Indonesian Coal Tested on As‑Received Basis Is Steam Coal, Exemption Allowed: CESTAT Mumbai

The Customs, Excise and Service Tax Appellate Tribunal, Mumbai set aside duty demands on JSW group imports, holding the coal to be steam coal eligible for nil basic customs duty.

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai has held that coal imported by JSW group companies was “steam coal” under tariff item 2701 1920 and eligible for nil basic customs duty (BCD), rejecting its reclassification as bituminous coal under tariff item 2701 1200 [JSW Steel Coated Products Limited v. Commissioner of Customs (Export), Mumbai & Ors., 2026-juristway.com-3390-CESTAT(Mumbai)-Customs].

The Bench of S.K. Mohanty, Member (Judicial), and M.M. Parthiban, Member (Technical), decided four appeals against orders of the Commissioners of Customs at Mumbai and Goa. The imports, under eight bills of entry between April 2012 and January 2013, were of Indonesian coal, and the appellants claimed nil BCD under Serial No. 123 of Notification No. 12/2012‑Customs dated 17 Mar 2012.

Sub‑heading Note 2 to Chapter 27 defines bituminous coal by two limits: volatile matter above 14% on a dry, mineral‑matter‑free basis, and calorific value of at least 5833 kcal/kg on a moist, mineral‑matter‑free basis. The Department computed these values from load‑port reports using the Parr formula.

The Tribunal held that the Department had applied the formula to values on an air‑dried basis instead of an as‑received basis. Using as‑received values, the coal in seven bills of entry did not meet the bituminous coal parameters. For two consignments, departmental laboratory reports at the discharge port certified that the coal had the characteristics of steam coal, yet the show cause notice relied only on load‑port values.

The Tribunal also noted that adverse results were never communicated before clearance and no retesting was offered, contrary to Circular No. 30/2017‑Customs on retesting as a trade facilitation measure. Liability could not be fastened later on calculations that did not follow the laid‑down formula. It rejected the Revenue’s reliance on the supply contracts, whose guaranteed specifications were commercial terms.

Holding that the goods in all eight bills of entry fell under tariff item 2701 1920, which is specifically covered by the exemption entry, the Tribunal found no ground to deny the concession. The demands could not survive, and the orders were set aside and the appeals allowed.

2026-juristway.com-3390-CESTAT(Mumbai)-Customs