1986 (3) TMI 185 - AT - Customs

Summary

Issues Involved:
1. Whether the additional duty of customs corresponding to the additional duty of excise was leviable on the imported goods cleared from the bonded warehouse.
2. The applicability of the rate of duty in force at the time of clearance from the warehouse versus the date of importation.
3. The impact of conflicting High Court decisions on the issue.

Detailed Analysis:

1. Levy of Additional Duty of Customs:
The primary issue was whether the additional duty of customs, equivalent to the additional duty of excise imposed by the Additional Duties of Excise (Textiles and Textile Articles) Ordinance, 1978, was applicable to goods imported before the ordinance but cleared from the bonded warehouse after its promulgation. The Tribunal, referencing its prior decision in Appeal No. CD(S.B.)(T) 595/80-D, concluded that such additional duty was indeed chargeable on goods cleared on or after 4-10-1978 from the bonded warehouse, as per Section 68 read with Section 15(1)(b) of the Customs Act.

2. Applicability of Duty Rates:
The Tribunal relied on the Supreme Court's judgment in Prakash Cotton Mills Pvt. Ltd. v. B. Sen, which clarified that the rate of duty applicable is the one in force on the date of clearance from the warehouse, not the date of importation. This interpretation was reaffirmed by the Tribunal, indicating that the customs authorities correctly applied the increased additional duty of customs at the time of clearance from the warehouse.

3. Conflicting High Court Decisions:
The Tribunal acknowledged conflicting High Court decisions on the matter. The Bombay High Court in Apar Private Ltd. v. Union of India held that if goods were wholly exempt from duty at the time of importation, they could not be subjected to duty upon clearance from the warehouse. Conversely, the Delhi High Court in Jain Shudh Vanaspati Ltd. and the Madras High Court in M. Jamal and Company ruled that goods exempted from duty at the time of import could still be charged duty based on the rate in force at the time of clearance from the warehouse, as per Section 15 of the Customs Act.

Majority Opinion:
The majority of the Tribunal upheld the view that the additional duty of customs was rightly charged on the goods based on the rate in force at the time of their clearance from the warehouse. This conclusion was drawn by applying the ratio of the Delhi and Madras High Court decisions, which supported the applicability of the duty rate in force at the time of clearance, irrespective of the duty status at the time of import.

Dissenting Opinion:
One member dissented, arguing that the levy of additional duty should not apply to goods imported before the ordinance's promulgation. The dissent emphasized that the taxable event is the importation, and since the additional duty was not in force at that time, it should not be retrospectively applied. The dissenting member referenced the Full Bench decision of the Bombay High Court and the Tribunal's own decision in M/s. Vazir Sultan Tobacco Co. Ltd., which distinguished between the imposition of a new levy and a mere change in the rate of an existing duty.

Conclusion:
In view of the majority opinion, the Tribunal confirmed the impugned order and rejected the appeal, holding that the customs authorities correctly levied the additional duty of customs on the goods cleared from the bonded warehouse after the promulgation of the Additional Duties of Excise (Textiles and Textile Articles) Ordinance, 1978.