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1983 (10) TMI 55 - HC - CustomsExemption from Customs duty does not include exemption from additional duty or auxiliary duty
Issues Involved:
1. Interpretation of a Customs Notification issued under Section 25 of the Customs Act. 2. Liability of the petitioners to pay additional customs duty (countervailing duty). 3. Scope of exemption provided under the Customs Notification. 4. Applicability of Section 3 of the Customs Tariff Act, 1975. 5. Legal precedents supporting the interpretation of the notification. Detailed Analysis: 1. Interpretation of a Customs Notification issued under Section 25 of the Customs Act: The dispute revolves around the interpretation of a Customs Notification issued under Section 25 of the Customs Act, 1962, which exempts viscose staple fibre and viscose tow from so much of the duty of customs leviable thereon under the First Schedule of the Customs Tariff Act, 1975, as is in excess of 10% ad valorem. The petitioners argue that this exemption limits their liability to pay any customs duty in excess of the specified percentage. 2. Liability of the petitioners to pay additional customs duty (countervailing duty): The petitioners have imported viscose staple fibre or polynosic staple fibre, attracting customs duty as per Chapter 56 of the Customs Tariff Act, 1975, and additional duty under Section 3 of the same Act. The petitioners contend that the exemption should cover the entire customs duty, including the additional duty (countervailing duty). However, the court held that the exemption notification pertains only to the duty under the First Schedule and not the additional duty under Section 3 of the Act. 3. Scope of exemption provided under the Customs Notification: The court emphasized that the exemption notification clearly states "so much of the duty of customs leviable thereon under the said First Schedule," indicating that the exemption applies only to the duty specified in the First Schedule of the Customs Tariff Act. The petitioners are liable to pay the additional levy under Section 3 and any further levy under the Finance Act, as these are not covered by the exemption. 4. Applicability of Section 3 of the Customs Tariff Act, 1975: Section 3 of the Customs Tariff Act imposes an additional duty equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. The court clarified that this additional duty is separate from the basic customs duty and is not covered by the exemption notification. The court noted that the notification's wording specifically limits the exemption to the duty under the First Schedule, thereby excluding the additional duty under Section 3. 5. Legal precedents supporting the interpretation of the notification: The court referred to a Division Bench decision of the Madras High Court in Sree Ayyanar Spinning and Weaving Mills Limited v. Union of India, which upheld a similar interpretation of the notification, stating that the exemption pertains only to the basic ad valorem duty and not the countervailing duty. The Delhi High Court in Civil Writ No. 2117 of 1982 also supported this view, stating that the Central Government can confine the relief under Section 25(1) of the Customs Act to one type of duty. Conclusion: The court confirmed the decision of the learned single judge, dismissing the writ petition and holding that the petitioners are liable to pay the additional levy under Section 3 of the Customs Tariff Act and the auxiliary duty under the Finance Act. The court directed that the bank guarantees furnished by the petitioners be kept alive for another three months, and the petitioners were given an extended timeline to discharge their liability in installments.
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