SC to decide if coke breeze imports qualify for duty exemption for steelmakers
NEW DELHI/MUMBAI: The Supreme Court on Wednesday took up a long-running tax dispute over a key steelmaking input, with steelmakers such as Jindal Steel (formerly Jindal Steel & Power Ltd) challenging the customs department on whether coke whiff qualifies for a tax exemption applicable to metallurgical coke.
A bench comprising Justices PS Narasimha and Alok Aradhe agreed to hear the case and resolve the underlying question; This decision will determine how such materials will be treated from a tax perspective and could have cost implications for steel producers.
The court said, “The objection was accepted, the hearing was accelerated.”
Conflict
The case arises from conflicting orders by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in 2025, leaving the tax treatment of coke breeze unclear.
Coke is a carbon-rich fuel made from coal and is essential for steel production. Metallurgical coke is the larger, stronger form used directly in blast furnaces to produce iron, acting as both fuel and reducing agent. Coke whiff consists of smaller particles created during processing. It cannot be used directly in furnaces, but is used in the sintering process to prepare iron ore; here it also serves as fuel and supports efficient steel production.
The dispute turns on classification. Metallurgical coke is completely exempt from customs duty under the Communiqué No. 12/2012-Cus; however, coke powder is not clearly specified and is generally subject to basic duty of around 5%, leading tax authorities to treat it as a separate taxable product.
In February 2025, CESTAT’s Bangalore bench ruled against companies like Mukand Ltd, Kalyani Steels Ltd, Kirloskar Ferrous Industries Ltd and SLR Metaliks Ltd, arguing that coke powder and metallurgical coke are different products and denying exemption. accepted the request for customs duty on ₹6.7 crore, we are of the view that this advantage is applicable only for metallurgical coke.
However, in November 2025, CESTAT’s Hyderabad bench reached the opposite conclusion in a case involving Jindal Steel & Power Ltd. It was stated that although coke powder is smaller in size, it is used in the steel production process and should benefit from exemption depending on its use. The board noted that coke breeze is used in sintering, a step in steel production, where it serves as both fuel and reducing agent, and said that since the law does not clearly define metallurgical coke, the exemption should depend on how the material is used.
Before the matter reached the Supreme Court, in January 2026 the government eased import rules for low-ash metallurgical coke, including coke dust, shifting these imports from limited to free under a notification on January 3, easing imports and reducing costs for steelmakers.
It also imposed a temporary anti-dumping duty ranging from $60.87 to $130.66 per ton on imports of low-ash metallurgical coke for six months to support local industry and protect local producers from cheaper imports.
Low-ash metallurgical coke is a key input in steel production, accounting for approximately 35 to 40% of production costs, making its pricing and availability critical to the industry.
