The issue of duty-free pellet exports has been raised again in a petition filed by Common Cause in the Supreme Court. In the petition, the NGO’s advocate Prashant Bhushan, seeks a complete ban on export of iron ore, whether in the form of pellets or otherwise. Or alternatively levy an export duty of 30% on all exports, excepting pellets exported by KIOCL, in public interest under Article 32 of the Constitution.
The charge against pellet producers is that they have been exporting essentially agglomerated iron ore in contravention of export provisions that only permitted exports to Central government company, KIOCL. An export duty of 30 per cent was applicable on iron ore of similar high ferrous content. Bhushan’s petition seeks an investigation on how this was allowed all these years.
The petitioner argues that iron ore is a vital raw materials for iron and steel industry. This was what the Indian Steel Association also claimed while lobbying for a ban on iron ore exports last year. Such a ban will benefit domestic steel players who in turn have been accused of unreasonable hike in prices by Union Minister of Road Transport, Highways and Shipping, Nitin Gadkari. While a ban maybe unlikely anytime soon, if imposed it would benefit captive miners who have bagged mines through auctions and whose premiums are linked to iron ore rates.
The controversy of pellets has been raging and waning over the last few years. It is also a subject of a petition filed by advocate-activist ML Sharma. The Federation of Indian Mining Industries had during a shortfall in iron ore production in 2020 claimed 9 mt of iron ore pellets had been exported by private players “illegally”.
Common Cause’s petition says mining companies have been taking undue advantage of the Notification. No. 92(RE2013), dated 26.09.2014 to freely and “illegally” export high-ferrous iron ore in pellets. Under Chapter 26 of Schedule 2 of the ITC (HS), 2018 in the FTP 2015-20 read with the Export Tariff 2018-19, “all iron ore of Fe content up to Fe 64%” is exportable by paying the export duty of 30%. Pellets being exported under ITC HS Code: 26011210, allows them to evade this 30% duty and also export iron ore superior to Fe 64%, which can only be done through State-owned MMTC Limited. A point to note that is that while Odisha continues to export iron ore, an export ban imposed by the SC in 2011 remains in force for miners in Karnataka.
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