1987 (8) TMI 101 - HC - Customs

Summary

Issues:
1. Liability to pay additional duty on imported natural rubber under Section 3 of the Customs Tariff Act.
2. Interpretation of Section 3(1) of the Act regarding the levy of additional duty equal to excise duty.
3. Contention on the absence of excise duty on natural rubber due to lack of manufacturing process.
4. Exemption notifications under Central Excise Rules and Customs Act affecting the levy of excise duty and additional duty.
5. Impact of notifications under Section 11C of the Central Excises and Salt Act on the levy of excise duty and additional duty.

The judgment addresses a batch of writ petitions concerning the liability to pay additional duty on imported natural rubber, specifically 'smoked sheets.' The petitioners challenge the levy of additional duty under Section 3 of the Customs Tariff Act, arguing that excise duty must be leviable on a like article produced in India for additional duty to apply. The petitioners assert that natural rubber does not undergo a manufacturing process to attract excise duty, supported by references to the absence of a specific excise duty item for natural rubber in the Central Excises and Salt Act. The court acknowledges the petitioners' argument that natural rubber does not involve manufacturing and cites sources to support this claim.

Regarding exemption notifications under Central Excise Rules and Customs Act, the court examines the contention that exemptions suspend the levy of excise duty, thus precluding the imposition of additional duty. The court rejects the argument that exemptions do not affect the liability for additional duty, citing a Supreme Court ruling emphasizing the necessity of an excise duty being leviable for additional duty to apply. The judgment highlights that the absence of excise duty, due to exemptions, precludes the imposition of additional duty under the Act, rejecting the government's argument to the contrary.

Furthermore, the judgment analyzes the impact of notifications under Section 11C of the Central Excises and Salt Act on the levy of excise duty and additional duty. The court notes that notifications implying the non-levy of excise duty support the petitioners' claim that no additional duty should be imposed. Consequently, the court rules in favor of the petitioners, directing the refund of additional duty already paid and restraining future levy and collection of additional duty on the imported natural rubber. The judgment also addresses specific cases within the batch of writ petitions, allowing relief based on exemptions under the Customs Act and canceling bank guarantees provided by some petitioners.