Assessment Must Be Based On The Condition Of Goods At The Time Of Export: Orissa High Court

In a significant ruling reaffirming the principle that the export duty assessment of iron ore fines must reflect their condition at the time of export, the Orissa High Court on January 15, 2026, dismissed a departmental appeal filed by the Commissioner of Customs (Preventive), Bhubaneswar. The appeal under Section 130 of the Customs Act, 1962, challenged the concurrent findings of the Commissioner (Appeals) and the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, which had held that the Fe (iron) content of iron ore fines exported by M/s Essel Mining and Industries Ltd. was to be determined on a Wet Metric Tonne (WMT) basis, not Dry Metric Tonne (DMT), for exports made before May 1, 2022.

A Division Bench comprising Chief Justice Harish Tandon and Justice Murahari Sri Raman emphatically held that no substantial question of law arose from the Tribunal’s order dated 04.12.2024, and accordingly dismissed the appeal in OTAPL No. 50 of 2025.

“This Court does not find any perversity in the concurrent finding of fact rendered by the learned CESTAT affirming the view expressed by the Appellate Authority,” observed the Bench, adding, “We thus do not find that the contention of the appellant that Fe content in Iron Ore Fines is to be determined on DMT and not WMT is sustainable.”

“Customs Authorities Cannot Override Contractual Terms For Transaction Value”: High Court Rejects CRCL Test Report As Basis For Duty

The Court firmly relied on the settled legal position, including the authoritative pronouncement in Union of India v. Gangadhar Narsingdas Agrawal, (1997) 10 SCC 305, to hold that iron content for duty determination must reflect the actual condition in which the goods were exported, which in this case was moist form—i.e., WMT basis.

The Bench rejected the Revenue’s argument that the test reports of CRCL (Central Revenues Control Laboratory), which were conducted belatedly on a dry sample, should override the contemporaneous load port test reports of a NABL-accredited private lab (Mitra S.K. Pvt. Ltd.), which were consistent with the terms of sale and pricing between the exporter and buyer.

The Court pointedly noted that: “The valuation of exported Iron Ore Fines has to be derived based on the terms of contract with the foreign buyer… Accordingly, we find that Load Port Test Report/Test Certificate in the present case would be the decisive factor for the determination of the iron content.”

Relying on Section 14 of the Customs Act, the Court reiterated that the “transaction value” must be based on the price actually paid or payable under the contract, and customs authorities cannot alter the basis of valuation in absence of any doubt about the declared value or test results.

The dispute arose from the final assessment of two shipping bills filed by M/s Essel Mining in March 2021 for export of iron ore fines through Gopalpur Port. The company relied on the SKM test reports at the load port, which showed Fe content below 58% on WMT basis, thereby attracting ‘Nil’ export duty under the then applicable Notification No. 27/2011-Cus.

However, the Assessing Officer discarded the SKM reports in favour of CRCL test reports, which were based on samples drawn at the time of export and later analysed on a DMT basis, resulting in a higher Fe content exceeding the 58% threshold. On that basis, duty of over Rs. 13.50 crore was demanded from the exporter.

This was successfully challenged before the Commissioner (Appeals), who ruled that since the export was prior to the amendment introduced by Finance Act, 2022 (w.e.f. 01.05.2022), WMT basis must prevail. The Commissioner also noted that the payment and invoices were based on SKM’s contemporaneous report, and not the CRCL report prepared weeks later.

The Revenue’s subsequent appeal before CESTAT was dismissed, prompting the present appeal before the High Court under Section 130 of the Customs Act.

The High Court thoroughly addressed the central legal issue — whether a substantial question of law arose from the Tribunal’s order in accepting the SKM test report and rejecting the CRCL analysis.

The Court held that: “The questions of law which are posed by the Revenue are basically based on the factual details… Hence, this Court desists from re-appreciating the evidence, which in its considered opinion is impermissible.”

It reaffirmed the consistent legal principle that for exports made prior to 01.05.2022, Fe content was required to be determined on WMT basis as per CBIC Circulars No. 04/2012-Cus dated 17.02.2012 and No. 12/2014-Cus dated 17.11.2014.

The Court also stressed that judicial discipline and precedent preclude re-litigation of issues already settled by a coordinate bench, as in Commissioner of Customs (Preventive) v. Chamong Tee Exports Pvt. Ltd., 2025 SCC OnLine Ori 2932 and Commissioner of Customs (Preventive) v. Kai International Pvt. Ltd., (2025) 29 Centax 178 (Ori).

“The comity of judicial discipline demands the uniformity in a proposition of law… We do not find any material forthcoming to take a different view.”

The High Court concluded that the Revenue’s attempt to challenge the Tribunal’s order was a repetition of factual disputes, without raising any debate-worthy or previously unsettled legal point. Accordingly, it found no basis to interfere under Section 130.

“It is, thus, manifest that an appeal shall lie to the High Court… if the Court is satisfied that ‘the case involves a substantial question of law’. That threshold is not crossed in this case,” the Bench concluded.

Date of Decision: January 15, 2026