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No evasion of duty on iron ore pellets: Centre to Supreme Court
Submitting its affidavit before a bench headed by Chief Justice of India NV Ramana, the Union ministry of commerce and industry emphasised that export of iron ore subheading minerals, value-added products, including iron ore pellets and derivatives, are neither prohibited nor restricted under the foreign trade policy.
Export of iron ore pellets are legal and export duty cannot be evaded by private firms when the levy has been fixed at zero, the Union government has submitted in the Supreme Court while seeking dismissal of two public interest litigations (PILs) that have alleged a scam in the overseas trade.
Submitting its affidavit before a bench headed by Chief Justice of India NV Ramana, the Union ministry of commerce and industry emphasised that export of iron ore subheading minerals, value-added products, including iron ore pellets and derivatives, are neither prohibited nor restricted under the foreign trade policy.
“Further, the export of iron ore pellets is not required to be canalized through state trading enterprises (STEs) under the prevailing rules. Therefore, the position is clear that iron ore pellets are not listed in either of the three regulated entities (prohibited, restricted or through STEs), which also clearly shows that as per foreign trade policy, trade-in iron ore pellets are free,” said the affidavit.
It pointed out that iron ore pellets have been subject to export duty from time to time and there was a duty of 5% on its export between January 2014 and January 2016. “Imposing export duty or removing it on any class of commodity is a policy decision and such decisions have been taken by the Government of India from time to time. The rate of the export or import duty on a product or commodity is based on various factors which are taken into account keeping in mind the avowed objective of boosting international trade and commerce, particularly exports which are essential for earning foreign exchange” stated the government.
The affidavit called the charge of evasion of duty “misleading”, saying that there was no export duty on iron ore pellets between 2011 and January 2014 when a decision was taken to impose a levy of 5%.
“Similarly, after January 2016 there is no export duty on iron ore pellets. The imposition of export duty on any commodity or class of commodities is a public policy decision and such decisions have been taken by the Government of India from time to time,” it added.
Advocate petitioner ML Sharma and NGO Common Cause have filed separate PILs in the top court, alleging duty evasion by several private firms in exporting iron ore in the form of pellets. The petitions have contended that a 30% export duty has been levied to discourage the export of iron ore, but companies are exporting iron ore in the form of pellets to avoid the duty.
Further, the pleas claimed that the companies used the wrong Harmonized System (HS) code to evade the lawful levy of 30%, and alleged that the governmental authorities acted in cahoots, leading to a severe loss of public money. Sharma’s petition has demanded an investigation by the Central Bureau of Investigation (CBI) into such exports while making 61 iron exporting firms, including Essar Steel and Jindal Steel & Power, as parties to his plea.
On Thursday, both the petitions came up for hearing but had to be adjourned to November 26 since the government’s affidavit was not received by the petitioners.
The affidavit, reviewed by HT, has also drawn a the distinction between iron ore lumps and fines, and iron ore pellets, saying they were allotted different HS codes because the former was a by-product while the latter was a manufactured product.
According to the government, the petitioners have tried to mislead the top court by mixing up the two in making accusations of evasion duty in exports. “The petitioner is intentionally misleading the honourable court by saying that export of iron ore fines public lumps about 64%-72% Fe (iron) is being done in the guise of pellets,” added the affidavit.
