2004 (8) TMI 118 - HC - Customs

Summary

Issues:
1. Whether additional duty equal to excise duty is leviable on imported marble materials under the provision of the Custom Tariff Act, 1975.
2. Whether the Supreme Court judgment regarding the manufacturing process of marble slabs affects the levy of additional duty.
3. Whether the exemption from basic customs duty extends to the additional duty under the trade agreement between India and Srilanka.

Analysis:
Issue 1: The writ petitioners sought a declaration that additional duty equal to excise duty is not leviable on imported marble materials under the Custom Tariff Act, 1975. The petitioners imported polished marble slabs from various countries and enjoyed exemption from basic customs duty under a bilateral free trade agreement with Srilanka. The levy of additional duty was based on the excise duty applicable to similar products if produced in India. The Supreme Court held that cutting and polishing of marble slabs did not amount to manufacturing, as no new commercial product emerged. The Court emphasized that the tax event for excise duty occurs upon importation, not upon manufacturing.

Issue 2: The contention arose whether the Supreme Court judgment on the non-leviability of excise duty on similar indigenous products affects the levy of additional duty under the Custom Tariff Act. The petitioners argued that since excise duty is not applicable to the indigenous product, there is no basis for imposing additional duty on imported marble slabs. However, the Court held that the rate mentioned in the schedule for imposing duty cannot be ignored, even if excise duty is not leviable. The Court emphasized that no exemption from the additional duty was provided under the Act.

Issue 3: The petitioners claimed that the exemption from basic customs duty under the trade agreement with Srilanka should extend to the additional duty. However, the Court clarified that the exemption only applied to basic customs duty and did not automatically extend to the additional duty under the Custom Tariff Act. The Court noted that no provision existed in the Act for granting exemption from the levy of additional duty. The Court dismissed the writ petition, stating that the petitioners had paid additional duty previously and could not claim exemption without legal basis.

In conclusion, the Court held that the petitioners were required to pay the additional duty under the Custom Tariff Act, despite the Supreme Court judgment on the non-leviability of excise duty on similar products. The Court dismissed the petition and granted a stay of operation for three weeks.