1989 (12) TMI 213 - AT - Customs

Summary

Issues:
Interpretation of the effective rate of duty on Cloves imported as per Notification No. 431/76-Cus., dated 1-11-1976.

Detailed Analysis:

Issue 1: Interpretation of the effective rate of duty on Cloves
The dispute in this case revolved around the interpretation of the effective rate of duty on Cloves imported from specified areas as per Notification No. 431/76-Cus., dated 1-11-1976. The notification contained an entry for "cloves" showing the rate of duty as "Rs. 22/- per kg. less 7 1/2 %." The main contention was whether the 7 1/2 % mentioned was ad valorem or a specific percentage of the amount arrived at the rate of Rs. 20 per kg.

Analysis:
The appellants argued that 7 1/2 % should be considered as 7 1/2 % ad valorem, while the Department contended that it should be calculated as 7 1/2 % of the amount arrived at the rate of Rs. 20 per kg. The Tribunal had previously interpreted 7 1/2 % as ad valorem in a similar case but the appellants requested a reconsideration of this view. The Tribunal noted that the phrase "ad valorem" was not mentioned against the entry for cloves, unlike other entries in the notification. Therefore, the Tribunal concluded that 7 1/2 % should not be considered ad valorem in this case.

Issue 2: Specific vs. Ad Valorem Duties
The Tribunal also discussed the nature of duties, distinguishing between specific duties levied on a weight basis and ad valorem duties calculated as a percentage of the value of goods. The Tribunal upheld the Assistant Collector's view that the duty on cloves was specific, based on weight, and not ad valorem. The Tribunal rejected the argument that interpreting the duty as specific would be contrary to the scheme of the Act.

Analysis:
The Tribunal emphasized the importance of specific duties in the customs system and stated that specific duties are leviable in accordance with the law. The Tribunal found it difficult to accept the Collector (Appeals)'s view that interpreting the duty as specific would go against the Act's scheme. Consequently, the Tribunal set aside the Collector (Appeals)'s order and confirmed the Assistant Collector's decision, ruling in favor of the appellant.

Final Decision:
The Tribunal, in a majority decision, dismissed the appeal, upholding the view that 7 1/2 % should not be considered ad valorem in this case and that the duty on cloves was specific, not ad valorem. The Tribunal relied on previous decisions and legal principles to reach this conclusion, emphasizing the specific nature of duties and the interpretation of the notification provisions.