Collector
of Customs, Bangalore & Anr Vs. Hansur Plywood Works & Anr [1989] INSC
324 (26 October 1989)
Rangnathan,
S. Rangnathan, S. Kuldip Singh (J)
CITATION:
1989 SCR Supl. (1) 775 1989 SCC Supl. (2) 520 JT 1989 (4) 393
ACT:
Customs
Tariff Act, 1975: Schedule Heading No. 44.01 and Notifications No. 265 of 1982,
No. 59 of 1983 and No. 126 of 1984-Timber from Burma exempted from customs duty--Levy of auxiliary
duty--Determination of.
HEAD NOTE:
Import
of timber is charged to effective basic .customs duty at 60 per cent under the
Customs Tariff Act, 1975. The Government of India had, however, issued
notification under s. 25 of the Customs Act, 1962 absolutely exempting timber
imported from Burma. But the importers are liable to
pay auxiliary duty in terms of Notification No. 265 dated December 8, 1982 and its successor Notification Nos.
59 of 1983 and 126 of 1984, which prescribed two rates with reference to the
rate of duty of customs. The explanation thereto provides that where there are
two effective basic rates applicable in respect of any article and the
differentiation in rates is attributable to the country of origin of the goods
imported, then the auxiliary duty payable will be the higher of the two rates.
The
respondents had imported certain consignments of timber from Burma which were assessed to auxiliary
duty at the higher rate as per notification. The Appellate Tribunal held in favour
of the assessee respondents.
In
these appeals by the Revenue under s. 130E(b) of the Customs Act, it was contended
for the respondents that exemptions Or concessions in respect of goods imported
from certain countries were generally granted in pursuance of trade agreements
entered into with those countries under s. 5 of the Tariff Act, that the
expression "country of origin" in the notification had a special
meaning and its determination governed by special provisions, and that,
therefore, the explanation to the notification in question had to be confined
in its application only to a comparison of the rates applicable under
notification of concession and basic auxiliary duty determined accordingly.
Allowing
the appeals, 776
HELD:
The auxiliary duty, in a case where imports from different countries attract
different degrees of exemption under different notifications in pursuance of
agreements under s. 5 of the Customs Tariff Act should be determinable
separately by reference to the effective basic duty notified in respect of each
such country. But, if there are different rates of effective duty notified for
goods imported from different countries of origin, then, notwithstanding the
agreement with each of these countries, the auxiliary duty under such a
notification will not be determined, in respect of the import from each of such
countries, by reference to the effective basic duty leviable in respect
thereof, but will be determined with reference to the highest of the effective
rates of duty applicable to all the imports.
[778A-C]
in the instant case, there is no material to show that the notification was
issued in pursuance of an agreement. It is a case where the imports come from
two sets of countries the imports from which attract two different effective
basic rates of duty. The differentiation arises because in respect of one set
of countries there is no notification of concession while in relation to the
other there is a complete exemption granted under a notification. There is
nothing in the language of the explanation that excludes such a case from its
purview. The auxiliary duty is, therefore, to be determined with reference to
the higher of the two effective rates of duty. [777H, 778C-D, F] Collector of
Customs v. Western India Plywood Manufacturing Co. Ltd., [1989] Supp. 1 SCR
779, applied.
CIVIL
APPELLATE JURISDICTION: Civil Appeal Nos. 3820-24 of 1988.
From
the Order dated 2.6.1988 of the Customs, Excise and Gold (Control) Appellate
Tribunal, New Delhi in Order No. 410-414/88-D, Appeal
Nos. CD/SB./659/86-D;C/1526/84-D, CD/SB/1522/86-D;C/1565/84-D and C/422/86--D.
V.C. Mahajan,
and P. Parmeshwaran for the Appellants.
V. Sridharan,
A.R. Madhav Rao and V. Balachandran for the Respondents.
The
Judgment of the Court was delivered by 777 RANGANATHAN, J. These are appeals
under section 130E(b) of the Customs Act from an order passed by the Customs,
Excise and Gold Appellate Tribunal dismissing the appeals preferred by the
Collector of Customs in the cases of M/s.
Hunsur
Plywood Pvt. Ltd. and M/s. Veneer Mills. The question raised involves the
interpretation of Notification Nos. 59/83 and 126/84. These notifications are
identically worded in all material respects with notification no.265/Cus. dated
8.12. 1982 and the question before us is directly governed by our judgment of
even date in Civil Appeal Nos. 2644-48 of 1987 (Collector of Customs v. Western
India Plywood Manufacturing Co. Ltd., [1989] Supp. 1 S.C.R. 779. For the
reasons set out in detail in the said judgment these appeals have to be allowed
and the orders of the Assistant Collector rejecting the claims filed by the
respondents have to be upheld.
When
these matters were taken up, Shri V. Sridharan, appearing on behalf of the
assessee-respondents, drew our attention to section 5 of the Customs Tariff
Act. He contended that exemptions or concessions in respect of goods imported
from certain countries are generally granted in pursuance of agreements entered
into with those countries, that the expression "country of origin"
has a special meaning and its determination governed by special provisions and
that, in view of this, the explanation to the notification in question has to
be confined in its application only to a comparison of the rates applicable
under notifications of concession to goods imported from certain
"countries of origin". In this case, though there are four different
notifications, one each in respect of Burma, Nepal, Bangladesh and Bhutan, they are all notifications of
complete exemption and the rate of auxiliary duty by reference to any one of
them will according to the assessee, be the smaller rate mentioned in the
relevant notification under consideration. The rate of basic duty in respect of
other countries is 60% as there is no notification of exemption or concession
in relation thereto. The argument is that the last of these should be ignored
and the basic auxiliary duty determined only by reference to the rates
prescribed in the four notifications of exemption. For the reasons set out in
the judgment in the case of Western India Plywood Manufacturing Co. Ltd. we are
unable to accept this contention.
We are
unable to agree with the learned counsel that the interpretation given by us
will be inconsistent with the agreement for concessional treatment that may
have been entered into between the Government of India and the countries from
which the goods in question are imported. In the first place, there is no
material in the case before us to show that the notification under section 25
was issued in 778 pursuance of an agreement under section 5 of the Customs
Tariff Act. That apart, if this argument were sound, the auxiliary duty, in a case
where imports from different countries attract different degrees of exemption
under different notifications, should be determinable separately by reference
to the effective basic duty notified in respect of each such country. But
admittedly, if there are different rates of effective duty notified for goods
imported from different countries of origin, then, notwithstanding the
agreement with each of these countries, the auxiliary duty under the
notification now under consideration will not be determined, in respect of the
import from each of such countries, by reference to the effective basic duty leviable
in respect thereof, but will be determined with reference to the highest of the
effective rates of duty applicable to all the imports. If that be so, there is
no reason why the position cannot be the same in a case like the present where
the imports come from two sets of countries the imports from which attract two
different effective basic rates of duty, although the difference arises because
in respect of one set of counties there is no notification of concession while
in relation to the other there is a complete exemption granted under a
notification. As we have pointed out, there is nothing in the language of the
explanation that excludes such a case from its purview.
Considering
the language of the notification before us, as we have explained in the case of
Western India Plywood Manufacturing Co. Ltd. the result of reading the First
Schedule along with the relevant notifications is that imports of timber into
India from most countries is charged to effective basic customs duty as per the
tariff in the Schedule whereas in respect of imports from Burma, Nepal, Bhutan
and Bangladesh, the rate of effective basic duty is nil. The position,
therefore, is that the article in question is liable to two or more different
rates of effective basic duty based on the country of origin for the import.
It,
therefore, follows that the auxiliary duty is to be determined with reference
to the higher of the two effective rates of duty.
We,
therefore, see no reason to reach a different conclusion in the present case
from that arrived at by us in the case of Western India Plywood Manufacturing
Co. Ltd. We, therefore, allow the appeals and restore the orders of the
Assistant Collector rejecting the claims of refund filed by the assesses. The
appeals are allowed but there will be no order as to costs.
P.S.S.
Appeals allowed.
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