India: Odisha Customs tightens check on iron ore fines exports

The Odisha Commissionerate of Customs (Preventive), Government of India, recently issued a circular against the fraudulent practices of iron ore or iron ore fines exports. Currently, exports of iron ore from any port under the Bhubaneswar Customs Commissionerate are assessed provisionally under the provisional duty bond (PD)/test bond with surety. Link for circular

Recently, the Commissionerate has found that some unethical exporters are misdeclaring iron ore fines (of grade Fe 58% or more) to get an exemption from the export duty of 30%.

Therefore, the current practice of provisional assessment of iron ore fines has been reviewed and decided with the following amendments:

• The shipping bills filed by traders for exports of iron ore/iron ore fines of Fe content less than 58% shall be assessed provisionally with PD/test bond along with a bank guarantee equivalent to 30% of FOB, which is equivalent to the differential duty. Further, an additional guarantee amount, as deemed fit, may be taken by the divisional AC/DC of the respective ports to safeguard revenue in case of enhancement of FOB value on account of higher Fe content ascertained than that is declared.
• Shipping bills filed by traders for exports of iron ore/iron ore fines of Fe content of 58% or more shall be assessed provisionally with PD/test bond along with bank guarantee as deemed fit. This may be taken by the divisional AC/DC of the respective ports to safeguard revenues in case of enhancement of FOB value on account of higher Fe content ascertained than that is declared.
• In case of manufacturer/producer exporters of iron ore/iron ore fines, the existing practice of provisional assessment with PD/Test Bond and surety shall be continued. However, in the case of manufacturer/producer exporters who have come to adverse notice in the recent past, the procedure prescribed for provisional assessment as at (i) & (ii) above shall be followed.
• It is also brought to the notice of the exporters that the bank guarantee submitted shall have unconditional self-renewal clause with mentions that the bank shall periodically renew the guarantee on its own till the case is decided by the Assistant Commissioner/Deputy Commissioner/Adjudicating Authority and duly discharged.

“It may not have a severe impact on Indian iron ore export volumes in the near term,” highlighted an Indian iron ore fines exporter. This rule was already applicable in the western coast of India, he added.

Indian iron ore export shipments increased to 3.91 mn t in Nov’20, up 8% m-o-m as compared to 3.61 mn t in Oct’20, according to vessel line-up data maintained with SteelMint. On a yearly basis too, exports increased sharply by 71% as compared to 2.29 mn t in Nov’19. The exports have increased on the expectation of firm steel production and Chinese iron ore restocking demand in winter. Also, increase in global iron ore fines prices favoured exports.