Imposing, removing export duty on commodities policy decision of govt: Centre to Supreme Court

The counsel for the Centre said that the filing got delayed. In compliance of order…, a counter affidavit has been filed by the Union of India today in the Court, which is taken on record. The Union of India is directed to provide a copy of the counter affidavit to M L Sharma and Prashant Bhushan,… Rejoinder affidavit, if any, be filed, in the meantime, the bench said in the order.

Sharma, in his PIL, has sought a direction to the CBI to register an FIR and probe the alleged duty evasion by private firms in exporting iron ore to China since 2015. NGO Common Cause, in the separate PIL, has alleged export of iron ore in pellet form by some firms by evading duty and it has sought a direction to either ban the export or levy a 30 per cent duty on exports of iron ore in all forms including pellets.

It has also said the exports of iron ore pellets, manufactured by government-approved Kudremukh Iron Ore Company Limited (KIOCL), may be exempted from the levy of 30 per cent export duty. In a 90-page affidavit, filed by Suhrut Kumar Mohapaatra, the Deputy Director-General of Foreign Trade in the Ministry of Commerce, has sought dismissal of the PIL saying that the government is empowered to take policy decisions on imposing or removing the export duty.

Iron ore pellets have been subject to export duty from time to time, Imposing export duty or removing it on any class of commodities is a policy decision. The periods in which export duty was applicable to the export of iron ore pellets bearing…The imposition of export duty on any commodity or class of commodities is a public decision and such decisions have been taken by the government of India from time to time, the Centre said. As of now, the reply has been filed by the Centre in response to the PIL filed by M L Sharma.

The present petition is a case of gross abuse of process of law and the petitioner has been known in the past to have filed similar kinds of petitions which are publicity driven and completely motivated in nature …the answering respondents (Centre) beseeches this court to handle these kinds of publicity savvy petitions with an iron hand. The allegations of evasion of the monumental magnitude are completely unfounded in the present petition, The commerce ministry said that the decision to exempt a particular type of iron pellet is product-specific and not company-specific as projected in the petition.

One of the pleas has alleged that a particular kind of iron pellet, on which no export duty was leviable, can be manufactured and exported by government-approved Kudremukh Iron Ore Company Limited (KIOCL) only. It is submitted that 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, it said and referred to the statement of object and reasons of the Foreign Trade (Development and Regulation) Act, 1992.

It is amply evident that iron ore lumps/fines are mined commodities and are in the nature of by-products, which are distinct from iron pellets, a manufactured product, both falling under separate classes and not just being different products…Owing to this misconception of the petitioner, he has been trying to mislead this Court by saying that export of iron are fines above 64-72 per cent Fe (iron) is being done in the disguise of pellets, it said. The government said that the prayers in the petition are completely unfounded and done with a sheer intent to mislead this court and sought its dismissal with exemplary costs.

Sharma, in his PIL, had alleged that companies be prosecuted for alleged evasion of export duty by declaring wrong tariff code to export the iron ore under the Foreign Trade (Development and Regulation) Act, 1992. The plea alleged that the iron ore smuggling to China has been taking place as some companies have been exporting them without paying 30 per cent export duty.

The PIL said the ministries of commerce and finance control and regulate the export policies and decide as to under which Harmonized System (HS) Codes each good will be exported. It said the government had set up a firm with the name of KIOCL to use low-grade iron ore and export them under the duty-free Tariff HS code 26011210 which is exclusively prescribed for KIOCL.

The PIL said under Foreign Trade (Development and Regulation) Act, 1992, tariff HS CODE NO. 26011100 was prescribed to export 'all other kinds of iron ore' subject to payment of export duty at the rate of 30 per cent.