1999 (12) TMI 61 - SC - Customs

Whether the phosphoric acid imported by the appellant for the manufacture of fertilizer is liable to auxiliary duty @ 5% under Clause 2 of the aforesaid Table and not @ 15% under Clause 1? Held that - In the instant case it is seen that the highest rate of duty specified in the First Schedule for the phosphoric acid as per Item 28(16) is 60 per cent. Hence in the instant case the highest rate for import of phosphoric acid would have been 60 per cent but for the Notification No. 14 dated 1-3-1974 since the import in question was from Burma the duty payable is 30 per cent ad valorem. Hence from a perusal of the First Schedule read with Notification dated 28-4-1969 it is clear that so far as the import of phosphoric acid by the appellant is concerned it falls at Serial No. 1 of the aforesaid Table and 15 per cent auxiliary duty is required to be paid. We also find support to the above reasoning of ours from the judgment of this Court in the case of Collector of Customs v. Western India Plywood Manufacturing Co. Ltd. 1989 (9) TMI 105 - SUPREME COURT OF INDIA . Appeal dismissed.

Summary

Issues:
1. Interpretation of customs duty rates for import of phosphoric acid.
2. Applicability of auxiliary duty on imported goods.
3. Justification for the levy of a higher auxiliary duty rate.

Analysis:
The appellant, a registered multi-unit co-operative society, challenged the imposition of a 15% auxiliary duty on imported phosphoric acid for manufacturing fertilizer. The appellant argued that the correct rate should be 5% as per the relevant notification. The dispute centered around the interpretation of customs duty rates specified in the Indian Tariff Act and the Finance Act. The appellant contended that the phosphoric acid fell under a specific category warranting a lower duty rate. However, the Central Government had exempted certain goods from auxiliary duty exceeding a specified rate, which affected the duty calculation for the appellant's imports.

The Court examined the provisions of the Finance Act, 1974, which allowed for the levy of auxiliary duty on goods covered by the Tariff Act. The relevant notification exempted goods from excess auxiliary duty beyond a specified rate. The Court analyzed the specific tariff item for phosphoric acid, noting different duty rates based on the country of origin. The Court emphasized that the highest duty rate specified in the First Schedule applied, leading to the imposition of a 15% auxiliary duty on the appellant's imports. Reference was made to a previous judgment regarding the application of auxiliary duty based on the highest basic customs duty rate.

The Court upheld the levy of the 15% auxiliary duty on the appellant's imported phosphoric acid, citing consistency with previous rulings and the relevant notifications. The Court found no grounds to deviate from the established interpretation of duty rates and auxiliary duty applicability. Consequently, the appeals were dismissed, and no costs were awarded. The judgment reaffirmed the application of the highest duty rate for determining auxiliary duty, ensuring compliance with the statutory provisions and notifications governing customs duties on imported goods.