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TMI Blog2011 (12) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... of Customs under Section 3(1) of the Customs Tariff Act, 1975 on the future imports which are continuous in nature and are required for the petitioner's manufacturing activities. 2. The petitioner herein is the manufacturer of Automotive Tyres, Tubes and other rubber products. For manufacturing these rubber products, they purchase indigenously grown natural rubber, apart from importing natural rubber on a regular basis. Rubber, under the Rubber Act, 1947, attracts a duty of excise on all rubber produced in India at such rate, as fixed by the Central Government. Section 12(1) of the Rubber Act, 1947 is the charging provision under which excise duty as cess is levied on rubber produced in India at such rate fixed by the Central Government as not exceeding two rupees per kilogram of rubber so produced in India. As per the Ministry of Commerce, a duty of excise at ₹ 1.50 per Kg is leviable as cess on all rubber produced in India. The excise duty shall be collected by the Rubber Board, levied under Section 12(1). As far as the excise duty leviable under the Central Excise and Salt Act, 1944 is concerned, natural rubber falling under Entry 40.01.00 is exempted from the whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Apex Court by the Revenue. By order dated 17.2.2003, in the decision reported in 2003 (157) ELT A134 (Commissioner of Customs, Chennai Vs. Vikrant Tyres, Mysore), the Apex Court dismissed the Revenue's appeal as "not pressed". Subsequently, in I.A.No.31-45 in Civil Appeal Nos.1460-1474/2003, under order dated 11.10.2003, the Apex Court dismissed the Review petition filed by the Revenue, by observing "We see no reason to modify/clarify our order dated 17th February, 2003. I.A.Nos.31-45 stands dismissed." 5. It is a matter of record that considering the conflicting views of the various Benches of CESTAT as to the levy of additional duty of customs on the imported rubber to the extent equal to the duty of excise levied as cess under Section 12 of the Rubber Act, the Principal Bench, New Delhi, referred the question as to whether the additional duty of customs was leviable on the imported rubber, to a Larger Bench, vide the decision reported in 2005 (190) ELT 47 in the case of TIK-LIG Ltd, Vs Commissioner of Customs, Chennai. In the decision reported in 2006 (193) ELT 169 (TTK-LIG Ltd. Vs. Commissioner of Customs, Chennai & Delhi), by order dated 16.12.2005, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner pointed out that in terms of Section 3 of the Customs Tariff Act, additional duty of customs was leviable; that the clarification dated 29.9.1997 had clearly held that cess on imported rubber is leviable under Section 3 of the Customs Tariff Act; hence, the refund claim was liable to be rejected. Although there is some confusion in the order passed by the said authority on 02.12.1998 with reference to the Ministry of Commerce letter dated 29.09.1997, the fact remains that as far as imported rubber is concerned, Ministry of Commerce made it clear that imported rubber did not attract cess levy under the Rubber Act. Aggrieved by the orders passed in 79 claims, the petitioner preferred appeals before the Commissioner of Customs (Appeals). Placing reliance on the CESTAT order in the assessee's case dated 11.9.1997, the petitioner contended that refund of the cess paid was to be ordered. 7. The First Appellate Authority, however, dismissed the appeals and held that the order of the lower authority holding that cess is leviable as additional duty of customs on natural imported rubber could not be held as bad and that the instruction given on 02.09.1997 clearly pointed out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1975? (b) Whether the claim of the respondent for refund of duty is barred by the doctrine of unjust enrichment? 11. The appeals filed by the Revenue were however dismissed under orders dated 05.07.2004 and the Apex Court remanded the matter back to the CESTAT to decide on the question of unjust enrichment. The appeals preferred in the case of Vikrant Tyres Ltd. and MM Rubber Company Ltd. were also remanded by the Apex Court under orders dated 14.07.2008 and 08.03.2007 respectively. The CESTAT accordingly set aside the orders in the respective assessee's case and remanded the case to the original authority to decide on the issue of unjust enrichment on the refund claim made by the assessees therein. 12. While matters stood thus, by Show cause-cum-Demand Notice dated 23.09.2011, the second respondent herein initiated proceedings under Section 28(1)(a) of the Customs Act, 1962, demanding levy of Additional Duty under Section 3 of Customs Tariff Act, 1975 and called upon the petitioner-MRF Limited to show cause: (i) As to why Additional Duty of Customs amounting to ₹ 46,47,500/- as detailed in Annexure I for the period 24.09.2010 to 23.10.2010 under Section 3(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering the fact that no excise duty is leviable in the case of imported rubber and going by the decisions of the Tribunal accepted by the Revenue too, there could no longer be any demand in the form of levying additional duty. Thus when Section 3 of Customs Tariff Act, 1975 is clear as to the levy as one of additional duty and not as cess and the present notice is no different from what was originally given by the Revenue, the order passed by the CESTAT on the refund claim should have been taken to a logical end. The present proceedings, in short, are aimed at the refund claims and there are no bona fides in the present proceedings. He pointed out that the confusion persisting in the minds of the authorities below as to the additional duty collected as cess is clear from the reading of the order of the Assistant Commissioner and later in the First Appeal order in considering the claim for refund. 15. Thus learned Senior Counsel pointed out that in substance, the demand now made in the notice is no different from what was originally levied. Going by the history of said levy, right from the decision of the CESTAT in the case of MRF Ltd Vs. CC, Madras reported in 1997 (96) ELT 198 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the pith and substance of the levy, the present notice has to be quashed as without jurisdiction. 17. On notice, the respondents have filed the counter affidavit before this Court. The stand of the Revenue is that levy under Section 12 of the Rubber Act, 1947 is not cess as such, but duty of excise levied as cess for the purpose of the Act. Thus, what is levied under the Rubber Act is no different from what is levied as excise duty under the Central Excise Act. Referring to Section 3(1) of the Customs Tariff Act, 1975, the counter states that the question before the Tribunal on the earlier round of litigation was as to whether the Customs Department could levy cess as per the Rubber Act, 1947. It is no doubt true that the Board, in its circular, pointed out that on imported rubber, there is no question of the Customs Department levying cess and the Tribunal also held in favour of the assessee that under Section 3(1) of the Customs Tariff Act, 1975, the Revenue cannot impose cess as leviable under Section 12(1) of the Rubber Act, 1947. Referring to the decision of the Tribunal, particularly to the Larger Bench of the Delhi Tribunal in the case of TTLK-LIG Ltd Vs. Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions in Section 3 of the Customs Tariff Act and the fact that the Tribunal had, in its order on the refund claim, clearly pointed out to the nature of collection made earlier as one of cess under the Rubber Act, 1947, the petitioner is not justified in contesting the show cause notice as though the levy of additional duty under Section 3 had already been decided in favour of the petitioner and accepted by the Revenue as not chargeable. Considering the stage of the proceedings at which the petitioner has approached this Court, the respondents submit that the writ petitions be dismissed. 21. Heard learned senior counsel appearing for the petitioner and learned standing counsel appearing for the Revenue and perused the materials available on record. 22. In the face of the orders of the Tribunal in the petitioner's own case holding the levy of cess and the collection by the Customs Authorities as bad and without jurisdiction and the decision of the Apex Court dismissing the Revenue's appeal thereon, the issue as regards the levy of cess by the Customs Department on the imported rubber under the Rubber Act thus no longer remains a question for any further consideration before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC 1211, the Apex Court pointed out as follows: "16. There are different types of customs duty levied under different Acts or Rules. Some of them are; (a) a duty of customs chargeable under Section 12 of the Customs Act, 1962; (b) the duty in question, namely, under Section 3(1) of the Customs Tariff Act; (c) additional duty levied on raw-materials, components and ingredients under Section 3(3) of the Customs Tariff Act; and (d) duty chargeable under Section 9A of the Customs Tariff Act, 1975. Customs Act 1962 and the Customs Tariff Act, 1975 are two separate independent statutes. Merely because the incidence of tax under Section 3 of the Customs Tariff Act, 1975 arises on the import of the articles into India it does not necessarily mean that the Customs Tariff Act cannot provide for the charging of a duty which is independent of the customs duty leviable under the Customs Act. " Thus merely because the incidence of tax under Section 3 arises on the import of the articles, it does not necessarily mean that the Customs Tariff Act cannot provide for the charging of duty which is independent of the customs duty leviable under the Act. It observed: "12. Section 3(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e levied. The decision in Khandelwal Engineering Works case to the extent it takes a contrary view, does not appear to lay down the correct law. Sh. Vaidyanathan contended that this Court should be reluctant to reconsider a judgment which has held the field for a long time, but in our opinion public interest requires that law be correctly interpreted more so in a taxing statute where the ultimate burden may fall on the common man. We hasten to add that we are not over-ruling the Khandelwal Metal & Engineering Works case in its entirety because the Court also held in that case that brass scrap was in any case an item which was manufactured and, therefore, excise duty was leviable. We have not examined, in the present cases, whether brass scrap can or cannot be regarded as a manufactured item for that question does not arise in the present cases. " 25. The said view was reiterated in the decision reported in (2009) 12 SCC 735 (CC (Preventive) Amritsar Vs. Malwa Industries Ltd.), that the object of the levy under Section 3 is that an importer should not be placed at some more advantageous position vis-a-vis the purchaser/manufacturers of similar goods in India. 26. It is an adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reated as excise duty to be included in the sales turnover for the purpose of levy of purchase tax under the Kerala General Sales Tax Act, came for consideration in the petitioner's own case in the decision reported in (1998) 1 SCC 616 (State of Kerala Vs. Madras Rubber Factory Ltd.). In considering the said issue, the Apex Court pointed out as follows: "12. That the cess which is collected is a duty of excise on all the rubber produced in India is evident from the provisions of Section 12(1) of the Rubber Act. The rate of cess is prescribed in Section 12(1) itself, The excise duty referred to in Section 12(1) is not determined with reference to any price but the duty is determined by applying a fixed rate to the weight of the rubber produced. After the amendment of Sub-section (2) of Section 12 the duty is to be collected by the Board in accordance with the rules made in this behalf either from the owner of the estate on which the rubber is produced or from the manufacturer by whom such rubber is used. It is the duty which is statutorily levied under Sub-section (1) on the rubber produced which is to be collected, Under Sub-section (2), in the manner provided by the rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted Units does not arise. Thus the exemption given under the Central Excise Act would not entitle the petitioner therein to an exemption under Section 5A of the Textiles Committee Act, 1963 on its 100% Export Oriented Units. 34. In contrast to this is the decision reported in 1997 (91) ELT 279 (Guj) in the case of Vareli Textile Industries Ltd., Vs. Union of India. Referring to the Textiles Committee Act, 1963, the Gujarat High Court considered the levy of cess under Section 5A(1) of the Textiles Committee Act, 1963, which is in pari materia with the Rubber Act, 1947, with reference to the additional duty of customs leviable under Section 3 of the Customs Tariff Act. The Gujarat High Court viewed that once the provisions of the Customs Tariff Act, 1975 stood attracted to the import of any article, it would become exigible to levy of customs duty, the measure of which would be commensurate with the excise duty leviable on such articles, if manufactured in India. The Gujarat High Court held that for the purpose of Section 3(1) of the Customs Tariff Act, 1975, the excise duty paid by way of cess under the Textiles Committee Act would be the measure of additional duty payable under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the levy originally collected was as cess or as an additional duty, we may have to look at the order of the CESTAT originally passed on the assessment made on the petitioner. 40. Both sides agree that a perusal of the Bill of entry for home consumption, clearly pointed out that what was collected from the petitioner was nothing but cess, levied under the Rubber Act, 1947. The copies of the Bill of Entry produced before this Court show that as against the column on the levy of additional duty, the endorsement therein reads as "Nil" and collection of cess alone was levied under the Customs and Tariff Act, 1975. In respect of such payment of cess collected from the assessee, in the appeal preferred before the Tribunal, the petitioner took a definite stand that levy of cess under Section 12 of the Rubber Act on rubber imports was not leviable by the Customs Department. In respect of the same, after the CESTAT order allowing the petitioner's case, it had also filed the refund claim on the cess payment. In the substantive part of the grounds of appeal filed against the levy and collection of cess under Section 12 of the Rubber Act, the petitioner herein specifically que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , considering the conflicting decisions among the various Benches of the Tribunal as to the decision as to the jurisdiction of the Customs Department to levy cess under the Rubber Act, particularly with reference to the circulars issued by the Ministry of Finance and Commerce, the issue was referred to a Larger Bench of the CESTAT. In the decision reported in 2006 (193) ELT 169 (TTK-LIG Ltd. Vs. Commissioner of Customs), by order dated 16.12.2005, the Tribunal, New Delhi, held that additional duty of customs was leviable under Section 3 of the Customs Tariff Act, 1975 on the imported rubber as on the date of importation to the extent equal to the duty of excise levied as cess under Section 12 of the Rubber Act on the rubber produced/manufactured in India as on the said date. In the appeal preferred before the Supreme Court, as against the orders of the Full Bench dated 28.10.2003, the following were the questions of law raised by the Revenue: "(a) Whether cess is leviable on imported rubber under Section 12 of the Rubber Act, 1947 read with Section 3 of the Customs Tariff Act, 1975? (b) Whether the claim of the respondent for refund of duty is barred by the doctrine of unj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration of the claim. 45. Thus, as rightly pointed out by the learned standing counsel appearing for the respondents, right from the claim made by the petitioner for the first time when the Bill of Entry was filed, to the appeals filed on the levy of cess thereon ultimately leading to the petitioner's filing of the refund application, show that there never existed any confusion in the mind of the petitioner as regards the stand taken by them that the dispute raised related to the levy of cess on the imported rubber by the Customs Authorities and that the issue on the levy of additional duty under Section 3 of the Customs Tariff Act was never an issue for consideration before any of the authorities for rendering a decision thereon. 46. The application on refund also makes no secret of what was paid by the assessee - that it was nothing but Cess under Section 12 of the Rubber Act, 1947, collected by the Revenue as so. 47. Considering the above facts and applying the decision of the Apex Court in the case of Hyderabad Industries Ltd. and another Vs. Union of India reported in AIR 1999 SC 1847, Section 3 of the Customs and Tariff Act, 1975 being a charging Section, the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner submits that what was collected originally under Section 3 of the Customs Tariff Act, 1975 was additional duty only and not cess. If that argument has to be accepted, then the Bills of Entry, the claim of the assessee as evident from the orders of the Tribunal, the refund claim and the grounds taken before the Tribunal in the refund claim appeal and finally, the findings of the Tribunal at paragraph 7 in the order on refund, would carry no meaning at all. 50. Given the factual finding that what was originally levied was cess only under the Rubber Act, 1947 and that the petitioner had not raised any grievance even to have the order rectified on this factual aspect at any point of time to contend that what was levied was additional duty only, I have no hesitation in rejecting the line of reasoning projected by the learned Senior counsel appearing for the petitioner. It is not denied by the learned senior counsel appearing for the petitioner that Section 3(1) of the Customs and Tariff Act, 1975 is a valid piece of legislation and the State has the authority to levy additional duty. 51. Thus even going by the argument of the petitioner herein, if what was collected from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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