1987 (3) TMI 223 - AT - Customs

Summary

Issues:
1. Determination of the correct rate of auxiliary duty of customs on imported timber.
2. Interpretation of Notification No. 126/84-Cus. dated 11-5-1984 in relation to the rate of duty based on the country of origin of the goods.

Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi involved four appeals arising from a common order-in-appeal with a common issue for determination. The appellants had imported timber from Burma and were initially assessed auxiliary duty of customs at 30% ad valorem. Subsequently, they were asked to pay an additional amount based on the claim that the duty should have been charged at 40% ad valorem. The dispute revolved around the classification of timber under the Customs Tariff Act and the applicability of basic customs duty based on the country of origin.

The First Schedule to the Customs Tariff Act prescribed a standard rate of 60% ad valorem for timber. However, notifications exempted timber imported from certain countries, including Burma, from the levy of basic customs duty. The issue was whether there were two different rates of basic customs duty based on the country of origin of the timber, i.e., nil for specified countries and 60% for others. The lower authorities argued for two rates, leading to a 40% ad valorem auxiliary duty. The appellants contended that the nil rate applied uniformly to timber from specified countries, making the applicable rate of auxiliary duty 30% ad valorem.

The Tribunal analyzed the relevant notifications and held that the nil rate of duty for timber from specific countries was the only rate fixed by reason of the country of origin. As there was no reduced rate applicable to timber from other countries, the standard rate of 60% ad valorem was not linked to the country of origin. Therefore, the Tribunal concluded that only one rate was determined by the country of origin, i.e., nil for specified countries. Consequently, the applicable serial number in the notification was 2, leading to a 30% ad valorem auxiliary duty for the imported timber from Burma.

In conclusion, the Tribunal set aside the lower authorities' orders and allowed the appeals in favor of the appellants, granting them consequential relief.