With the Supreme Court dismissing Essar Steel?s petition on Thursday, the company will have to pay around Rs 5.74 crore as excise duty on steel products allegedly exported in July 2008.
A bench headed by Justice SH Kapadia refused to stay the Gujarat High Court?s judgment that dismissed its petition seeking to restrain the excise department from recovering the excise duty of around Rs 5.74 crore in respect of 10,867.359 MT of different grades of steel products including galvanised coils and hot-rolled plates removed from its factory without payment of duty under export bond. Essar Steel, in its petition before the apex court, stated that it cannot be regarded as a defaulter for not being able to furnish proof of export of goods for which overseas payment was received in foreign currency. The department raised a duty demand of around Rs 7 crore with interest on the basis that goods had not, in fact, been exported as the assessee could not produce proof of export. ?This ground was misconceived because the foreign buyer had, in fact, taken delivery of the subject cargo at Mumbai port, paid the entire consideration in foreign exchange to the petitioner and in whom the title of the subject goods has passed,? the petition stated.
It further said the steep fall in prices due to global financial crisis resulted in the cancellation o the resale orders of the buyer which led to the goods not being exported and thus, Essar could not produce proof of export. Moreover, on account of delay in nomination of the vessel detention and demurrage charges were levied by Mumbai Port on the buyer. According to Essar, it was not possible to submit proof as exports had become impossible due to events which cannot be attributed to it at all and thus, it must be deemed to be relieved from such obligation.
The buyer had found it unviable to physically export the goods and appears to have abandoned them with the result that it had become impossible for Essar to furnish proof of export, the petition said, adding that the assessee had encashed the letter of credit and as such, the title in the goods had passed on to the buyer. The assessee had entered into agreements for sale of 10,867.359 MT of different grades of steel products with Liberty Commodities. The export sale value of the quantity was about Rs 48.54 crore. The company had paid duty of more Rs 1.56 crore including interest on 2004.07 meteric tonne in February 2010 when one of its units had sought an exit from the Essar SEZ.