Supreme Court to Decide on Duty Exemption for Coke Breeze Imports Used in Steel Production

Tax Dispute Over Steelmaking Input Reaches Supreme Court

The Supreme Court of India has taken up a long-running tax dispute over the classification of coke breeze, a key steelmaking input, with steelmakers such as Jindal Steel challenging the customs department on whether it qualifies for a duty exemption available to metallurgical coke.

The dispute stems from conflicting rulings by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in 2025, leaving the tax treatment of coke breeze unsettled. Coke is a carbon-rich fuel made from coal and is essential for steel production. Metallurgical coke is the larger, strong form used directly in blast furnaces to produce iron, acting as both fuel and a reducing agent. Coke breeze consists of smaller particles formed during processing and is used in the sintering process to prepare iron ore.

The classification of coke breeze as a taxable product or an exempt one under Notification No. 12/2012-Cus is at the heart of the dispute. While metallurgical coke is fully exempt from customs duty, coke breeze typically attracts a basic customs duty of around 5%. In February 2025, the Bangalore bench of CESTAT ruled against companies including Mukand Ltd, Kalyani Steels Ltd, Kirloskar Ferrous Industries Ltd, and SLR Metaliks Ltd, holding that coke breeze and metallurgical coke are distinct products and denying the exemption.

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However, in November 2025, the Hyderabad bench of CESTAT, in a case involving Jindal Steel & Power Ltd, reached the opposite conclusion. It held that coke breeze, though smaller in size, is used in the steelmaking process and should qualify for the exemption based on its use. The bench noted that coke breeze is used in sintering, a step in steelmaking, where it acts as both a fuel and a reducing agent.

Before the matter reached the Supreme Court, the government in January 2026 eased import rules for low-ash metallurgical coke, including coke breeze, shifting these imports from restricted to free under a 3 January notification, allowing easier imports and lowering costs for steelmakers. At the same time, it imposed a provisional anti-dumping duty ranging from $60.87 to $130.66 per tonne on low-ash metallurgical coke imports for six months to support the domestic industry and protect local producers from cheaper imports.

Low-ash metallurgical coke is a key input in steelmaking and accounts for about 35 to 40% of production costs, making its pricing and availability critical for the industry. The Supreme Court's ruling on the classification of coke breeze will determine how such materials are treated for tax purposes and could have significant cost implications for steelmakers.

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