2005 (5) TMI 83 - HC - Customs

Summary

Issues Involved:
1. Validity of the imposition of Special Additional Duty (SAD) under Section 3A of the Customs Tariff Act, 1975.
2. Relationship between the Customs Act, 1962, and the Customs Tariff Act, 1975.
3. Applicability of exemptions under Section 25 of the Customs Act, 1962, to SAD.

Detailed Analysis:

1. Validity of the Imposition of Special Additional Duty (SAD) under Section 3A of the Customs Tariff Act, 1975:

The petitioner contested the imposition of SAD on polyester/texturised yarn imported from Nepal, arguing that since the imports were exempt from basic Customs Duty under the Customs Act, 1962, they should also be exempt from SAD. The petitioner relied on the principle that the Customs Act and the Customs Tariff Act form a composite legislation, and the imposition of additional duties under the Tariff Act is contingent upon the imposition of basic customs duty under the Customs Act. The petitioner cited the Supreme Court's judgment in *Ashok Service Centre v. State of Orissa* and *Associated Cement Companies Ltd. v. Commissioner of Customs* to support their argument.

2. Relationship between the Customs Act, 1962, and the Customs Tariff Act, 1975:

The court analyzed whether the Customs Act and the Customs Tariff Act are independent of each other or if one is dependent on the other for the imposition of duties. The court referred to Section 12 of the Customs Act, which is the charging section for customs duties, and various sections of the Tariff Act, including Sections 3, 3A, 8B, 9, and 9A, which provide for different types of duties. The court concluded that the two Acts are independent of each other, and duties under the Tariff Act can be levied independently of the basic customs duty under the Customs Act.

3. Applicability of Exemptions under Section 25 of the Customs Act, 1962, to SAD:

The petitioner argued that since the goods were exempt from basic customs duty under a notification issued under Section 25 of the Customs Act, they should also be exempt from SAD. The court examined various judgments, including those of the Supreme Court and High Courts, which held that exemptions under Section 25 of the Customs Act do not automatically extend to additional duties under the Tariff Act unless explicitly stated. The court referred to the judgment in *Hyderabad Industries Ltd. v. Union of India*, which clarified that different types of duties under the Tariff Act are independent and can be levied even if the basic customs duty is exempt.

Conclusion:

The court dismissed the writ petition, upholding the validity of the impugned order dated 16-12-2000, which levied SAD on the imported goods. The court concluded that the Customs Act and the Customs Tariff Act are independent statutes, and exemptions under one do not automatically apply to the other. The imposition of SAD was found to be lawful, and the petitioner's arguments were rejected. The court also emphasized that the principle "nil duty is also duty" applies to the Central Excises and Salt Act and not to the Customs Act. The petitioner's reliance on the judgment in *Associated Cement Companies Ltd.* was found to be misplaced, as it did not support the petitioner's case. The court also relied on the judgments of the Bombay High Court, Kerala High Court, and Calcutta High Court, which supported the respondents' case that additional duties under the Tariff Act can be levied independently of exemptions under the Customs Act.