9911796707
TMI Blog2006 (11) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted DMT when imported into India from customs duty in excess of 100% ad valorem . In effect, the rate of customs duty payable on imported DMT was 100%. As regards caprolactum, Notification No. 86 Cus dated 23-4-1980 exempted the said goods from payment of custom duty in excess of 25% ad valorem . Thus the basic customs duty on caprolactum, when imported, was 25% ad valorem . 3. Notification No. 86 Cus dated 23-4-1980 was amended by a Notification No. 164 Cus dated 5-6-1982, whereby the rate of basic customs duty on imported caprolactum was increased from 25% to 55% ad valorem . Further para 2 was inserted in the said notification to the effect that : "This notification shall be in force upto and inclusive of the 31st day of May 1983." 4. Under Section 3(1) of the Customs Tariff Act, 1975 ('CTA') an additional duty of customs (otherwise known as countervailing duty - CVD) is payable on imported goods equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. Section 3(2) CTA states that for the purposes of the levy of CVD the value of the imported goods would be loaded with the basic customs duty payable on such goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already imported prior to 5-6-1982 and be refunded the excess customs duty and CVD already paid. 7. On 20-10-1982 a further amendment was made to Notification No. 86-Cus dated 23-4-1980. The effective rate of basic customs duty on imported caprolactum was increased from 55% to 75% ad valorem . Thereafter the Central Excise Laws (Amendment and Validation) Ordinance 1982 (later substituted by an Act) (hereafter the '1982 Amendment Act') was promulgated to overcome the effect of the judgment date 6-8-1982 of this Court in Modi Rubber Ltd. v. Union of India [1983 (12) E.L.T. 24 (Del.)] holding that the expression 'duties of excise' in an excise exemption notification would include special and additional duties of excise. The petitioners herein relied on the said judgment of this Court to contend that the position in respect of the expression 'duty of customs' in the notifications dated 23-4-1980 and 1-7-1977 would be no different. Consequent to these developments, the petitioners were permitted to further amend the present petition to seek the following additional reliefs : (e) A declaration that the respondents were estopped from increasing the basic customs duty on c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises and Salt Act, 1944 and cannot cover such special, auxiliary or other kind of duty of excise." Consequently, in the same judgment the validity of the 1982 Amendment Act was also upheld. In view of this binding judgment, the prayers in 5(a) and 7(f) above do not survive for consideration. Further, in Jain Bros. v. Union of India - 1999 (112) E.L.T. 5, the Hon'ble Supreme Court upheld the validity of Section 3(2) CTA. Accordingly, the relief sought in this petition as noted in para 5(c) above also does not survive. When this petition was heard finally on 16-10-2006, the learned counsel for the petitioners fairly restricted his arguments to the reliefs as noted in para 5 (b), 5 (d) and 7 (e) above. Submissions of Counsel 10. Mr. Ravinder Narain, learned Advocate for the petitioners, submitted that : (a) The assessable value for the purposes of levy of custom duty cannot include the landing charges and for this proposition he relied on the judgments of the Hon'ble Supreme Court in Garden Silk Mills Limited v. Union of India - 1999 (113) E.L.T. 358 and Ispat Industries Limited v. Commissioner of Customs, Mumbai - 2006 (202) E.L.T. 561 (S.C.) = 2006 (137) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... labour for unloading goods from a ship to the wharf or to move the goods from the wharf to the place of storage. These are in the nature of post importation charges as they become payable only after the entry of the goods into the territorial waters of India. Further, in a c.i.f contract these are usually borne by the shipping company. It has been further averred in para 18 that in addition to these charges "the Customs Authorities insist on loading a percentage of the value of the goods which is about 0.75% of the value of goods as landing charges for the purpose of determining the assessable value and levying duties of customs." It is contended that in the consignments imported by the petitioner the landing charges have been paid by the shipping company and included in the freight and this value is already included in the assessable value. Therefore the landing charges and the additional landing charges of 0.75% ought not to be included in the assessable value again. 13. The issue concerning landing charges appears to be fully covered by the decision of the Hon'ble Supreme Court in Garden Silk Mills Limited v. Union of India (supra). The main question which arose in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is indicated in the documents of purchase or sale." Even in those cases it was contended that since they were cif contracts, the landing charges formed part of freight which was included in the assessable value. The Court however did not accept this and observed that there was nothing to show that the shipper had paid the landing charges to the Port Trust Authorities. It was emphasized that the burden of showing this was on the importer. This is clear from the following passage (ELT p.366, para 17) : "It was submitted by the learned counsel for the appellants that in actual effect in the case of CIF contracts like the present, it is the shipper who pays the landing charges and the Indian Importer does not incur these expenses in addition to that he has paid on the basis of the CIF contract. In other words the submission was that the landing charges are already included in the CIF value of the goods as they form part of the freight paid to the steamer agent and the said charges are recovered by the Port Trust Authorities directly from the steamer agents and, therefore, a second inclusion of such landing charges by loading a flat percentage of the CIF value is uncalled for. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt held that "the landing charges was rightly taken into consideration in determining the assessable value of the goods imported in terms of Section 14(1)(a) of the Act." 14. In our view, the facts of the present case are no different from those in the cases before the Hon'ble Supreme Court in Garden Silk Mills Ltd. Like the importers in those cases, the petitioners here have also failed to show that either the shipper or the importer in fact paid the landing charges and additional landing charges to the Port Authorities. The petitioners having failed to discharge the aforesaid onus, the landing charges have to be included while determining the assessable value of the imported goods. Therefore in the present case, the challenge by the petitioners to the inclusion of landing charges and additional landing charges to the assessable value must fail. 15. The judgment in Ispat Industries Limited (supra) turned on its facts. In para 21 of Ispat Industries the decision in Garden Silk Mills Ltd. was noted and distinguished as under : "It may be noted that Garden Silk (supra) was a case where the question was whether landing charges could be included in the value of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle belongs and where such duty is leviable at different rates, the highest duty." 17. The object behind the levy of CVD has been succinctly explained by the Hon'ble Supreme Court in Hyderabad Industries Ltd. v. Union of India , 1999 (108) E.L.T. 321 (S.C.) = (1999) 5 SCC 15 in the following passages (SCC, p. 25) : "12.Section 12 of the Customs Act levies duty on goods imported into India at such rates as may be specified in the Customs Tariff Act, 1975. When we turn to the Customs Tariff Act, 1975, it is Section 2 which states that the rates at which duties of customs are to be levied under the Customs Act, 1962 are those which are specified in the First and Second Schedules of the Customs Tariff Act, 1975. In Section 12 of the Customs Act there is no reference to any specific provision of the Customs Tariff Act, 1975. In other words for the purpose of determining the levy of customs duty on goods imported into India what is relevant is Section 12 of the Customs Act read with Section 2. 13.On the other hand levy of additional duty under Section 3 is equal to the excise duty for the time being leviable on the like article which is imported into India if produced or manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article. This provision corresponds to Section 2-A of the existing Act, and is necessary to safeguard the interests of the manufacturers in India". Apart from the plain language of the Customs Tariff Act, 1975 even the notes to the clauses show the legislative intent of providing for a charging section in the Tariff Act, 1975 for enabling the levy of additional duty to be equal to the amount of excise duty leviable on a like article if produced or manufactured in India was with a view to safeguard the interests of the manufacturers in India. Even though the impost under Section 3 is not called a countervailing duty there can be little doubt that this levy under Section 3 is with a view to levy additional duty on an imported article so as to counterbalance the excise duty leviable on the like article indigenously made. In other words Section 3 of the Customs Tariff Act has been enacted to provide for a level playing field to the present or future manufacturers of the like articles in India." 18. These observations make it clear that the Act and the CTA operate in different fields. To repeat "Merely because the incidence of tax under Section 3 of the Customs Tariff Act, 1975 ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se duty when the local manufacturers have to compulsorily pay the special excise duty as well. If the interpretation sought to be placed on the language of Section 3(1) CTA by the petitioners is accepted, the CVD so levied would not counterbalance the excise duty payable by the local manufacturers on a like product in order to ensure a "level playing field." 20. We are also not able to accept the contention of the petitioner that in view of the decision in Collector of Central Excise, Jaipur v. J.K. Synthetics (supra), the Government cannot charge CVD duty in excess of 15% ad valorem . The decision in J.K. Synthetics shows that the product involved there was 'Mono-Ethylene Glycol' (MEG) in respect of which no excise duty at all was leviable. It was in that context that it was held that where goods are completely exempted from excise duty, the question of levying CVD under Section 3(1) CTA would not arise. Here there is no dispute that as on 5-6-1982, caprolactum manufactured locally attracted basic excise duty of 15% ad valorem and special excise duty of 5% on the basic excise duty. Therefore, the judgment in J.K. Synthetics is of no help the petitioners. For these r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court in Kasinka Trading v. Union of India (1995) 1 SCC 274 and reiterated in Shrijee Sales Corpn. v. Union of India (1997) 3 SCC 398. In both these cases this Court was concerned with notifications issued under Section 25 of the Customs Act. In Kasinka Trading case it is stated that the exemptions granted under Section 25(1) of the Customs Act in public interest is designed to offset the excess price which the local entrepreneurs were required to pay for importing PVC resin at a time when the difference between the indigenous product and the imported product was substantial and at a time when the notification was withdrawn by the Government there was no scope for any loss to be suffered by the importers and, therefore, the change of policy was permissible. This decision is the same as in Shrijee Sales Corpn. wherein it was noticed that once public interest is accepted as the superior equity which can override individual equity, the principle would be applicable even in cases where a period has been indicated for which period the notification would remain in force and the Government is competent to resile from a promise. It was further noticed therein that the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rit petition, and in its amended versions, pleaded that the impugned notification dated 20-10-1982 is invalid because the respondents have failed to demonstrate any public interest or justification for the reduction of the exemption (and the corresponding increase in the rate of customs duty) by 20%. The only plea is that the petitioner had already firmed up several contracts prior to the date of the notification dated 20-10-1982 and that the petitioner would suffer losses if the increased rate of customs duty is levied. In any event these are matters of economic policy and in the absence of pleadings to show that there was no public interest involved, it is not possible to conclude that the reduction of the exemption was not activated by public interest. We accordingly reject the petitioner's challenge to the validity of the Notification dated 20-10-1982. 26. Before concluding, a mention must be made of the fact that the petitioners have filed an application No. 13827/2006 on 14-10-2006 stating that although pursuant to the interim order of this Court, the bank guarantee for 50% of the disputed amount was furnished, it was not kept renewed by the petitioners and it has since be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
