1994 (3) TMI 107 - HC - Central Excise

Summary

Issues Involved:
1. Levy of additional duty under Section 3(1) of the Customs Tariff Act, 1975.
2. Applicability of exemption notification No. 276 of 67 dated 21-12-1967 to imported goods.
3. Interpretation of Section 3 of the Customs Tariff Act, 1975 in relation to excise duty exemptions.

Detailed Analysis:

1. Levy of Additional Duty under Section 3(1) of the Customs Tariff Act, 1975:
The petitioner filed a writ petition under Article 226 of the Constitution of India seeking a writ of mandamus to prevent the respondents from levying and collecting additional duty on imports of orthoxylene. The petitioner argued that orthoxylene is totally exempt from excise duty in India under a notification issued under Rule 8(1) of the Central Excise Rules, 1944. The court noted that three types of duties are generally payable on imported goods: (1) Customs duty under Section 12 of the Customs Act, 1962, (2) Auxiliary duty, and (3) Additional duty or countervailing duty under Section 3 of the Customs Tariff Act, 1975.

2. Applicability of Exemption Notification No. 276 of 67 dated 21-12-1967 to Imported Goods:
The petitioner contended that the exemption notification dated 21-12-1967, which exempts certain goods from excise duty, should also apply to the additional duty on imported orthoxylene. The petitioner relied on several judicial decisions to assert that if the imported goods were manufactured in India, they would be exempt from excise duty, and therefore, should also be exempt from additional duty under the Customs Tariff Act, 1975. The court examined various judgments, including Saigal Industries v. Central Board of Excise and Customs, Century Enka Limited v. Union of India, and M.R.F. Limited v. Union of India, which supported the petitioner's claim.

3. Interpretation of Section 3 of the Customs Tariff Act, 1975 in Relation to Excise Duty Exemptions:
The court analyzed the scope and purport of Section 3 of the Customs Tariff Act, 1975, which mandates that additional duty should be equal to the excise duty leviable on a like article if produced or manufactured in India. The court referred to the Supreme Court decision in Thermax Private Limited v. Collector of Customs, which held that the exemption from excise duty should also apply to the additional duty on imported goods. The court also considered the decision of the Division Bench of the Karnataka High Court in Mysore Petrochemicals Limited v. Union of India, which was contrary to the petitioner's claim but was found to be inconsistent with the Supreme Court's ruling.

Conclusion:
The court concluded that the petitioner is entitled to succeed and that the imports of orthoxylene cannot be subjected to additional duty under Section 3(1) of the Customs Tariff Act, 1975, as long as the identical product is exempt from excise duty under any exemption notification when locally manufactured and sold. The court directed the respondents to finally assess the petitioner's liability in accordance with this declaration of law within three months and extended the validity of the bank guarantees furnished by the petitioner until the final assessment.

Order:
The writ petition is allowed, and the respondents are directed to assess the petitioner's liability in accordance with the court's declaration within three months. The validity of the bank guarantees furnished by the petitioner will continue until the final assessment. No costs.