1991 (8) TMI 103 - HC - Customs

Summary

Issues Involved:
1. Levy of additional duty on synthetic yarn imported and warehoused before 4th October 1978.
2. Applicability of Section 15 of the Customs Act, 1962.
3. Binding nature of previous Division Bench rulings.
4. Reconsideration of the Division Bench ruling in light of the Full Bench ruling of the Bombay High Court.

Detailed Analysis:

1. Levy of Additional Duty on Synthetic Yarn Imported and Warehoused Before 4th October 1978:

The petitioners challenged the levy of additional duty on synthetic yarn imported before 4th October 1978 and warehoused in their private bonded warehouse. They argued that the synthetic yarn imported before this date should not be liable to the additional duty imposed by the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (AD Excise Act), which came into force on 4th October 1978. Despite their protest, the petitioners paid the additional duty at the time of clearance from the warehouse and sought a refund.

2. Applicability of Section 15 of the Customs Act, 1962:

The court examined whether Section 15 of the Customs Act, which determines the rate of duty applicable at the time of clearance from the warehouse, applies to the additional duty imposed by the AD Excise Act. The court referenced the Supreme Court's rulings in Prakash Cotton Mills (P) Ltd. v. B. Sen and Khandelwal Metal & Engg. Works v. Union of India, which upheld the collection of additional duty as additional customs duty. The court concluded that Section 15 governs both the upward revision of duty rates and the imposition of new duties after import but before clearance from the bonded warehouse.

3. Binding Nature of Previous Division Bench Rulings:

The court noted that a Division Bench of the Gujarat High Court had previously addressed an identical issue in Special Civil Applications Nos. 848 and 849 of 1981, upholding the collection of additional duty at the time of clearance from the warehouse. The court found this ruling binding and applicable to the present case, deeming the levy and collection of additional duty just and proper.

4. Reconsideration of the Division Bench Ruling in Light of the Full Bench Ruling of the Bombay High Court:

The petitioners' counsel argued for reconsideration of the Division Bench ruling based on the Full Bench ruling of the Bombay High Court in Apar Private Ltd. v. Union of India, which held that goods imported before the withdrawal of an exemption notification should not be subject to customs duty at the time of clearance if they enjoyed exemption at the time of import. The court disagreed with the Full Bench ruling, asserting that Section 15 of the Customs Act applies to both upward revisions of duty rates and new imposts of duty. The court emphasized that the taxable event for customs duty occurs at the time of import, but the duty can be collected at the time of clearance for administrative convenience.

The court also referenced the Supreme Court's ruling in Wallace Flour Mills Company Ltd. v. Collector of C. Ex., which clarified that even if the taxable event is the manufacture, the duty can be levied at the time of removal for administrative convenience. Applying this principle to customs duty, the court concluded that the withdrawal of exemption before clearance does not alter the taxable event.

Conclusion:

The court rejected the petition, upholding the levy and collection of additional duty on the synthetic yarn imported and warehoused before 4th October 1978. The court found the previous Division Bench rulings binding and in consonance with the Supreme Court's principles, and thus, did not find merit in referring the matter to a larger bench. The petition was dismissed with no order as to costs.