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TMI Blog1979 (9) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... ad valorem and duty under Section 2A of the Indian Tariff Act 51/2% of the ad valorem. The duty under Section 2A of the Indian Tariff Act is known as countervailing duty. The Government of India, in exercise of the powers conferred by Section 23 of the Sea Customs Act, 1878, issued the exemption Notification on August 6, 1960 whereby component parts of machinery when imported were exempted from so much of the Customs duty leviable thereon under the Indian Tariff Act as is in excess of the rate applicable under the Indian Tariff Act to the machinery when imported complete. 3.The petitioners have imported the components of the diesel engines between the period commencing from May, 1965 to December, 1965. The Customs authorities at Bombay granted advantage of the exemption Notification to the imports of the petitioners but took the view that expression "Customs Duty" used in the Notification meant not merely the customs duty referred to in Section 2 of the Indian Tariff Act but also the countervailing or additional duty referred to in Section 2A of the Indian Tariff Act. The petitioners were assessed accordingly at the rate of 33% ad valorem. The petitioners applied for refund of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time being in force on goods imported or exported by sea into or from any customs-port from or to any foreign port. The duties were levied under the provisions of the Indian Tariff Act, 1934. Section 2 of the Indian Tariff Act provides that there shall be levied and collected in every port the duties specified in the First and Second Schedules. The First Schedule refers to the Import Tariff and the various items are grouped together in this Schedule. Item No. 72 refers to Machinery and provides for levy of duty at certain per cent ad valorem. Item No. 73 (22) refers to a kind of machinery i.e. Internal Combustion Engines, all sorts and it provides that the duty leviable is at the rate provided for the machinery plus the excise duty for the time being leviable on like articles if produced or manufactured in India. The idea of levying additional duty known as countervailing duty is that the manufacturer of the same category of goods in India ought not to suffer unfair competition from outsiders. In order to balance economy and trade, the countervailing duty was levied, so that if the manufacturers in India are obliged to pay excise duty, then persons importing similar or same ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of complete machinery. The submission of the learned Counsel is that the petitioners are entitled to claim exemption from so much of the customs duty as is in excess of the rates applicable to the complete machinery and, therefore, the duty leviable on component parts should be at the rate of 271/2% of the ad valorem. Mr. Dhanuka submitted that the duty levied on the component parts was at the rate of 33% and the assessment was made by taking into account the countervailing duty of 51/2% on the completed machinery. The question which requires determination is whether the customs duty and the countervailing duty on the completed machinery are distinct and different or the customs duty would also include the countervailing duty. In my judgment, the submission of the learned Counsel that the customs duty would not include the countervailing duty is not correct. The provisions of Section 12 of the Customs Act provide that the duties of customs shall be levied at such rates as may be specified under the Indian Tariff Act. Prior to 1963, Section 2 of the Indian Tariff Act provided for the rates of duties as set out in Schedule I to that Act. That impost was known as customs duty and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in AIR 1966 Supreme Court 1686. It was observed that as the expression "countervailing duties" has not been defined, it has to be determined with reference to etymological sense. In its etymological sense, it means to counter-balance and the levy is made to counter-balance the duties of excise imposed on goods manufactured in the country. The Supreme Court in Mc Dowell Company's case quoted with approval a passage from its earlier judgment in the case of M/s. Mohan Meakin Breweries Ltd. v. Excise Taxation Commissioner, Chandigarh reported in AIR 1976 Supreme Court 2020 where the Supreme Court was concerned with the question of countervailing duty levied in respect of interstate trade. In view of this judgment, there can hardly be any dispute as regards the nature or purpose of the levy of countervailing duty. Mr. Dhanuka submitted that the countervailing duty is distinct and different from customs duty because the customs duty is levied on the import of the goods, while the countervailing duty can be recovered provided certain condition precedents are in existence. It is urged that the countervailing duty can be levied provided the goods imported are also actually pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that the duty was lawful and the contention that such duty does not attract Entry 83 in List I of the Constitution even assuming to be correct, still the Parliament has power to levy the impost under Entry 97 of List I which is of residuary nature. Certain observations in this judgment really go contrary to the submission of Mr. Dhanuka and the learned Judge did proceed on the basis that the customs duty and the countervailing duty are part and parcel of the same impost and was not distinct and separate. In my judgment, the submission of Mr. Dhanuka that the two duties are distinct and separate is not correct and cannot be entertained. It was also submitted that Section 2A was amended by Finance Act, 1963 and the amended provision also establishes that the nature and kind of duty differ. Mr. Manjrekar is right in his contention that Section 12 provides for levy of duty as provided under the Indian Tariff Act and it is not permissible to split out the duty under Sections 2 and 2A into different categories. 10.There is one more aspect of the matter which cannot be overlooked. The question as to whether the countervailing duty can be taken into account while interpreting th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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