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M/S Star Industries v. Commissioner of Customs (Imports), Raigad

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 6088 of 2013)Decided 7 Oct 2015
Civil Appeal No. 6088 of 2013
Justice A.K. Sikri · Justice Rohinton Fali Nariman

Background

Star Industries makes ferro-alloys and imports "Roasted Molybdenum Ore Concentrate" as a raw material. It paid no countervailing duty (an extra import duty) by claiming that a 2006 general exemption for "Ores" covered concentrate. Customs found that the goods were concentrate, not ore, and demanded the duty for earlier imports and the seized consignment, plus interest and penalties.

Decision Breakdown

The Supreme Court dismissed the company's appeal with costs. It relied on a 2011 amendment (Chapter Note 4) which treats converting ores into concentrates as "manufacture", so that concentrate becomes a different product from ore. An exemption notification is read strictly, and this one covered only "Ores", so concentrate was outside it. The Court held that an older Tribunal ruling treating ore and concentrate as the same product could not be relied on because it was decided before Note 4 existed. It also noted that domestic producers pay excise on concentrate, so imported concentrate should not escape the duty.

Lesson Learnt

An exemption applies only to the goods it actually names, and a product that is changed by processing can fall outside an older exemption. Importers must describe their goods accurately and check how the tax law classifies them before claiming an exemption.

Official source (sci.gov.in)View Judgment (PDF)

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