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2005 (12) TMI 300 - AT - CustomsNature of duty - Additional duty of Customs - Imported rubber - Cess on rubber - Whether Additional Duty of Customs was leviable u/s 3 of the Customs Tariff Act, 1975 on the imported rubber, as on the date of importation, to the extent equal to the duty of excise levied as cess u/s 12 of the Rubber Act, 1947 on rubber produced/manufactured in India as on the said date? - HELD THAT - Since Section 3 of the Customs Tariff Act, 1975 corresponds to Section 2A of the Indian Tariff Act, 1934 and both referred to the excise duty leviable on the like article made indigenously, there is no scope for imposing any narrow construction on the provisions of Section 3(1) by confining the excise duty for the time being leviable on a like article if produced or manufactured in India only to such excise duty leviable under the Central Excises Salt Act, 1944 and not to the excise duty leviable on a like article if produced or manufactured in India under the other laws imposing such excise duty. Even in of the said judgment, the Supreme Court observed that when articles which are not produced or manufactured, cannot be subjected to levy of excise duty, then on the import of like article no additional duty can be levied under the Customs Tariff Act. The levy of additional duty being with a view to provide for counter balancing the excise duty leviable, we are clearly of the opinion that additional duty can be levied only if on a like article excise could be levied . There is nothing in the said decision to suggest that additional customs duty was not leviable u/s 3(1) of the Customs Tariff Act even if excise duty was levied on a like article under the other laws. Nor is the decision of the Supreme Court in Motiram Tolaram 1999 (8) TMI 68 - SUPREME COURT suggestive of such an interpretation. Even in that case, the Supreme Court was not concerned with imposition of excise duty under the laws other than the Central Excise Act. It is, therefore, not correct to say that it is a settled law that excise duty referred to u/s 3 of the Customs Tariff Act refers to only the duty payable under the provisions of the Central Excise Act, 1944 and not the excise duty payable under the other laws. The contentions canvassed on behalf of the appellants on the basis of these two decisions of the Supreme Court are based on picking certain observations out of the context in which the observations were made, and, in both these cases, it is evident that no issue regarding excise duty leviable under other laws vis-a-vis Section 3 of the Customs Tariff Act was at all involved. Admittedly, there are number of Central Acts providing for levy of cess as a duty of excise or simply of duty of excise, leviable on various items and the interpretation sought to be suggested on behalf of the appellants would bring about unintended consequences that would fly in the face of the provisions of Section 3(1) of the Customs Tariff Act, which was enacted for affording a level playing field to indigenous producers and manufacturers by imposing the countervailing duty on the imports of like articles. Thus, having regard to the rationale underlying the provisions of Section 3(1) of the Customs Tariff Act, which is of providing a level playing field to the Indian producers and manufacturers, and having regard to the nature of the duty of excise, we find no valid reason for confining the operation of Section 3(1) of the Customs Tariff Act only to excise duties leviable under the Central Excise Act, 1944, and ignoring excise duties leviable under the other laws. Any such construction would undermine the operational effect intended to be brought about by Section 3(1) of the Customs Tariff Act and would be wholly unwarranted by the provisions of the Act. As is evident from sub-section (7) of Section 12 the proceeds of the duty of excise collected u/s 12 reduced by the cost of collection as determined by the Central Government, are required first to be credited to the Consolidated Fund of India. Therefore, a subsequent allocation by the Central Government to the Rubber Board of such amount for being utilized for the purposes of the Act, if Parliament by appropriation made law in that behalf so provides, can never take away the characteristics of the duty of excise and it remains like any other duty of excise under any law for the time being in force including the one leviable under the Central Excise Act. In any event, such subsequent allocation of an amount by appropriation made by law by Parliament will not take away the duty of excise leviable as cess under the Rubber Act from the sweep of the provisions of Section 3(1) of the Customs Tariff Act for the purpose of imposing additional duty of customs equal to the excise duty leviable u/s 12 of the Rubber Act. It will be evident from the communications of the Ministry of Finance/Central Board of Excise Customs that there was no question of the department having accepted the stand of the assessees that the additional duty of Customs was not leviable u/s 3(1) of the Customs Tariff Act in respect of the imported rubber on the ground that duty of excise levied as cess u/s 12 of the Rubber Act, 1947, was to be imposed on rubber produced in India and not on imported rubber. There could arise no question of levying such cess under the Rubber Act on any imported product, because under the Rubber Act it was intended to the levied on rubber produced in India. The question of levy of additional duty of Customs on imported rubber u/s 3(1) of the Customs Tariff Act stood totally on a different footing, and in fact that levy was attracted precisely because, duty of excise was levied as cess on rubber produced in India under the Rubber Act. Therefore, the contentions raised on behalf of the appellants are both misconceived and misleading. Thus, we answer the question referred to us as under - Additional duty of Customs was leviable under Section 3 of the Customs Tariff Act, 1975 on the imported rubber, as on the date of importation, to the extent equal to the duty of excise levied as cess u/s 12 of the Rubber Act, 1947 on rubber produced/manufactured in India as on the said date.
Issues Involved
1. Whether Additional Duty of Customs was leviable under Section 3 of the Customs Tariff Act, 1975 on imported rubber, equivalent to the duty of excise levied as cess under Section 12 of the Rubber Act, 1947 on rubber produced/manufactured in India. Detailed Analysis Reference to Larger Bench The Division Bench referred the question to the Larger Bench due to conflicting interpretations. The appellants had challenged this reference, but the Supreme Court allowed the matter to proceed before the Larger Bench. Appellants' Principal Objection The appellants argued that the Revenue could not raise a contrary contention after having accepted the legal position in previous cases by not challenging earlier decisions. They contended that the Revenue's acceptance of earlier Tribunal decisions should preclude it from arguing otherwise in this case. Tribunal's Consideration The Division Bench noted that the dismissal of the Revenue's appeal by the Supreme Court on the ground that it was not pressed did not constitute a binding legal precedent. The Tribunal retained jurisdiction to decide the issue referred to the Larger Bench. Refund Claims The appellants sought refunds of additional duty of Customs on natural rubber, arguing that cess could only be collected by the Rubber Board and not as an excise duty under the Central Excise Act, 1944. They relied on a clarification by the Rubber Board that cess was applicable only to domestically produced rubber. Revenue's Position The Assistant Commissioner and the Commissioner (Appeals) upheld the levy of additional duty, arguing that Section 3(1) of the Customs Tariff Act authorized the collection of an amount equal to the excise duty levied as cess on indigenously produced rubber. The Ministry of Finance had issued clarifications supporting this interpretation. Appellants' Arguments The appellants contended that cess, being earmarked for specific purposes, differed from excise duty and that Section 3 of the Customs Tariff Act referred only to excise duty under the Central Excise Act, 1944. They cited various judicial decisions to support their argument that the additional duty of Customs should not include cess levied under the Rubber Act. Revenue's Arguments The Revenue argued that the additional duty of Customs under Section 3(1) of the Customs Tariff Act was intended to counterbalance any excise duty, including cess, levied on like articles produced in India. They cited judicial precedents and clarifications from the Ministry of Finance to support their position. Tribunal's Analysis The Tribunal examined the provisions of Section 3(1) of the Customs Tariff Act and Section 12 of the Rubber Act. It concluded that the term "excise duty" in Section 3(1) was not limited to the Central Excise Act but included any excise duty levied under other laws. The Tribunal emphasized that the purpose of Section 3(1) was to provide a level playing field for domestic manufacturers by imposing a countervailing duty on imports. Misinterpretation in MRF Ltd. Case The Tribunal found that the decision in MRF Ltd. was based on a misinterpretation of government communications, which only clarified that cess under the Rubber Act was not levied on imported rubber. These communications did not address the additional duty of Customs under Section 3(1) of the Customs Tariff Act. Final Order The Tribunal concluded that additional duty of Customs was indeed leviable under Section 3 of the Customs Tariff Act on imported rubber, equal to the excise duty levied as cess under Section 12 of the Rubber Act on domestically produced rubber. The contrary decision in MRF Ltd. and subsequent cases was overruled. The appeals were directed to be placed before the Regular Bench for disposal in accordance with this judgment.
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