1992 (8) TMI 72 - SC - Customs

Whether the concession or exemption from auxiliary duty under Notification No. 41/80 can be claimed only in respect of goods which are partially or wholly exempt by virtue of Notification No. 35/79? Held that - The parts in the present case as well as the principal article of which they are part are both assessable to basic duty at the same rate. Since the duty payable on the part, even without invoking the notification, is not in excess of the duty payable on the article, the assessee cannot be said to have got a partial or complete exemption of basic duty by virtue of Notification No. 35/79. Consequently, the assessee cannot claim any benefit under Notification No. 41/80. This interpretation no doubt leads to an anomaly in marginal cases. If the rate of duty on the part had been 41%, the assessee would have been entitled to a complete exemption from auxiliary duty. On the other hand, if the rate of duty on the part had only been 39% or 40%, he would have to pay the auxiliary duty because the Notification does not apply to it in terms. Counsel, however, submits that such anomalies are inevitable in the case of provisions of this type and that, in taxing matters, it is imperative to concentrate on the language of the statute or the relevant statutory instrument. If the wording clearly imposes a tax or gives a relief, that should be given effect to. If the wording does not justify either the imposition or the relief, it should not be extended merely on the ground that there may be some unintended anomaly as a consequence of the interpretation or that the equities of the situation require a more liberal interpretation. It seems absurd to say that when the part suffers a basic duty of 40% and the whole a duty of 40%, there will be a countervailing duty but that there will be no such duty where the basic duty on the part is 41% or more but reduced to 40% because of the 1977 notification. The correct position appears to be that the purpose and purport of the 1979 notification is to ensure that, in respect of the articles listed therein, the part should not suffer a higher duty than the whole. The 1980 notification likewise exempts this category of articles, which enjoy the benefit of the same or less duty on the part than that on the whole, from auxiliary duty. Appeal dismissed.

Summary

Issues:
1. Refund of auxiliary duty paid by the assessee on imported pressure gauges.
2. Interpretation of Notification No. 35/79 and Notification No. 41/80 for exemption from customs duty.

Analysis:

Issue 1: Refund of auxiliary duty
The assessee, a public sector company, imported pressure gauges subjected to a basic customs duty of 40% and paid an auxiliary duty at 5%. The assessee claimed a refund of the auxiliary duty based on Notification No. 35/79 and Notification No. 41/80. The Tribunal allowed the assessee's appeals for the refund, leading to the department filing appeals challenging the decision.

Issue 2: Interpretation of Notifications
Notification No. 35/79 exempts parts of articles falling under specified headings from excess customs duty when imported for initial setup or assembly. The notification's conditions include the part being imported and required for initial setup. The pressure gauges imported by the assessee, as parts of steam turbines falling under Heading No. 84.04/05, fulfilled these conditions.

Regarding Notification No. 41/80, the department argued that the pressure gauges were not entitled to any exemption as they were assessed under a different heading. However, the Court clarified that the benefit under Notification No. 41/80 does not depend on the practical application of Notification No. 35/79 for a specific item but applies to a class of goods. The Court interpreted that the purpose of both notifications was to ensure parts do not face higher duty than the whole article and upheld the Tribunal's decision to grant exemption from auxiliary duty to the assessee.

The Court rejected the department's contention that the exemption under Notification No. 41/80 was not available after a certain date, as further research revealed the exemption continued on similar terms. Consequently, all appeals were dismissed, and no order regarding costs was made.

This judgment clarifies the conditions for claiming exemptions under specific notifications and emphasizes interpreting statutory instruments to uphold the true intent and purpose behind such provisions.