MINERAL ENTERPRISES LTD. Vs. COMMISSIONER OF CUSTOMS, MANGALORE

JUDGEMENT

(1.) THIS appeal is directed against the Order -in -Original No. 06/2006 dated 24 -11 -2006.

(2.) THE relevant facts that arise for consideration are as under : As per the Export -Import Policy 2002 -2007, ITC (HS) Classification of Export & Import Vol. 3 Schedule II, Table B, Sl. No. 2601, export of Iron Ore Fines having Fe content up to 64% is permitted to be exported freely, whereas Export of Iron Ore Fines having Fe content above 64% is permitted only through MMTC Limited or under a license issued by DGFT in this regard. As the Exporters had declared that the Fe content of the goods covered under the shipping bill was 62% (i.e. less than 64%) representative sample of the consignment was drawn in the presence of the representative of CHA and export was allowed provisionally on accepting the Bond No. 48/04.03.2005 for an amount of Rs. 8,57,00,000/ -pending testing the actual Fe content. The sample was then sent for chemical analysis to the Chemical Examiner, Customs House, Cochin under Test Memo No. 61/18 -3 -2005. The Chemical Examiner, Central Revenue Laboratory, Customs House, Cochin, after analysis of the sample covered under Test Memo 61/18 -3 -2005 reported Vide F. No. S -10/11/2005 -06 Lab. Cus. L -29 (Mg) dated 8 -6 -2005 reported that the Fe content of the samples was 64.6%. As the Exporters had declared the Fe content of the iron ore exported as 62%, an explanation was called for vide letter C. No. S. 02/14/2004 Exports dated 1 -8 -2005 from the Exporter. The exporter in their letter No. MEL:CUS:08:05 dated 26 -8 -2005 denied the allegation made in the letter that they exported iron ore with Fe content of 64.6% and stated that they are under presumption that the sampling had not been conducted in accordance with IS 1405 : 1982 specification, which is the basis for sampling of minerals and hence the result obtained was misleading; that M/s. Mitra S.K. who are one of the accredited agencies by National Accredition Board for Testing and Calibration Laboratories (NABL) to conduct Testing and analysis of various materials including Ores and Minerals, have drawn sample in accordance with IS 1405 : 1982 and analysis had been done in accordance with the procedure laid down for the purpose and the result shown that the Fe content as 62.03%; that the consignment was also verified and counter checked by Chinese Government agency (CIQ) on the lines of internationally accepted procedures, that the test results of CIQ at the discharge port shown that the iron ore exported was 62.37% of Fe content; that they have realized the proceeds based on the quantity and quality certified by CIQ; that they have submitted the copies of Provisional Invoice dated 15 -3 -2005 and Final Commercial Invoice dated 3 -5 -05, Copies of Export Bills of payment dated 28 -3 -05 and 3 -5 -05 of Standard Chartered Bank, Copy of Certificate of analysis of M/s. Mitra S.K. Private Ltd. Hospet and copy of Inspection Certificate of Quality issued by CIQ. Since the Fe content of the Iron Ore exported vide Shipping Bill No. 1011800 dated 28 -6 -2004 was more than 64% as per the test report from the Chemical Examiner, Customs House, Cochin, and as the subject consignments was exported directly by the exporters without any licence, the export made under the said Shipping Bill appeared to be in contravention of the provisions of Export -Import Policy 2002 -2007 as detailed at para 2 above. Accordingly, the goods appeared to be liable for confiscation under Section 113(d) and 113(i) of Customs Act, 1962 read with Section 3(3) of the Foreign Trade (Development and Regulation) Act, 1962 and the Exporter appeared to be liable for penalty under Section 114(i) of the Customs Act, 1962.

(3.) ACCORDINGLY , show cause notice dated 27 -10 -2005 was issued to the appellant asking them to show cause as to why :