1998 (3) TMI 625 - AT - Customs

Summary

Issues:
1. Interpretation of the expression "rate applicable to" in relation to customs duty.
2. Applicability of concessional rate under Notification No. 59/87.
3. Relevance of exemption notifications under Section 25 of the Customs Tariff Act in determining the rate of duty.

Analysis:
The case involved a dispute regarding the classification and duty applicable to imported leather clicking knives. The appellants imported the knives and cleared them under Chapter sub-heading 8208.90, claiming a concessional rate under Notification No. 59/87. The Department contended that the items were chargeable at the standard rate, leading to a demand for a higher duty amount. The Assistant Collector upheld this decision, relying on a Collector's Conference decision. The matter was appealed before the Collector (Appeals), who interpreted the expression "rate applicable to" to mean the statutory rate specified in the Customs Tariff Act, not considering exemption notifications under Section 25.

The appellants argued that a judgment of the Bombay High Court, relied upon by the Collector (Appeals), had been overturned by a larger bench of the same High Court in a subsequent case. The larger bench held that the rate of duty applicable should consider exemption notifications, and the assessee was entitled to the benefit of the notification. The Department reiterated the lower authorities' findings that the statutory rate for the machine in which the knives were designed to be used should apply.

Upon considering the submissions, the Tribunal found that the duty applicable to the knives should consider the concessional rate applicable to the machines they were designed for, as per Notification 59/87. The Tribunal disagreed with the interpretation of the expression "rate applicable to" as solely the standard rate specified in the Customs Tariff Act. Therefore, the recovery of the higher duty amount was deemed unsustainable. Consequently, the appeal was allowed, and the impugned order demanding the higher duty amount was set aside.