1984 (10) TMI 51 - HC - Customs

Summary

Issues Involved:
1. Levy of duty under two different items on empty dissolved acetylene cylinders.
2. Levy of countervailing duty on the cylinders.
3. Classification of the cylinders under Item 72(C) or 72(A) of the Indian Customs Tariff.
4. Refund of excess import duty and countervailing duty paid.

Detailed Analysis:

1. Levy of Duty Under Two Different Items:
The petitioners challenged the levy of duty on empty dissolved acetylene cylinders under both Item 72(C) of the Customs Tariff and Item 28 for the small quantity of saturation gas contained within the cylinders. They argued that the cylinders, including the saturation gas, should be considered a single item for duty purposes. The court found that the small quantity of saturation gas was an integral part of the cylinders, imported under specific conditions laid down by the Chief Controller of Explosives. Therefore, the cylinders should have been assessed under a single item, not two separate items.

2. Levy of Countervailing Duty:
The petitioners also contested the levy of countervailing duty on the cylinders. They argued that the cylinders fell under Item 72(A) of the Indian Customs Tariff, which would exempt them from countervailing duty as per Notification No. 122 dated 20th August 1965. However, the customs authorities contended that the cylinders were assessable under Item 72(C) due to the lack of contract registration. The court concluded that the petitioners failed to register their import contract, a prerequisite for assessment under Item 72(A). Consequently, the customs authorities correctly levied the countervailing duty under Item 72(C).

3. Classification Under Item 72(C) or 72(A):
The petitioners claimed that the cylinders should be classified under Item 72(A) as apparatus for a specific industrial plant, which would grant them certain exemptions. The customs authorities, however, assessed the cylinders under Item 72(C) due to the lack of contract registration. The court agreed with the customs authorities, noting that the registration of the import contract was a mandatory condition for assessment under Item 72(A). Since this condition was not fulfilled, the assessment under Item 72(C) was deemed appropriate.

4. Refund of Excess Import Duty:
The petitioners sought a refund of Rs. 9,634.80 paid as excess import duty and Rs. 1,47,091.67 as countervailing duty. The court ruled in favor of the petitioners regarding the excess import duty, ordering a refund of Rs. 9,634.80 within one month. However, the claim for a refund of the countervailing duty was rejected due to the appropriate classification under Item 72(C) and the non-fulfillment of conditions for exemption under Item 72(A).

Conclusion:
The court partially allowed the petition, ordering a refund of the excess import duty but upheld the levy of countervailing duty and the classification of the cylinders under Item 72(C). The petitioners' failure to register their import contract was a crucial factor in the court's decision. The application for leave to appeal to the Supreme Court was rejected, as no substantial questions of general importance were found.