NEW DELHI :

Allegations of evading duty on the export of iron ore pellets do not stand scrutiny considering that the value-added product attracts zero duty, the government told the Supreme Court in response to a batch of petitions on Thursday.

While export of all grades of iron ore, including lumps and fines, attracts 30% duty, the export of iron ore pellets made from iron fines is not taxed, according to existing government policies.

In its submission before a bench headed by Chief Justice of India N.V. Ramana, the Centre also urged the apex court to dismiss the two public interest litigations (PILs), alleging a scam in overseas trade of iron ore, as the petitioners were “intentionally misleading the court”.

According to the Centre, while no export duty was levied between 2011 and January 2014 on iron ore pellets, the government had subsequently imposed 5% duty on it. “(However), after January 2016 there is no export duty on iron ore pellets. Imposition of export duty on a commodity or class of commodities is a public policy decision and such decisions are taken by the government from time to time.”

“Furthermore, the export of iron ore pellets is not required to be canalized through state trading enterprises under the prevailing rules. Therefore, the position is clear that iron ore pellet is not listed in either of the three regulated entities (prohibited, restricted or STE), which clearly shows that as per foreign trade policy, trade in iron ore pellets is free,” it said in the affidavit.

“Export or import duty rates on a product or commodity is based on various factors which are taken into account keeping in mind the avowed objective of boosting international trade and commerce, particularly exports which are essential for earning foreign exchange.”

The Centre was responding to two separate PILs filed by advocate M.L. Sharma and NGO Common Cause before the top court, alleging duty evasion by private companies by exporting iron ore in the form of pellets.

The petitioners alleged that iron ore exporting firms, including Essar Steel and Jindal Steel & Power Ltd, were evading duty by exporting pellets instead of fines or lumps as they attracted 30% duty.

The petitioners claimed that companies were using wrong harmonized system (HS) code to evade duty and government authorities were in cahoots, leading to severe losses to the public exchequer.

Sharma also demanded an investigation by the Central Bureau of Investigation into the exports scam involving 61 iron exporting companies.

According to the government, the petitioners were trying to allege a scam by mixing up two separate policy decisions . “The petitioner is intentionally misleading the honourable court by saying that export of iron ore fines public lumps 64%-72% Fe (iron) is being done in the guise of pellets,” it added. The hearing was adjourned till 26 November as the petitioners had not received a copy of the government’s affidavit on time.

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