In an eminently interesting development this past week, India’s legal establishment seemed to be rattled by the highly controversial topic of duty-free iron ore pellet exports from India, SteelMint gleaned from reports.
The Supreme Court heard two separate public interest litigations (PIL) on the imminent need of clamping down on iron ore pellet exports – basically disguised iron ore exports of material above Fe 58% in pellet form.
Two PILs
The apex court asked the Indian government to file a counter affidavit within four weeks in response to the PIL filed by advocate Prashant Bhushan representing an NGO that alleged excessive mining and consequent environmental degradation that is being withstood to sustain high pellet exports from India – mainly to China.
“To discourage iron ore exports, imposition of 30% export duty has been provided; however, the ore has been exported in pellet form without paying the duty,” Bhushan had alleged in the court.
SteelMint had reported earlier that the apex court had directed the Centre to file a response to a separate PIL, filed in personal capacity by advocate M.L. Sharma, arguing that certain companies be prosecuted for alleged evasion of export duty by declaring wrong tariff code to ship out iron ore and pellets under the Foreign Trade (Development and Regulation) Act, 1992.
Sharma’s PIL has informed the bench that iron ore “smuggling to China” was taking place, as private companies have been exporting without paying the 30% export duty.
The PIL had alleged that the government had set up KIOCL to use low-grade iron ore for pelletisation and exports under the “duty free Tariff HS code 26011210, which is exclusively prescribed for KIOCL”.
The PIL observed that “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%. The firms were wrongly allowed to export iron ore/pellets using the tariff code being used by KIOCL”.
Sharma’s PIL stated that the ministries of commerce and finance, the customs department and 61 companies had been “hand-in-glove in exporting millions of tonnes of iron ore and pellets to China” in violation of various laws by using Tariff HS Code 26011210 instead of 26011100 and evading 30% export duty. The PIL sought a penalty of over 7 lakh crore to be slapped on the defaulters.
Ball in government’ court
Both PILs alleged that private firms had evaded export duty and sought the SC’s direction to the Centre to levy export duty of 30% on export of iron ore in all forms including pellets.
In conversation with SteelMint, advocate Sharma informed that the apex court has accorded a hearing on the matter on 29 Sep’21. However, without the Centre filing a response to his PIL, the case could drag on. The central government’s response could come as late as mid-Oct, Sharma surmised.
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