2012 (7) TMI 167 - HC - Customs

Import of Zircon - Whether Zircon is Ore - Zircon Ore and Concentrate - Permission to clear goods in question without payment of CVD till appeal is disposed of by Tribunal assessee contested that some other persons similarly placed with the petitioner are not required to pay by virtue of the decisions of the authority situated in a different State on interpretation of the selfsame provisions of law- Held that - Division Bench of this court in the past allowed the petitioner to release the goods on payment of 25% of the duty and on execution of a bond to pay the assessed amount if their appeal before the Commissioner (Appeals) failed with a direction to file such an appeal within a specified time - since a further appeal has been filed before the Tribunal by the petitioners and there is no decision on the above point by any Tribunal of this State the petitioners should be permitted to get the order of release of the similar goods during the pendency of the appeal before the Tribunal on the selfsame conditions imposed earlier by a Division Bench of this court which will abide by the decision of the Tribunal - direction to Tribunal to dispose of the appeal pending within a period of three months from date of Order.

Issues Involved:
1. Eligibility for exemption under Notification No. 4/2006.
2. Classification of imported goods as "Zircon Ore" or "Zircon Concentrate."
3. Maintainability of the writ petition in the presence of an alternative remedy.
4. Interim relief for clearance of goods without payment of CVD.
5. Alleged violation of Articles 14 and 19 of the Constitution of India.

Detailed Analysis:

1. Eligibility for Exemption under Notification No. 4/2006:
The petitioners argued that their imports of Zircon sand should be exempt from CVD under Notification No. 4/2006, which exempts "Ores" falling under Chapter 2601 to Chapter 2617 from payment of Excise Duty. They contended that Zircon sand, being classified as "Zircon Ore," should not attract CVD. The respondents countered that the imported goods were "Zircon Concentrate," not "Zircon Ore," and thus not eligible for the exemption.

2. Classification of Imported Goods as "Zircon Ore" or "Zircon Concentrate":
The petitioners maintained that the imported Zircon sand, containing various minerals, should be classified as "Zircon Ore." They challenged the department's classification of the goods as "Zircon Concentrate," which was based on chemical test reports indicating high Zircon content. The respondents justified their classification by citing chemical test reports and the insertion of Chapter Note 4 in Chapter 26 of the Central Excise Tariff Act in the Union Budget 2011, which stated that the process of converting ores into concentrates amounts to manufacture, thereby making concentrates excisable and subject to CVD.

3. Maintainability of the Writ Petition in the Presence of an Alternative Remedy:
The respondents argued that the writ petition was not maintainable due to the availability of an alternative remedy, as the petitioners had already filed an appeal before the CESTAT. The court, however, noted that the rule of exhausting alternative remedies is discretionary and not absolute. The court referred to the Supreme Court's decision in A. V. Venkateswaran v. Ramchand Sobhraj Wadhwani, which allowed for exceptions where the alternative remedy is not equally efficacious or where there is a violation of natural justice.

4. Interim Relief for Clearance of Goods without Payment of CVD:
The petitioners sought interim relief to clear their goods without paying CVD during the pendency of their appeal before the Tribunal. The court acknowledged that forcing the petitioners to pay CVD while their appeal was pending would place them at a competitive disadvantage, as other similarly placed competitors were not required to pay CVD. The court granted interim relief, allowing the petitioners to clear the goods upon furnishing a bank guarantee for 25% of the duty claimed and a personal bond for the remaining amount, similar to the conditions imposed by a previous Division Bench of the court.

5. Alleged Violation of Articles 14 and 19 of the Constitution of India:
The petitioners claimed that the differential treatment in the classification and imposition of CVD violated their rights under Articles 14 and 19 of the Constitution of India. The court found merit in this argument, noting that the inconsistent application of the law across different states resulted in unequal treatment. The court held that this situation warranted interference under Article 226 of the Constitution to ensure fair treatment.

Conclusion:
The court directed the Tribunal to dispose of the pending appeal within three months and allowed the petitioners to clear their goods under the specified conditions during the pendency of the appeal. The court rejected the respondents' request for a stay of the order, emphasizing the need to protect the petitioners' business interests and ensure equal treatment under the law.

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