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Issues:
Interpretation of exemption notification under Central Excise Rules, 1944 and Finance Act, 1982; applicability of special duty of excise; distinction between countervailing duty and additional duty; impact of exemption notification on liability to pay countervailing duty; comparison with previous court judgments. Detailed Analysis: 1. The petitioners imported Poly Vinyl Chloride (P.V.C.) from Korea and faced a dispute regarding the levy of countervailing duty by Customs authorities. The duty was charged at a rate of 5% on top of the existing 35% countervailing duty based on an exemption notification under the Central Excise Rules, 1944 dated 28-2-1982 exempting P.V.C. from excess excise duty beyond 35% ad valorem. 2. The Finance Act, 1982 introduced a special duty of excise equal to 10% of the excise duty on goods. The reduced rate of 5% special excise duty was applicable to P.V.C. at the time. The court noted that the exemption notification under the Central Excise Act also covered special duty of excise, as per Section 50 of the Finance Act, 1982. 3. Referring to the judgment in Century Enka Limited and Others v. Union of India, the court emphasized that an exemption under the Central Excise Act directly impacts the liability to pay countervailing duty under the Customs Tariff Act. The court highlighted that the liability to pay countervailing duty is linked to the liability to pay excise duty on local goods. 4. In the case of Modi Rubber Ltd. v. Union of India, the Delhi High Court clarified that an exemption from excise duty includes exemption from special excise duty levied under a special enactment or Finance Act. The court ruled that the language of the exemption notification covers all types of excise duties, including special duty of excise. 5. The court determined that the exemption notification of 28-2-1982 exempted P.V.C. from paying excise duty exceeding 35% ad valorem, including special excise duty. Therefore, the total excise duty on P.V.C., including special excise duty, could not exceed 35% ad valorem, and the Customs authorities were not entitled to levy an additional 5% duty on the goods. 6. The court distinguished a judgment of the Kerala High Court regarding Customs duties, emphasizing that the exemption notification in the present case did not limit the exemption based on the rate of duty prescribed in the First Schedule. The court concluded that the exemption covered the total excise duty, including special duty of excise. 7. The petition was partially allowed, and the court ruled in favor of the petitioners, highlighting the exemption under the Central Excise Rules and Finance Act. The court did not award costs in the case. End of Analysis
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