of the goods in terms of Customs Page 9 of 32 Appeal No.: C/75043/2022-DB Valuation (Determination of Value of Export Goods) Rules, 2007. In no case, shall a price based upon the average of the two test reports be accepted for the purposes of arriving at the assessable value.
(iii) As seen from above, the Circular underlines the importance of discharge port test report (CIQ - in the instant case) for finalization of the Shipping Bills pertaining to Iron Ore Export shipments. However, it appears that Adjudicating Authority has not taken cognizance of the directions of CBIC for finalization of Iron Ore Shipping Bills while passing the impugned O-I-O and completely ignored the discharge port test reports (CIQ) while passing the impugned O- I- O. It's worth mentioning that CIQ for various shipments were submitted by KPSPL themselves during the investigations.
(iv) To support his sole reliance on test reports issued by CRCL Kolkata, the AA has cited (at para 7.3.2 of the impugned O- I- O) the judgment in case of 'Reliance Cellulose Products Ltd. Vs. Collector of C. Ex., Hyderabad' [1997 (93) E.L.T. 646 (S.C.)] passed by Hon'ble Supreme Court of India. It is to submit that the ratio of above cited judgement is not applicable to the instant case. In the aforesaid cited case, the samples of impugned goods were first tested by departmental Chief Chemist. Later, samples were re-tested by Chief Chemist, CRCL Delhi on the request of Reliance Cellulose Products Ltd (Hereinafter referred as the 'Company'). Both the times, the test results were same and in line with the Departmental stand. So, the company requested again to draw Page 10 of 32 Appeal No.: C/75043/2022-DB fresh samples of the impugned goods and to re- test those samples. This request of the company was denied by then Assistant Collector of Central Excise, Hyderabad I Division and subsequently SCN No. V/68/17/154/82 Vol. I dated 11.8.86 was issued to Reliance Cellulose Products Ltd. based on those test reports. The matter went up to the Hon'ble Tribunal where the departmental stand was confirmed again. Subsequently, matter reached to Hon'ble Supreme Court of India, which passed the order wherein it was held that CRCL test reports merits acceptance. The relevant para of the above-mentioned Judgement is reproduced as below -
"We were referred to a number of test reports obtained by the appellant from various persons and on the basis of these opinion, the reports of the Departmental Chemical Examiner and also the Chief Chemist were assailed. We are of the view that the Assistant Collector cannot be said to have erred in relying upon the reports given by the Chemical Examiner and the Chief Chemist. It may be that in a given case, the report of the Chief Chemist may be demonstrated to be palpably wrong. In such a case, the Court may direct re-examination of the whole issue. But that is not the case here. It has not been shown that the Chemical Examiner or the Chief Chemist were in error in their analysis in any way. The views expressed by the Chief Examiner and Chief Chemist of the Government cannot be lightly brushed aside on the basis of opinion of some private persons obtained by the appellant."Page 11 of 32
Appeal No.: C/75043/2022-DB
(v) Further, the Hon'ble Supreme court also held that "Under Rule 56 of the Central Excise Rules, the Central Excise Officer is empowered to take samples for the purpose of testing the samples. He has to communicate the result of such tests to the manufacturer. If the manufacturer is aggrieved by the result of the test, he can request the Assistant Collector that the samples be re-tested. That procedure has been followed. Therefore, there is no procedural infirmity in the order of the Assistant Collector nor has it been established that the Assistant Collector was wrong in relying on the report of Chemical Examiner and Chief Chemist in preference to the opinion obtained by RCPL from some private individuals."
(vi) As seen from the facts of the above case that only CRCL test reports were available in the said case. Test reports of no other testing agency was available in that case. In the present case, the AA ought to have considered CBIC Circular No. 12/2014-Customs dated 17th November, 2014, whereby it has been prescribed that both load port test report and discharge port test report should be considered. The Apex Court judgment which was relied upon by the AA related to only CRCL Test reports. But in the present case besides only CRCL Test reports, other authorised agencies Test reports are available. Thus the facts of the two cases are completely different. In view of the above, it is clearly evident that the AA has erred in placing reliance on the above said judgement of the Hon'ble Supreme Court.
Page 12 of 32Appeal No.: C/75043/2022-DB
(vii) Further the AA has also placed reliance on the case of 'Commissioner of Customs Vijayawada vs. Essel Mining & Industries ltd. 2019 (370) E.L.T. 928 (Tri. - Hyd.)' decided by Hon'ble CESTAT, Hyderabad. In this case, Hon'ble CESTAT agreed with the findings of the first Appellate Authority and also reproduced relevant portion of those findings in its order. In this case, the party had requested for re- testing of the samples at a different laboratory and the remnant samples were sent to the CRCL, New Delhi for re-test. Even after getting test Results from CRCL New Delhi, the department got the samples tested at another laboratory for which no intimation was given to the party. The first appellate authority held it as violation of principles of Natural Justice and ruled in favour of the party. In this backdrop only the test reports of CRCL, New Delhi were upheld by the First Appellate Authority. Neither First Appellate Authority nor Hon'ble CESTAT have recorded in their order that CRCL Test Reports alone should be relied upon. Thus, reliance on the subject case law by the AAin his findings at para 7.3.2 of the impugned O- I- O is misplaced.
(viii) Further, it may be noted that, in the same case the First Appellate Authority has placed reliance on another judgment of the Hon'ble CESTAT, Bangalore in the case of 'Taurion Iron & Steel Company Pvt. Ltd. v. The Commissioner of Central Excise, Visakhapatnam (order No. 69/2009, dated 30-01-2009)'. In this case, the Hon'ble CESTAT, Bangalore has held that -
Page 13 of 32Appeal No.: C/75043/2022-DB "we do not find any strong reason for rejecting the test report produced by the appellant from two sources, one from the reputed testing organization and the other from the destination port. The evidence also has been produced that payment has been made based on the test results at the destination port. When it is less than 62% depending upon the shortage, the penalties have been paid by these factors, we find that the impugned order which very cursory manner without taking into account the party is liable to be set aside...." The subject case is an identical case wherein the appellants have produced two test reports, one from the reputed testing organization SGS and the other from the destination port, which showed that the iron content is less than 62%. These two test reports should also be considered while arriving at the Fe content of the samples. Thus, if all the five test reports are taken into consideration, three out of five test reports indicated less than 62%. Even on average also it is less than 62%. Therefore, I hold that the appellants have a prima facie case to set aside the impugned order."
(ix) It is interesting to note that the above judgment by Hon'ble Tribunal has taken into account the Test reports of Iron ore shipment at destination port as well as test reports of private testing agencies like SGS whereas in the instant case Adjudicating Authority has overlooked the 'Fe' analysis report at discharge port (CIQ) by stating (at para 7.5.5 of the impugned O- I- O) that it does not have any bearing on assessment. This stand by the AA appears to be erroneous to his own stand. At one hand the Adjudicating Page 14 of 32 Appeal No.: C/75043/2022-DB Authority has placed reliance on the above- mentioned case law to support his sole reliance on CRCL test reports (though the ratio of the said case law is not applicable to the instant case as discussed in above paras), on the other hand he has simply overlooked the fact that in the same case law the Hon'ble Court has taken into account the test reports of Iron ore shipment at destination port as well as test reports of private testing agencies. In the instant Case, for Iron ore shipments exported by KPSPL, available test reports of destination/Discharge port (CIQ) as well as test reports of private testing agencies SGSIPL have reported Fe content above 58%.
(x) Further, in regards of test reports by CRCL Kolkata, it is pertinent to mention that these test reports were neither mentioned nor relied upon in the said Show Cause Notice issued to the company. The said test reports by CRCL Kolkata were mentioned by the company in their reply in defense which was subsequently taken up by the Adjudicating Authority and relied upon in the O- I- O. The fact being, if the CRCL test reports (based on which the whole case is being dropped) were not relied upon in the SCN and the Adjudicating Authority wished to rely on the same (for dropping the proceedings against the said company), it would have been prudent on the part of Adjudicating Authority to ask for comments / views of the Investigating Agency on the CRCL test reports before arriving at any definite conclusion. The same have clearly not been done and it appears that the basic principles of natural justice have not been adhered to by not giving the chance to the Page 15 of 32 Appeal No.: C/75043/2022-DB investigating agency to explain their position / views on test reports by CRCL Kolkata.
(xi) The AA in his findings at para 7.3.3.7 of the impugned O- I- O has concluded that the value of Iron ore fines considered in the SCN for the purpose of computation of differential Customs Duty is not sustainable. The AA has discussed his findings on the aspect of 'Transaction Value' at paras 7.3.3.2 to 7.3.3.7 of the impugned O- I- Ο. The AA has observed that M/s. KPSPL has submitted the copies of BRC in respect of the payment received against export of said Iron ore shipments. AA has concluded in para 7.3.3.5 of the impugned O- I- O that the higher transaction value as computed in SCN is not sustainable as there is no evidence in the SCN to show that KPSPL has received that higher amount. It appears that the AA has erred to interpret the valuation guidelines issued vide Board Circular No. 18/2008 dated 10.11.2008 which also has been cited at para 7.3.3.2 of the impugned O- I- O. The said guidelines clearly state that-
"the transaction value, that is to say the price actually paid or payable for the goods for delivery at the time and place of exportation under section 14 of Customs Act 1962, shall be the FOB price of such goods at the time and place of exportation."
(xii) It appears that the AA has conveniently overlooked the 'Actual Transaction Value' (payable)- established after the investigation and as proposed in the SCN. The value declared by the KPSPL cannot be considered as the true transaction value as it is based on the Page 16 of 32 Appeal No.: C/75043/2022-DB manipulated test reports. The actual Transaction Value as proposed in the SCN has been computed in accordance with the provisions of Section 14 of the Customs Act 1962 and the Customs Valuation (Determination of Value of Export Goods) Rules 2007.
(xiii) The AA has concluded in para 7.3.5 & 7.3.5.1 of the impugned O-I-O that investigation has failed to substantially prove the modus operandi of artificially splitting of the single Iron Ore consignment into two separate consignments of Iron Ore, exported per vessel 'M. V. Fortune Wing' by KPSPL. However, it appears that the AA has failed to appreciate the fact that such manipulation by KPSPL was not only brought out clearly in the investigation report but also was admitted by Shri Kamal Mohanty, Manager, SGS India Pvt. Ltd. (SGSIPL- authorized testing agency deputed by KPSPL). Vide his statement dated 05.04.2018 recorded under section 108 of the Customs Act, 1962, Shri Kamal Mohanty has stated that the SGSIPL never tested two separate cargos of Iron Ore exported per vessel 'M.V. Fortune Wing' by KPSPL. It was only after the sailing of the said vessel and after written instruction form KPSPL, they artificially split the test report into two grades one lower and other higher one. The said fact is corroborated by another testing agency Inspectorate Griffith India Private Limited (IGIPL), which had also tested the same cargo as per work order of overseas buyer i.e. M/s Global Minore Pte Ltd., Singapore. M/s IGIPL had issued a single Certificate of Quality (CIQ) for the aforesaid vessel. Apart from the aforesaid oral evidences there were also Page 17 of 32 Appeal No.: C/75043/2022-DB documentary evidences relied upon in the SCN viz. Statement of Facts (SOF) of the said vessel and the final draft survey report which further establish the fact that Iron ore fines loaded on the said vessel were treated as one single parcel by Shipping Agents as well as Ship officials. These crucial evidences are not at all considered by the AA leading to incorrect conclusions. In fact the AA has completely ignored these vital documentary evidences.
(xiv) The AA at para 7.4.3 of the impugned O-I-O has held that the confessional statement of Shri Debabrata Behara, Managing Director of M/s KPSPL cannot be relied upon solely, for alleging mis-declaration of 'Fe' contents, as he had immediately retracted his confessional statement before the Chief Judicial Magistrate, Panaji, Goa. In this regard, it is to submit that the AA appears to have ignored the fact that beside confessional statement of Shri Debabrata Behara, there are various documentary evidences viz. test reports of private testing agencies, CIQs, shipping documents and E-mail communications. The said documents are relied upon in the SCN and are admissible evidence revealing the culpable intent of KPSPL. No finding on the said documents have been given by the AA and no reason to not consider the same have been given by him. Thus, the O-I-O is a non-speaking order to this extent.
(xv) Secondly, it is to emphasize here that statements of Shri Debabrata Behara were recorded u/s 108 of the Customs Act, 1962 (after he was enlarged on bail) where he was Page 18 of 32 Appeal No.: C/75043/2022-DB specifically asked in his statements dated 04.06.2018, 06.06.2018, 04.03.2019 and 19.08.2019, whether he wished to retract any part of his statement which were earlier recorded but he neither retracted any part of his earlier statements nor objected to the correctness of the test reports by other agencies as well as CIQ at discharge port showing Fe content-more than 58%.
(xvi) It appears that the Ld. AA also overlooked the fact that apart from CRCL and test reports of testing agencies appointed by KPSPL (i.e. IGIPL & SGSIPL) there were test reports issued by two other independent test agencies which were appointed by the overseas buyer i.e. Leon Inspection & Testing India Private Limited, Chennai (LITIPL) and Cotecna Inspection India Private Limited, Paradip (CIPL). The test reports of these two independent testing agencies at Load port were in consonance with the discharge port test reports (CIQ). Therefore, it clearly established that 'Fe" content of the exported Iron ore by KPSPL were above 58%. A table showing test results of various testing agencies are shown below which clearly establishes the fact that majority of the test results shows iron ore content above 58%:
Sr. Name of Testing WMT 'Fe' content in percentage (%) as per respective No. the Agency Exported test report Vessel as per Contract Declared M/s M/s M/s M/s Discharge at Load IGIPL SGSIPL CIIPL LITIPL Port Port (CIQ) Page 19 of 32 Appeal No.: C/75043/2022-DB
1. M.V. IGIPL / 53,732 57.92 57.92 61.68 ---- ---- 59.40 PRABHU SGSIPL MIHIKA
2. M.V. IGIPL / 55,300 57.78 57.78 62.63 62.58 ---- ----
MENALON SGSIPL
3. M.V. IGIPL / 55,000 57.88 57.88 62.32 ---- 60.30
ITHOMI LITIPL
4. M.V. 30,910 57.94 57.94 ---- ----
FORTUNE
SGSIPL 60.82 59.87
WING
22,950 63.92 63.92 ---- ----
(xvii) As per Section 17 of the Customs Act, 1962, Self-Assessment of Customs duty in respect of export goods is done by the exporters. Thus, exporters are required to declare the correct description, value, classification, notification number, if any, and themselves assess the Customs duty leviable, on the export goods. It has been clarified in the first Para 4 of CBIC Circular No. 17/2011-Customs dated 08.04.2011 that the exporter is responsible for assessment of export goods. Therefore, it is statutory responsibility of the exporter to properly self-
assess the goods and discharge Customs duty on export goods, along with filing all declarations and related documents and confirming these as true, correct and complete. In the instant case it appears that KPSPL has failed to discharge their statutory obligation under self-assessment by way of mis-declaration of Fe Contents and Page 20 of 32 Appeal No.: C/75043/2022-DB thereby undervaluation of Iron Ore Exported by them per vessel M. V. Prabhu Mihika, M. V. Menalon, M. V. Ithiomi and M. V. Fortune wing, as clearly brought out in the SCN dated 30.03.2021.
2.1. In view of the above submissions, the Revenue has prayed for setting aside the impugned Order-in- Original and to confirm the demand, along with applicable interest, under Section 28AA of the Customs Act, 1962 and imposition of penalty as applicable under Section 114A,114AA & 114(ii) of the Customs Act, 1962.
3. In their defence, the Respondent herein have made the following submissions:
(a) In terms of Section 144 of the Customs Act,1962 only proper office is vested with the power to take sample at the time of entry or clearance of any goods or at any time while such goods are being passed through the customs area, it is admitted fact on record that sample was drawn by the officer of the Customs in the presence of the respondent and send to CRCL for test , therefore , drawing of the sample and there test thereof are as per mandate of the Customs Act,1962 , whereas the sample drawn by the private testing agencies are not drawn in the presence of the officer of the Customs , hence , such sample and report thereto is not admissible at all as credible evidence in the eye of law. The ld. Commissioner has recoded his findings to this effect. at Para 7.3.2, of the impugned order.
(b) At paragraphs 7.3.3.3, 7.3.3.4, 7.3.3.5 and 7.3.3.6 of the said order, the ld. Commissioner categorically recorded that there is no difference Page 21 of 32 Appeal No.: C/75043/2022-DB in the value declared in the Shipping Bills vis-à-vis Invoices and remittance received owing to variation in 'Fe' % age and Moisture % age.
(c) In terms of Para (3) clause (c) and clause (d) of the Circular No. 12/2014, dated 17th November, 2014, the proper officer vested with the jurisdiction to re-determine the value only when variation has impinged upon the price, not otherwise, in the instant case it is admitted fact on record that there is no variation in the price due change of 'Fe' , moreover , para 4 of the circular is also complied, since the remittance received matches with the Final Invoice(s) . Hence, the assessment is made in terms of the Circular No. 12/2014, dated 17th November, 2014.
(d) The instant case is squarely covered by the decision of the Hon'ble Apex Court in Steer Overseas Pvt. Ltd. v. Commissioner - 2022 (381) E.L.T. A34 (S.C.), wherein the Hon'ble Apex court affirmed the decision of the Tribunal. In that case, the Tribunal had held that the test report of the private laboratory in respect of samples drawn by the exporter without the knowledge or the presence of the Departmental officers cannot prevail over the test report of the Customs laboratory/CRCL which drew samples as per the prescribed procedure and in the presence of the exporter.
(e) From Paragraph 3.2 of the Appeal, it is evident that out of three test reports, two test report i.e. the report by SGSIPL, the Private Agency and the report of CRCL has indicated less than 58% , Fe content. The respondent relies upon the decision of the Tribunal in the case of Commissioner Of Page 22 of 32 Appeal No.: C/75043/2022-DB Cus., Vijayawada versus Essel Mining & Industries Ltd., 2019 (370) e.l.t. 928 (Tri. - Hyd.) which squarely covered the instant case.
3.1. In view of the above submissions, the Respondent, prayed for upholding the impugned order passed by the Ld. Principal Commissioner of Customs and rejection of the appeal filed by the Revenue.
3.2. The Respondent also submitted that during the course of investigation they have paid an amount of Rs. 2,50,00,000/- as deposit towards their duty liability, if any. As the issue has been decided in favour of the Respondent and there is no duty liability to be borne by them, the Respondent prayed for refund of the amount deposited, along with interest at the applicable rate.
4. Heard both sides and perused the appeal records.
5. We observe that the Ld. Adjudicating authority has dropped the proceedings initiated against the Respondent in the SCN dated and held that the demand of customs duty raised against the Respondent as unsustainable. From the Grounds of Appeal raised by the Revenue, we find that the Revenue has filed the appeal mainly on the following grounds:
(a) The AA while dropping the entire proceedings initiated by SCN dated 30.03.2021 has solely relied upon the test reports issued by the Central Revenue Control Laboratories (CRCL) Kolkata and did not consider test reports issued by SGS India Pvt. Ltd. (SGSIPL)- an independent Page 23 of 32 Appeal No.: C/75043/2022-DB authorized testing agency appointed as per the terms of contracts between M/s. Kashvi Power & Steel Ltd. (KPSPL) and its foreign buyers.
(b) The AA appears to have erred while inferring at para 7.5.5 of the impugned O-I- O that analysis of 'Fe' content of Iron ore cargo at discharge port (In China), done by CIQ does not have any bearing for the purpose of assessment. In this regard, an attention is invited to the CBIC Circular No. 12/2014 dated 17th November, 2014 issued for clarifying Valuation/Assessment Practice in respect of export of Iron.
5.1. In the present appeal, we find that the Revenue is of the view that the overall Fe content in the combined cargo being more than 58%, export duty @ 30% ad valorem was liable to be paid by the exporter. Thus, we observe that the main issue involved in this appeal is the percentage of 'Fe' content in the goods exported. It is seen that samples were drawn by the officer of the Customs in the presence of the Respondent and send to CRCL for test, as per the mandate of the Customs Act, 1962. However, Revenue has not relied upon this Test Report and relied upon some test conducted at Private labs. In this regard, we also take note of the fact that the private testing agencies have not drawn the samples in the presence of the officer of the Customs. Hence, such sample and report thereto are not admissible as credible evidence in the eyes of law. We observe that this view is supported by the decision of the Hon'ble Apex Court in Steer Overseas Pvt. Ltd. v. Commissioner [2022 Page 24 of 32 Appeal No.: C/75043/2022-DB (381) E.L.T. A34 (S.C.)], wherein the Hon'ble Apex court has affirmed the decision of the Tribunal that the test report of the private laboratory in respect of samples drawn by the exporter without the knowledge or the presence of the Departmental officers cannot prevail over the test report of the Customs laboratory/CRCL which drew samples as per the prescribed procedure and in the presence of the exporter. Accordingly, by relying on the decision of the Hon'ble Apex Court cited supra, we hold that demand raised by the Department on the basis of the test report received from the Private test labs is not sustainable. We observe that the ld. Principal Commissioner has recorded his findings to this effect at Paragraphs 7.3.1 and 7.3.2, of the impugned order.
5.2. The Ld. AA (Adjudicating Authority) in paragraph 7.3.1 of the OIO found that in respect of six shipping bills, samples of exported iron ore fines were drawn by the Customs authority in presence of the exporter's representatives, when the cargo was inside the load port area. The samples were subsequently sent to the Central Revenue Control Laboratory (CRCL), Kolkata, in order to ascertain the percentage of Fe content by weight on dry basis. As per the CRCL, Kolkata test reports/memos, the details of which was collected from Customs, Pradeep (the port of export of the impugned iron ore fines), the 'Fe' content of the iron ore fines exported vide said six (06) shipping bills are mentioned in the table below: -
Page 25 of 32Appeal No.: C/75043/2022-DB Sr. Shipping Bill No., date, (vessel name) Total iron content (on dry No. basis) by weight in % 1 5384026 dt. 12.04.2017 (M.V. Prabhu Mihikaa) 53.3% 2 8320143 dt. 29.08.2017 (M.V. Menalon) 56.9% 3 8387522 dt. 01.09.2017 (M.V. Ithomi) 56.4% 4 8472055 dt. 05.09.2017 (M.V. Ithomi) 56.4% 5 4801526 dt. 17.03.2017 (M.V. Fortune Wing) 60.4% 6 4801523 dt. 17.03.2017 (M.V. Fortune Wing) 57.6% 5.3. The Ld. AA, in paragraph 7.3.2, found that there are three sets of load port test reports; 1) the test reports basing on which the exporter raised the Invoice, 2) the test reports taken into account in the SCN for the purpose of demanding customs duty and
3) the test reports issued by the CRCL, Kolkata after testing the samples drawn by the Customs authority in presence of the exporter's representative. Fe contents as per the said three sets of test reports are mentioned below in a tabular format: -
Sr. No. Shipping Bill No., 'Fe' content 'Fe' content 'Fe' content date, (vessel basing on taken by DRI, as per CRCL name) which Invoice Goa for report was prepared computation of customs duty [A] [B] [C] [D] 1 5384026 dt. 53.3% 61.68% 53.3% 12.04.2017 (M.V. Prabhu Mihikaa) 2 8320143 dt. 56.9% 62.63% 56.9% 29.08.2017 (M.V. Menalon) 3 8387522 dt. 56.4% 62.78% 56.4% Page 26 of 32 Appeal No.: C/75043/2022-DB 01.09.2017 (M.V. Ithomi) 4 8472055 dt. 56.4% 62.78% 56.4% 05.09.2017 (M.V. Ithomi) 5 4801526 dt. 60.4% 60.08% 60.4% 17.03.2017 (M.V. Fortune Wing)
6 4801523 dt. 57.6% 60.08% 57.6% 17.03.2017 (M.V. Fortune Wing) 5.4. The Ld. AA opined that the first and second sets of test reports, under column [B] and [C] respectively, have been issued by private testing agencies. In those cases, the test samples of export goods were not drawn in presence of Customs authorities. It is not known to Customs, how and when those test samples were drawn. Those tests, done by private testing agencies, give substantially contrasting test result thus putting question mark on the credentials of either of tests and results thereof. On the other hand, the samples tested by CRCL, Kolkata were drawn by the Customs authorities in presence of the authorized representatives of the exporter at the time loading at load port. Therefore, the test results as per the CRCL, Kolkata is more trust worthy and have better credentials than that of any private testing agency. CRCL is the recognized departmental authority for testing of products. The views expressed by the CRCL, Kolkata cannot be lightly brushed aside on the basis of opinion of some private testing agency. Further, the test results as per the CRCL, Kolkata almost matches to that Page 27 of 32 Appeal No.: C/75043/2022-DB produced by the exporter at the time of presenting the Shipping Bills for assessment.
5.5. We observe that in support of his above opinion, the Ld. AA has placed reliance of the judgments of
(i) Hon'ble Supreme Court of India in the case of Reliance Cellulose Products Ltd. Vs. CCE, Hyderabad [1997(93) ELT 646(SC)]
(ii) CESTAT, Hyderabad, in the case of Commr of Customs, Vijaywada Vs. Essel Mining & Industries Ltd [2019 (370) E.L.T. 928 (Tri. - Hyd.)].
5.6. Regarding the valuation of the goods, we find that the Ld. AA has compared the value of Iron Ore Fines on the basis of the documents submitted by M/s KPSPL i.e. Bank Realization Certificate (BRC), shipping bill, commercial invoice in respect of the six shipping bills and given his findings as under: -
Sr. No Shipping Value declared in Value as per Value as Value taken in the Bill No. the shipping bill Invoice basing on per BRC SCN for the load port Fe computation of content duty Value Fe% Value Fe% Value Fe% [A] [B] [C] [D] [E] [F] [G] [H] M.V. Prabhu Mihikaa 1 5384026 2395909.88 57.5 2478652.0 57.92 2478203. 2641148.7 61.68 0 8 77 2 M.V. Menalon 2 8320143 2239650.00 57.5 2283055.5 57.78 2283040. 2454405.1 62.63 Page 28 of 32 Appeal No.: C/75043/2022-DB 0 5 55 2 M.V. Ithomi 3 8387522 2354400.00 57.5 2402583.0 57.88 2354400. 2609284.2 62.78 0 1 00 9 4 8472055 21600.00 57.5 21600.00 0 Total (3+4) 2376000.00 2402583.0 2376000. 2609284.2 1 00 9 M.V. Fortune Wing 5 4801526 137876.90 57.0 1420973.8 57.94 Not yet 2820930.7 60.08 0 5 received 2 6 4801523 1336608.00 62.0 1399956.8 63.92 0 7 Total (5+6) 2714881.90 2820930.7 2 5.7. We observe that the Ld. AA found that in respect of shipping bills no. 5384026 (MV Prabhu Mihikaa) and no. 8320143 (MV Menalon), the sales proceeds as per BRC matches with the value declared in the final Invoice raised by the exporter M/s KPSPL. The minor variation attributes to the bank/regulatory charges. In respect of the shipping bills no. 8387522 & 8472055 (MV Ithomi), the sales proceeds as per BRC matches to value declared in the shipping bills. The AA found that there is no suppression / mis-declaration of Fe content on the part of M/s KPSPL. The AA further observed that in respect of the shipping bills no. 4801526 & 4801523 (MV Fortune Wing), the sales proceeds have not yet been received by the exporter. The Ld. AA in Page 29 of 32 Appeal No.: C/75043/2022-DB paragraph 7.3.3.7 concluded that the value of iron ore fines considered in the SCN for the purpose of computation of differential Customs duty is not sustainable. We do not find any infirmity in the finding of the Ld. AA.
6. Accordingly, we uphold the findings of the Ld. AA and hold that there is no merit in the appeal filed by the Revenue on this score.
7. As regards the allegation in paragraph 10.5 of the SCN that "M/s KPSPL negotiated with M/s Global Minore Pte Ltd., Singapore for sale/export of 53,860 WMT of iron ore fines but subsequently very cleverly and mischievously entered into two separate contracts with M/s Global Minore Pte Ltd. One contract having No. IOP/KP/003-A dated 10.03.2017 pertained to export of 30,910 WMT (28,548.476 DMT) of iron ore fines having 57.94% 'Fe' content @ USD 49.00 PDMT and another contract having No. IOP/KP/003 dated 10.03.2017 pertained to export of 22,950 WMT (21,217.275 DMT) iron ore fines having 63.92% 'Fe' content @ USD 64.00 PDMT", from a perusal of the impugned order, it is seen that the Ld. AA has found that it is fact on record that there are two separate Contracts, signed between the exporter M/s KPSPL and the overseas buyer M/s Global Minore on 10.03.2017, the genuineness of which is not disputed. On 16.03.2017, M/s KPSPL issued letters to the testing agency M/s SGSIPL (RUD page no. 209 and 210 of the SCN refers) to carry out sampling of two consignments of cargo, one of 57% Fe and another of 62% Fe. Further, two sets of shipping bills were filed on 17.03.2017. This chronology indicates that Page 30 of 32 Appeal No.: C/75043/2022-DB M/s KPSPL has supplied two different consignments of cargo to their overseas buyer. We find that the Ld. AA has opined that the aforesaid allegation leveled in the SCN fails due to lack of substantial evidence. We do not find any infirmity in the findings of the Ld. AA and accordingly, uphold the same.
7.1. As regards the allegation in paragraph 10.5 of the SCN that "the manipulation by M/s KPSPL is exposed by the email dated 27.03.2017 from Shri Mansoor Ali of M/s KPSPL to M/s SGSIPL to split the cargo and issue two separate quality certificates instead of one that too after the sailing of the vessel" the Ld. AA found this allegation levelled in the SCN to be incorrect in view of the fact that there were two contracts, two advices to the testing agency for sampling and two shipping bills, one for below 58% Fe iron ore fine and another above 58%. AA has opined that there is no bar to load two different consignments of same cargo into a vessel, even if the buyer is one person. We agree with the above observations of the Ld. AA in the impugned order. In this regard, we find it pertinent to note that unless the alleged modus operandi is substantially proved, it cannot be held that there is contravention. Accordingly, we hold that there is no merit in the issue raised by the Revenue on this count.
7.2. As regards allegation that "Shri Debabrata Behera, Managing Director of M/s KPSPL, in his statements given before DRI, Goa, has admitted that he was aware about the mis-
declaration of 'Fe' content of iron ore fines exported by M/s KPSPL", it is a settled issue that adjudication proceedings under Customs Act, 1962 Page 31 of 32 Appeal No.: C/75043/2022-DB cannot solely be based on inculpatory statements of witnesses and noticee alone. The Department is bound to prove case based on balance of probabilities as per well-recognized principle of law in case of departmental adjudications.
7.3. Regarding the allegation that "analysis of 'Fe' content of cargo at the discharge port (in China), done by CIQ (China Entry Exit Inspection and Quarantine Bureau) also indicate that the 'Fe' content was more than 58%". In this regard, we are of the view that as per the contracts entered into between M/s KPSPL and the overseas buyers, the sale was on FOB basis and "The buyer shall pay to the seller 100% as payment on CAD basis of the value as per load port, weight, Fe and moisture basis analyzed at the load port." Essentially it means that the exporter i.e. M/s KPSPL would receive 100% payment for the said shipment based on load port test results. Thus, we observe that analysis of 'Fe' content of cargo at the discharge port (in China), done by CIQ doesn't have any bearing for the purpose of assessment of customs duty of the impugned exported goods.
8. In view of the above findings, we do not find any merit in the appeal filed by Revenue and hence we reject the same.
9. During the course of hearing, the Ld. Counsel for the Respondent submitted that the amount deposited by them should be considered as a deposit and the said amount should be refunded along with applicable interest. Regarding the above prayer of the Respondent for refund of the amount deposited by them during the course of investigation along with interest, we observe that during the course of Page 32 of 32 Appeal No.: C/75043/2022-DB investigation the Respondent has paid an amount of Rs.2,50,00,000/- as deposit towards their duty liability, if any. As the issue has been decided in favour of the Respondent and there is no duty liability to be paid by them, we find that the amount deposited by the Respondent is liable to be refunded, along with interest at the applicable rate.
10. In view of the above findings, we pass the following order:
(I) The appeal filed by the Revenue is rejected.
(II) The amount deposited by the
Respondent during the course of
investigation is liable to be refunded to them, along with interest at the applicable rate.
11. The appeal is disposed of on the above terms.
(Order Pronounced in Open court on16.10.2025) (R. MURALIDHAR) MEMBER (JUDICIAL) (K. ANPAZHAKAN) MEMBER (TECHNICAL) RKP