Customs dept imposes Rs 33 cr fine on Tata Sponge Iron

The Customs department has imposed a total fine of Rs 33 crore on Tata Sponge Iron over its classification of coal imports.
Tata Sponge Iron, a subsidiary of Tata Steel, said it has been meeting its coal requirement through imports.
"Coal so imported was classified as steam coal by the company and duties are paid accordingly. According to the Customs department, this coal merited classification as bituminous coal," it said in a regulatory filing.
"In the financial year 2013, the tariff of bituminous coal was higher than steam coal. Hence, the company paid the differential duty with interest 'under protest'."

The filing further said: "The Commissioner of Customs (Preventive) in adjudication of the company's 'payment under protest' has upheld the Customs department's classification and demanded fine amounting to Rs 23.25 crore and a further penalty of Rs 9.86 crore."
The Tata Sponge Iron management is taking steps to challenge this "unjustified" demand, as per options available to it.

Tata Sponge is a coal-based merchant sponge iron producer and operates three rotary kilns with an installed capacity of 3,90,000 tonnes per annum (tpa) to produce sponge iron.
According to its annual report, the firm used coal worth of about Rs 229 crore in 2014-15 as against around Rs 263 crore in 2013-14. Iron ore and coal alone constitute more than 80 per cent of the cost of production.

During 2014-15, the firm sourced almost all of its iron ore requirement from Tata Steel. It sourced half of its coal requirement from auctions of Coal India while the other half was imported.