2004 (10) TMI 106 - HC - Customs

Imports PU leather goods - Refund of special additional duty u/s 3A of the Customs Tariff Act, 1975 - Whether the Circular of the Board, has been issued contrary to the provision of Section 3A(5) of the said Tariff Act or not - HELD THAT - The judgment rendered in case of Collector of Central Excise, Hyderabad v. Vazir Sultan Tobacco Co. Ltd. 1996 (2) TMI 138 - SUPREME COURT the Supreme Court has held amongst others that 'nil rate of duty' is also 'rate of duty'. It is no doubt that the 'nil rate of duty' is also leviable. It is equally correct as rightly submitted by Mr. Singh that there is difference inter se the events of levy, assessment, collection and chargeability, as observed by the Hon'ble Supreme Court in case of Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd. 1972 (8) TMI 45 - SUPREME COURT . In order to grant exemption in this case under sub-section 5 of Section 3A of the Tariff Act, I think the levy of Additional Duty under sub-section 1 of Section 3 of Additional Duties of Excise is sine qua non. Admittedly, the aforesaid goods is chargeable to additional duties and such duty may be levied and realized at various rates. In this case levy must be a levy in realistic sense, not in notional sense, in other words collectable duty. The whole intention of inserting the sub-section 5 is to relieve an importer from the hardships in making payment twice over again. Sub-section 5 of Section 3A of the Tariff Act is an independent and in addition to what is otherwise payable. I am unable to accept the argument of Mr. Mehta that nil duty is to be accepted as being additional duties levied for the purpose of exemption. Therefore the interpretation given by the Board by applying the Dhiren Chemicals case 2001 (12) TMI 3 - SUPREME COURT is appropriate and just. If this interpretation is given otherwise while applying the apparent and literal meaning, then the petitioner would unjustly be enriched. Therefore, I do not find any force in the submission of Mr. Mehta. As such this application is dismissed.

Summary

Issues Involved: Refund of special additional duty under Section 3A of the Customs Tariff Act, 1975.

Comprehensive Details of the Judgment:

1. Issue 1 - Refund of Special Additional Duty:
The petitioner imported PU leather goods chargeable to additional duty but with a nil rate, making the duty not realizable. The petitioner sought refund of the duty paid under Section 3A of the Tariff Act, contending that the goods should be excluded under sub-section 5 of Section 3A. The respondent levied Special Additional Duty despite the nil rate, leading to a dispute on chargeability and levy. The Court granted interim relief for duty payment without prejudice. The petitioner argued that the impugned circular misinterpreted the law, citing Supreme Court decisions in support.

2. Issue 2 - Interpretation of Sub-section 5 of Section 3A:
The key issue was whether the impugned Circular of the Board was issued contrary to sub-section 5 of Section 3A. The Circular relied on a Supreme Court judgment regarding excise duty exemption, emphasizing actual payment over nil payment. The petitioner claimed exemption under sub-section 5 due to chargeability under the 1957 Act, regardless of levy or collection. The Supreme Court's precedent on nil rate of duty being a chargeable event was highlighted, distinguishing between levy, assessment, collection, and chargeability.

3. Decision and Reasoning:
The Court upheld the Board's interpretation based on the Dhiren Chemicals case, stating that nil duty cannot be considered for exemption. The judgment emphasized that the levy of Additional Duty under the 1957 Act is essential for exemption under sub-section 5 of Section 3A. The purpose of sub-section 5 was to prevent double payment, requiring a realistic levy for exemption. The Court dismissed the application, rejecting the petitioner's argument for accepting "nil duty" as additional duties levied for exemption. No costs were awarded in this matter.

This judgment clarifies the application of sub-section 5 of Section 3A in determining the refund eligibility of special additional duty and highlights the distinction between chargeability, levy, and actual collection of duties under the Customs Tariff Act.