For iron ore exports before 1 May 2022, Fe content must be determined on WMT basis.

The appellant exported iron ore fines under shipping bills filed before 1 May 2022.

A dispute arose regarding the method for determining the iron (Fe) content for classification and levy of export duty—whether it should be calculated on a Wet Metric Ton (WMT) basis, accounting for moisture, or on a Dry Metric Ton (DMT) basis.

The Commissioner (Appeals) rejected the appellant’s claim, inter alia, on the grounds that the assessments had been accepted without protest and that the appellant was seeking to introduce additional material at the appellate stage.

The three appeals were heard together because they involved common questions of law and fact.

Whether the Fe content of iron ore fines exported under shipping bills filed before 1 May 2022 was required to be determined on a WMT basis or a DMT basis for classification and levy of export duty?

Whether the appellant was barred from raising the legal issue at the appellate stage because the assessments had been accepted without protest and the claim allegedly involved additional evidence?

The Tribunal applied the principle laid down by the Supreme Court in Union of India v. Gangadhar Narsingdas Aggarwal, 1997 (89) E.L.T. 19 (S.C.), that the Fe content of iron ore exported in moist condition must be determined with reference to the condition of the goods at the time of export, and that a dry-basis percentage cannot be directly applied to goods exported in moist condition.

It relied on Board Circular No. 4/2012-Cus. dated 17 February 2012, which clarified that Fe content for export-duty purposes was to be determined on a WMT basis by taking moisture and other impurities into account.

The Tribunal also considered the supplementary note inserted in Chapter 26 of the First Schedule to the Customs Tariff Act, 1975, with effect from 1 May 2022, expressly requiring Fe content under Heading 2601 to be calculated on a DMT basis; this supported the conclusion that the earlier regime was WMT-based.

Further, under Jute Corporation of India Ltd. v. Commissioner of Income Tax, 1991 (51) E.L.T. 176 (S.C.), and Eternit Everest Ltd. v. Commissioner of Central Excise and Customs, Bhopal, 2010 (254) E.L.T. 507 (Tri.-Del.), an appellate authority may entertain an additional legal ground necessary to determine the correct tax liability, and a question of law may be raised at the appellate stage.

The Tribunal also held that there can be no estoppel against the statute.

The Tribunal found that the applicable law for the relevant pre-1 May 2022 exports required the Fe content to be assessed in the condition in which the iron ore was actually exported—namely, in moist form.

Consequently, the Fe percentage had to be determined on a WMT basis, taking the moisture recorded in the relevant test reports into account.

The subsequent statutory insertion expressly prescribing the DMT method from 1 May 2022 reinforced, rather than displaced, the conclusion that the earlier legal position was WMT-based.

The Tribunal further held that the appellant’s contention was a legal challenge based on test reports and material already forming part of the assessment record, not an attempt to introduce an entirely new factual case.

Therefore, Rule 5 of the Customs (Appeals) Rules, 1982 did not justify rejection of the claim.

Acceptance of the assessments without protest could not validate an assessment contrary to the tariff, binding precedent, or the Board’s circular.

The impugned Order-in-Appeal was set aside.

The jurisdictional assessing authority was directed to re-determine the Fe content on a WMT basis, carry out consequential reclassification and reassessment, and grant consequential relief, including refund if otherwise admissible in law.

All three appeals were allowed by way of remand.