1987 (9) TMI 52 - HC - Customs

Summary

Issues Involved:
1. Exemption from auxiliary duty under Customs Law.
2. Applicability of Notification 62/83-Customs versus Notification 61/83-Customs.
3. Interpretation of fiscal law principles.
4. Refund and cancellation of bank guarantees.

Issue-wise Detailed Analysis:

1. Exemption from auxiliary duty under Customs Law:
The petitioner sought writs of mandamus to permit the clearance of imported machinery without paying auxiliary duty under the Customs Law. The petitioner also requested an exemption under Section 25 of the Customs Act, 1962, for auxiliary duty on the imported machinery items. The petitioner did not contest the payment of basic Customs duty.

2. Applicability of Notification 62/83-Customs versus Notification 61/83-Customs:
The petitioner argued that the imported items, specifically 'paper making machinery and component parts thereof' under Heading 84.31, were exempt from auxiliary duty as per Notification 62/83-Customs dated 1-3-1983. The Revenue contended that since these items were imported under contracts registered under Heading 84.66, they should bear a 20% auxiliary duty as per Notification 61/83-Customs dated 1-3-1983. The court analyzed both notifications and found that Notification 62/83, which specifically exempts 'paper making machinery and component parts thereof' under Heading 84.31, should prevail over the general provisions of Notification 61/83.

3. Interpretation of fiscal law principles:
The court relied on two principles to support the petitioner's claim:
- Generalia specialibus non derogant: This principle implies that general provisions do not override specific provisions. The court cited various precedents to support this principle, including J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. State of Uttar Pradesh and U.P. State Electricity Board v. Hari Shankar Jain, among others.
- Rule of construction of fiscal law: The court emphasized that any ambiguity in fiscal law should be resolved in favor of the taxpayer. This principle was supported by precedents such as Commissioner of Income Tax v. Bosotto Brothers, Ltd. and Commissioner of Income Tax v. Kulu Valley Transport Co. (P) Ltd.

The court noted that Notification 62/83 specifically exempted 'paper making machinery and component parts thereof' under Heading 84.31, without any exclusion based on their potential classification under Heading 84.66. The court found no express exclusion in Notification 62/83 that would deny the petitioner the benefit of the exemption.

4. Refund and cancellation of bank guarantees:
The court acknowledged that the petitioner had paid auxiliary duty and furnished bank guarantees pursuant to the court's orders during the pendency of the writ petitions. Since the petitioner succeeded in the writ petitions, the court ordered the refund of the auxiliary duty paid and the cancellation of the bank guarantees. The court set a three-month deadline for the refund.

Conclusion:
The court allowed W.P. Nos. 2054, 3257, and 3258 of 1983, granting the petitioner the exemption from auxiliary duty as per Notification 62/83. W.P. 2055 of 1983 was dismissed as the petitioner's purpose was served by the other three writ petitions being allowed. There were no orders as to costs in all the writ petitions. The court ordered the refund of the auxiliary duty paid by the petitioner within three months and the cancellation of the bank guarantees.