1994 (12) TMI 92 - HC - Customs

Summary

Issues involved:
The legality of levying and collecting cess on imported yarn by mill companies engaged in the manufacture of synthetic fabric.

Summary:

Issue 1: Levy of Cess on Textiles
The petitioners, mill companies importing polyester filament yarn, challenged the imposition of cess at 0.05% ad valorem by the respondents, contending it was unauthorized and violated constitutional provisions. They sought a declaration that the levy was without legal authority and requested a refund of the amount collected.

Details:
- The respondents justified the cess under the Textiles Committee Act, 1963, as a duty of excise, not an unauthorized levy.
- Previous legal precedents, including a Supreme Court case, clarified that additional duty on imports, termed countervailing duty of excise, was essentially customs duty, not excise duty.
- The Customs Tariff Act, 1975, mandates additional duty on imported articles, equivalent to excise duty on similar locally manufactured goods, aligning with the cess on textiles under the Textiles Committee Act.

Issue 2: Legal Precedents and CEGAT Decision
The respondents cited a CEGAT decision and a High Court Division Bench ruling supporting the legality of levying cess on imported articles, affirming the position of law as settled.

Details:
- The CEGAT decision and the High Court ruling upheld the view that the levy of cess on imported goods was in accordance with legal provisions and consistent with previous judicial interpretations.

Final Judgment:
The High Court, in an order dated May 3, 1989, granted interim relief to the petitioners by restraining the respondents from collecting the cess. However, the petitioners were directed to pay the equivalent customs duty within a specified timeframe. Ultimately, both petitions were rejected, and the rule was discharged, with no costs imposed.

This summary encapsulates the legal arguments, interpretations of relevant statutes, and the final decision of the High Court regarding the contentious issue of levying cess on imported yarn by mill companies.