1979 (11) TMI 116 - HC - Customs

Customs exemption - General & special exemption - Distinction between - Excise duty - Classification

Issues Involved:

1. Validity of the Central Government's exemption of customs duty under Section 25 of the Customs Act, 1962.
2. Alleged discrimination under Article 14 of the Constitution.
3. Applicability of customs duty to imports by the State Trading Corporation (STC) versus private petitioners.
4. Impact of international prices and domestic policy on customs duty exemptions.

Issue-wise Detailed Analysis:

1. Validity of the Central Government's Exemption of Customs Duty under Section 25 of the Customs Act, 1962:

Under Section 25 of the Customs Act, 1962, the Central Government has the authority to exempt goods from customs duty either generally or under specific conditions. The government exercised this power to reduce the customs duty on certain vegetable oils imported by the State Trading Corporation (STC) to 5% ad valorem, while maintaining a 12.5% duty for other importers. The court clarified that Section 25(1) allows for general exemptions, while Section 25(2) permits specific exemptions under exceptional circumstances, which must be stated in the order. The court found that the conditions set forth in Section 25(2) were met, as the government aimed to control domestic prices of vanaspathi by reducing the duty on imported oils.

2. Alleged Discrimination under Article 14 of the Constitution:

The petitioners argued that the differential treatment in customs duty between STC and private importers violated Article 14 of the Constitution, which guarantees equality before the law. The court held that the burden of proving discrimination lies with the petitioners. The court found that the petitioners and the STC were not similarly situated. The STC's imports were made after the imposition of the ban on 2nd December 1978, at higher international prices, whereas the petitioners had entered into contracts before the ban, likely at lower prices. The court concluded that the differential treatment was justified and did not constitute discrimination under Article 14.

3. Applicability of Customs Duty to Imports by the State Trading Corporation (STC) versus Private Petitioners:

The court examined the applicability of customs duty to imports by STC and private petitioners. It was noted that the STC had a monopoly on the import of these commodities from 2nd December 1978 onwards. The court emphasized that the government had the discretion to grant exemptions under Section 25(2) based on public interest and exceptional circumstances. The court found that the government's decision to reduce the duty for STC was aimed at controlling domestic prices of vanaspathi, which was a valid exercise of its powers under the Customs Act.

4. Impact of International Prices and Domestic Policy on Customs Duty Exemptions:

The court considered the impact of international prices and domestic policy on customs duty exemptions. The government had reduced the duty on imported oils to ensure that vanaspathi prices remained reasonable in the domestic market. The court noted that the government had access to information about the prices at which STC purchased the oils, but not the prices paid by the petitioners. The court held that the government was justified in granting exemptions to STC to achieve its policy objective of maintaining reasonable vanaspathi prices, and that the petitioners had not provided sufficient information to demonstrate that they were similarly situated to STC.

Conclusion:

The court dismissed the petitions, holding that the differential treatment in customs duty between STC and private importers was justified and did not violate Article 14 of the Constitution. The petitioners were directed to pay the balance of the customs duty at 7.5% along with interest, as stipulated in the interim orders. The costs of the writ petitions were to be borne by the parties.

← Previous Next →