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TMI Blog2002 (2) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... release the bank guarantees furnished at the time of provisional release of the goods in question. 2.Petitioner No. 1 is a partnership firm while petitioner No. 2 is a partner of petitioner No. 1 Firm. The petitioners are engaged in business of trading in various commodities including Crude Palm Oil and Crude Palm Olein of non-edible grade which is imported in accordance with law. Respondent No. 1 is Union of India while respondent No. 2 is the Central Board of Excise and Customs, a statutory authority constituted under the Central Board of Revenue Act, 1963. Respondent No. 3 is the proper officer having jurisdiction to assess the duty under the provisions of the Act. 3.On 1-3-2001 the Central Government issued an exemption Notification bearing No. 17 of 2001-Cus., dated 1-3-2001 (hereinafter referred to as 'Notification No. 17') in exercise of powers available under Sec. 25(1) of the Act. On 28-3-2001 the petitioners imported consignments of crude palm oil (non-edible grade) and crude palmolein and filed Bills of Entry for home consumption wherein the said goods were classified under Chapter 15 of the First Schedule to the Customs Tariff Act, 1975 (hereinafter referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for industrial purposes at concessional rate of duty under Notification No. 17 of 2001. By the said circular, it was incumbent upon the importer to satisfy the proper officer that actual use was for the industrial purpose only and only where such actual use was shown the importer would be entitled to benefit at the concessional rate of 35% under Notification No. 17. 5.Learned Senior Counsel Shri Kamal Trivedi appearing with Shri Rakesh Gupta, Advocate, submitted that the impugned Circular No. 40 of 2001 was illegal, without jurisdiction and authority inasmuch as it sought to rewrite Notification No. 17 by adding condition in relation to end-use even when Notification No. 17 itself did not provide for any such condition. That by virtue of the impugned circular a condition precedent was being imposed on an importer before availing of concessional rate of duty in respect of imported goods resulting in unwarranted harassment of the petitioner. That Notification No. 17 was subordinate legislation in relation to taxing statute and there was no room for supposed intendment while interpreting the said Notification. That, Entry at Sr. No. 29 was clear in terms and the plain words used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and after fulfilling the prescribed condition and not just by misinterpreting the entries in the notification. It was also submitted that Circular No. 40 of 2001 was issued by the Central Board of Excise and Customs after examining the issue and in consultation with the Ministry of Food and Directorate of Vanaspati so as to ensure that benefit of concessional rate of duty for crude palm oil is available to actual users for industrial purposes and such actual use has to be shown to the satisfaction of the proper officer. That in the present case, though Crude Palm Oil imported by the petitioner was not conforming to the specifications of the provisions of Food Adulteration Act, 1954, it could be subsequently refined to make it fit for human consumption and if concessional rate of duty under Entry at Sr. No. 29 of Notification No. 17 would be allowed, Entry at Sr. No. 34 would become redundant and defeat the intention of the Government of giving concessional duty for crude oil to be used for industrial purpose and not for edible purpose. Our attention was invited to the fact that the notification is issued under Sec. 25(1) of the Act whereby the specified goods are declared exempt o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods, the only dispute being applicability of the circular to the extent that the circular required establishing end-use when the same was practically not possible. It was further submitted that in taxing statute the proposition was well established that where two interpretations were possible, an interpretation which was more beneficial and which would leave the assessee with a lighter burden should be preferred. That in case of an item which might fall within two entries, the option was with the assessee to claim benefit of an entry which would leave the assessee with a lighter burden of tax. The decision in case of Collector of Central Excise v. Bakelite Hylam Ltd., 1997 (91) E.L.T. 13 (S.C.) was relied upon in support of this proposition and lastly, it was submitted that the Revenue's reference and reliance upon the earlier circular and Notification both of 1997, was misplaced inasmuch as the entries were different. 8.The charge of customs duty is provided under Sec. 12 of the Act, which declares that duties of customs shall be levied on all goods imported into or exported from "India." The taxable event occurs the moment goods enter the territorial waters of India and the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o which the duty is leviable. Every notification(4) issued under sub-sec. (1) shall - (a) unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette; (b) also be published and offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi. Notwithstanding(5) anything contained in sub-sec. (4), where a notification comes into force on a date later than the date of its issue, the same shall be published and offered for sale by the said Directorate of Publicity and Public Relations on a date on or before the date on which the said notification comes into force." 10.Sub-section (1) of Sec. 25 of the Act specifically provides that Central Government may by public notification in the Official Gazette, if it is necessary in the public interest, exempt generally either absolutely or subject to such condition in relation to specified goods either wholly or partly duty of customs. The condition which may be imposed in the notification may be such as may require fulfilment before or after clearance. Sub-section (2) deals with passing of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y by issuing circular in exercise of power under Sec. 151A of the Act. 13.As already seen, charge is leviable by operation of Sec. 12 of the Act and the said provision also prescribes taxable event. In the present case, taxable event having occurred when the goods were imported by the petitioners, can the department then take a stand that though the taxable event has occurred collection of duty shall be made provisionally and final chargeability shall be ascertained upon happening or not happening of a contingency. In our opinion, this course of action cannot be permitted as the statute does not so provide. Once the import of goods is complete, the charge is fastened and only the assessment or quantification remains to be done but such assessment or quantification cannot depend upon a contingency which may happen or which may not happen in future. This cannot be the intention of the legislature and the provisions of the Act coupled with the Tariff Act cannot be read in such a manner. 14.Section 25(1) of the Act permits the Central Government to notify specified goods to be exempt generally either absolutely or subject to such condition which may be fulfilled before or after cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation No. 17 has not provided for any condition, in our opinion, subsequent circular cannot impose such a condition as the same would tantamount to rewriting Notification No. 17 or in other words legislating by circular, which is not permissible in law. As can be seen from the relevant provisions with special reference to Sec. 25 read with Sec. 159 of the Act, a notification under Sec. 25 of the Act requires publication in the Official Gazette as well as requires tabling before both the Houses of Parliament and if that exercise has been carried out without any condition being imposed in the Notification No. 17 it would not be permissible to permit Revenue to impose such condition by way of circular. If the Revenue is allowed to undertake such an exercise, the requirement of publication in Official Gazette and laying a notification before each House of the Parliament would become nugatory and such a course of action is not envisaged by the Act. It would give licence to the executive to bypass/override the legislature and cannot be countenanced. 17.Lot of debate took place in relation to the actual wordings and the meaning of Entries 28, 29 and 34 of Notification No. 17. The said e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue that goods falling under Entry No. 29 should not be made liable to concessional rate of duty i.e. 35% but should be treated as falling under Entry No. 34, if the importer fails to establish that though the goods are other than edible oils at the time of import, yet importer should establish that they shall not be refined or processed to make them of edible grade, in other words, the importer should establish end-use to the satisfaction of the proper officer. There is one more reason why this course of action proposed by the Revenue cannot be accepted. As can be seen from comparison of Entry No. 29 and Entry No. 34, though there are various types of oils mentioned in Entry No. 29 only crude palm oil of edible grade is brought under Entry No. 34 and the circular is only in relation to the said item viz. crude palm oil. Thus, in effect all goods (other than edible oils) falling under different headings except 15.11 can be imported without any such condition of end-use being imposed upon an importer. Only in relation to heading No. 15.11 relating to palm oil, the condition is being imposed upon an importer to establish the end-use for claiming benefit of concessional rate of duty u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isplace the report of technical expert, nor can he insist that inspite of such report the importer must establish that end-use of the product shall not be other than one as regards entry in which the goods admittedly fall at the time of import. 20.The impugned Circular No. 40 of 2001 in Paragraph 6(c) requires that the end-use certificate shall have to be produced by the importer from the Assistant/Deputy Commissioner of Central Excise having jurisdiction over the factories of soap manufacturers (or other industrial application for which the vegetable oil is claimed to have been used) and such certificate is produced before the customs authority within a period of three months or a period as may be extended by the Commissioner of Customs on being requested by the importer. It is further stated in the said sub-paragraph that on failure of importer to produce such certificate within a specified time-frame immediate recovery action of differential amount be initiated. The earlier paragraph i.e. sub-paragraph (b) of Paragraph 6 of the circular states that even after the report of testing of vegetable oil and finding that the consignment is not conforming to the standards prescribed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade and its popular meaning should be preferred and should commend to the authority because it is the condition of the article at the time of importing which is material for the purpose of classification as to under what head duty will be leviable and whether it would be exempt wholly or partly. In the case of Collector of Central Excise v. Vipul Shipyard, 1997 (10) SCC 337 various notifications have been dealt with which grant exemption from excise duty to "Ocean-going vessels". The Revenue had contended that end-use of the vessel was relevant and if the vessels were used within inland waters as barges they were liable to levy of duty. The Apex Court held that at the point of time when the vessels were built the liability to excise duty arose, and at that time vessels were "ocean-going vessels" and that subsequently if they were used in inland waters is of no consequence. 22.It is well established in law that the circulars issued by the Board may bind the officers of the department yet the position would be different with regard to an assessee who is always entitled to contest the validity or legality of such instructions. 23.We, therefore, hold that the impugned Circular No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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