Orissa High Court Rejects Customs Plea to Prefer CRCL Reports Over Private Lab Reports In Essel Mining Case

The Orissa High Court has rejected the customs department's argument that test reports issued by the Central Revenues Control Laboratory should be given primacy over load-port test reports issued by a NABL-accredited private laboratory and dismissed a revenue appeal against Essel Mining and Industries Ltd. in an iron ore export duty dispute.

A Division Bench of Chief Justice Harish Tandon and Justice Murahari Sri Raman declined to interfere with a December 4, 2024 order of the Customs, Excise, and Service Tax Appellate Tribunal at Kolkata, which had set aside a Rs 13.50 crore export duty demand raised against the company. The court held that the department's appeal did not raise any substantial question of law.

The case concerns iron ore fines exported by Essel Mining through Gopalpur port in March 2021. Before shipment, the company had the iron content tested at the load port by Mitra S.K. Pvt. Ltd., a NABL-accredited private laboratory. The testing was done on a wet metric ton basis, meaning the ore was assessed in the same moist condition in which it was exported.

Based on those results, iron content was below the threshold that attracted export duty. Invoices were raised on that basis and payment from the foreign buyer was received accordingly.

Customs authorities later relied on test reports from the CRCL, Kolkata, conducted after a time gap and on a dry metric tonne basis, to finalize the assessment and raise a duty demand of over Rs 13 crore.

Before the High Court, the revenue argued that CRCL reports, based on samples drawn in the presence of customs officers, ought to have been treated as decisive for duty purposes, and that acceptance of private laboratory reports arranged by the exporter raised a substantial legal issue.

Rejecting this contention, the bench noted that both the Commissioner (Appeals) and the tribunal had examined the contracts, invoices, bank realization certificates, and test reports and had reached the same conclusion on facts by applying the legal position prevailing in 2021. The court observed:

“The determination of customs duty liability in respect of the export of Iron Ore Fines, percentage of Fe content of which was calculated based on WMT as certified by SKM, does not call for determination of the question as “substantial” on the facts and in the circumstances of the case. The finding of the fact returned by the Appellate Authority is affirmed by the learned CESTAT, and such finding of fact is based on appreciation of evidence on record and adaptation of consistent approach of the learned CESTAT rendered earlier in different cases. Hence, this Court desists from re-appreciating the evidence, which in its considered opinion is impermissible.”

Holding that the appeal sought interference with concurrent findings of fact already recorded by the appellate authority and the tribunal, the High Court dismissed the revenue's appeal and allowed the relief granted to Essel Mining to stand.