1991 (7) TMI 71 - SC - Customs

Whether the notifications granting favourable treatment to MMTC are discriminatory and violative of Art. 14 of the Constitution of India? Held that - To make the metal available at a uniform sale price to the consumer irrespective of the source of supply and to compensate the loss suffered by the Corporation in importing the metal as the canalising agency and selling it at less than the cost price, the Government decided to pool the prices of indigenously produced aluminium and the imported metal. As a result, an Equalisation Amount was included in the sale price of the indigenous metal. This amount was realised as a part of the sale price of the indigenous metal and was required to be deposited in the Aluminium Regulation Account for payment to the Corporation with a view to compensate it for the loss suffered by it in selling the metal at a price below costs. We are fully satisfied that the above action taken by the Central Government was done in the larger interest of the economy of the country and in public interest. Appeal dismissed.

Summary

Issues:
Challenge to customs duty, auxiliary duty, and additional duty on import of aluminium rods/ingots. Legality, validity, and constitutionality of ad hoc exemption order in favor of Metals and Minerals Trading Corporation (MMTC). Discriminatory nature of notifications. Applicability of duty on the date of goods entering territorial waters vs. date of filing bill of lading.

Analysis:
The petitioners challenged the customs duty, auxiliary duty, and additional duty on the import of aluminium rods/ingots, along with the ad hoc exemption order favoring MMTC, alleging discrimination and violation of Article 14 of the Constitution. The petitioners also argued for the duty to be charged based on the date of goods entering territorial waters, not the date of filing the bill of lading. These issues were addressed in previous judgments like M. Jhangir Bhatusha and Bharat Surfactants cases. The petitioners attempted to distinguish the cases by arguing against the favorable treatment given to MMTC. However, the Court found no merit in this contention.

The MMTC and the Union of India provided explanations in a counter affidavit, stating that due to high international market prices of aluminium, importing at a lower cost than the domestic consumer price would result in significant losses for MMTC. The Government decided to grant waivers on customs duty, countervailing duty, and auxiliary duty on aluminium imports by MMTC to prevent price revisions and ensure a uniform sale price for consumers. This decision was made in the larger interest of the country's economy and public interest, justifying the concessions granted to MMTC.

The Court was fully satisfied with the Government's actions, considering them to be in the public interest and beneficial for the economy. The explanations provided by the respondents were deemed valid, and the decision in M. Jhangir Bhatusha's case was found to be applicable in the present cases. Additionally, the judgment in Bharat Surfactants case clarified that duty rates and valuation must be determined according to the Customs Act, with the rate and valuation in force on the date of presenting the Bill of Entry. Consequently, the Court concluded that all contentions raised by the petitioners were addressed in previous Constitution Bench decisions, and thus dismissed the cases without any costs.

In conclusion, the Supreme Court upheld the legality and constitutionality of the customs duties, auxiliary duties, and exemptions related to aluminium imports, emphasizing the public interest and economic considerations behind the Government's decisions. The Court's analysis relied on previous landmark judgments to dismiss the challenges raised by the petitioners, highlighting the importance of consistent application of customs laws and regulations.