2013 (10) TMI 1053 - HC - Customs

Imposition of 50% duty on wheat by issuing notification u/s 8A of Customs Tariff Act, 1975 - Validity of Notification No.127/99-Customs - Import of wheat falling under Customs Tariff Sub-heading 1001.90 of Chapter X of the Customs Tariff Act, 1975 from Australia - Held that - It is not the case that the increased rate of duty is payable when only there is a Nil rate and not when there is Free rate of duty. We may note that under Section 25 of the Customs Act, the Government has the authority to grant exemption from duty only conditionally or in absolute terms and in which event, the power under Section 25 of the Customs Act will only go for exempting generally and in absolute terms, thus making import free of any liability under the Act or permit import, subject to such conditions as it may deem fit in the given circumstances - there could not be much of difference in an item being notified under the Customs Tariff Act as Nil or Free . As already pointed out, the Central Government has power under Section 8A of the Customs Tariff Act to increase the rate of duty in respect of goods falling under First Schedule. It matters very little whether the same is on Nil or Free rate of duty - Following decision of Associated Cement Companies Limited. Vs. Commissioner of Customs 2001 (1) TMI 248 - Supreme court of India - Decided against assessee.

Summary

Issues Involved:
1. Validity of Notification No.127/99-Customs dated 01.12.1999.
2. Interpretation of Section 8A of the Customs Tariff Act, 1975.
3. Interpretation of Section 12 of the Customs Act, 1962.
4. Classification and duty rate of imported wheat under Customs Tariff Sub-heading 1001.90.

Issue-wise Detailed Analysis:

1. Validity of Notification No.127/99-Customs dated 01.12.1999:
The petitioners challenged the validity of the Notification issued by the Government of India, Ministry of Finance, which imposed a 50% customs duty on imported wheat. The petitioners argued that this notification was ultra-vires Section 8A of the Customs Tariff Act, 1975, and Section 12 of the Customs Act, 1962. They contended that wheat was classified under Sub Heading 1001.90 for duty-free clearance, and the imposition of a new duty rate via notification was not permissible.

2. Interpretation of Section 8A of the Customs Tariff Act, 1975:
The respondents defended the notification, stating that it was issued under the emergency powers conferred by Section 8A of the Customs Tariff Act, which allows the Central Government to increase import duties in case of an emergency. They argued that the notification was approved by the Parliament, and the Lok Sabha passed a resolution on 21.12.1999, validating the notification. The court examined Section 8A, which permits the Central Government to amend the First Schedule of the Customs Tariff Act to increase import duties if immediate action is necessary. The court found that the conditions for issuing the notification under Section 8A were met, as wheat was included in the First Schedule, and the Central Government was satisfied that circumstances necessitated an increase in duty.

3. Interpretation of Section 12 of the Customs Act, 1962:
The petitioners argued that Section 12 of the Customs Act is the charging section, which states that customs duties shall be levied at rates specified under the Customs Tariff Act. They contended that since the Tariff Table indicated a "Free" rate for wheat, no duty was leviable, and thus, the notification imposing a 50% duty was without jurisdiction. The court, however, clarified that Section 12 mandates the levy of customs duties on imported goods, and the rate of duty is controlled by the Tariff Schedule. The court held that the term "Free" in the Tariff Schedule denotes a zero rate of duty, which can be varied by a notification under Section 8A.

4. Classification and Duty Rate of Imported Wheat:
The court noted that wheat was classified under Sub Heading 1001.90 and was initially importable free of duty. The respondents argued that the term "Free" in the Tariff Schedule is equivalent to a zero rate of duty, which was increased to 50% by the impugned notification. The court agreed with this interpretation, stating that the rate of duty mentioned as "Free" in the Tariff Schedule does not preclude the Central Government from issuing a notification to increase the duty rate under Section 8A. The court emphasized that the main test for issuing a notification under Section 8A is whether the article is included in the First Schedule, not the rate of duty.

Conclusion:
The court dismissed the writ petitions, upholding the validity of Notification No.127/99-Customs. It concluded that the Central Government acted within its powers under Section 8A of the Customs Tariff Act to increase the duty on imported wheat, and the term "Free" in the Tariff Schedule does not bar such an increase. The court also referenced a similar decision by the Kerala High Court, which was affirmed by the Supreme Court, reinforcing the validity of the notification. Consequently, the writ petitions were dismissed, and the connected miscellaneous petitions were closed.