Union of India & others Vs. Inter Continental (India) [2008]
INSC 695 (23 April 2008)
ASHOK BHAN & DALVEER BHANDARI
O R D E R CIVIL APPEAL NO. 6529 OF 2002 The short question which arises for
consideration in the present appeal filed by the revenue is "whether the
end-use verification of the products is necessary for availing the benefit of
concessional rate of duty".
Respondent-assessee (hereinafter referred to as the 'assessee') is engaged
in the business of trading in various commodities including Crude Palm Oil and
Crude Palmolin of Non-Edible Grade which is imported in accordance with law. On
28.3.2001, assessee imported consignments of Crude Pal Oil and Crude Palmolin
and it is alleged that the assessee got them cleared after paying concessional
rate of duty at the rate of 35% as per entry 29 of the Notification
No.17/2001-Customs dated 1st March, 2001 instead of clearing the same after
paying duty at the rate of 75% as per entry 34 of the same notification. The
goods were provisionally allowed to be cleared after taking Bank Guarantee of
Rs.10 crores for the differential duty due. Provisional assessment was allowed
directing the assessee to produce End-use Certificate so as to avail
concessional rate of duty as per Board's Circular No.40/2001-Cus. dated 13th
July, 2001.
Assessee, instead of producing the End-use Certificate, filed a writ
petition in the High Court questioning the direction to produce the End-use
Certificate which was to be issued by the Assistant/Deputy Commissioner of
Central Excise having jurisdiction over last such purchaser on the ground that
a new condition could not be added to the notification by issuing a circular.
According to the assessee, the Board Circular seeking to impose a limitation on
the exemption notification or whittling it down by adding a new condition was
not binding on the assessee as it travelled beyond the said notification.
It may be mentioned here that the samples taken from the imported crude oil
were sent for testing to the Chemical Examiner, Customs House, Kandla and
Public Analyst, Food & Drug Laboratory, Vadodara for their opinion to
ascertain as to whether the oil is fit for human consumption or not. Both the
laboratories opined that the imported oil was not fit for human consumption.
The High Court by the impugned order has accepted the writ petition by
holding that the Central Board of Excise and Customs could not, by issuing a
circular subsequent to the issuance of the notification, add a new condition
thereby restricting the scope of the exemption notification. It was held that
the impugned circular No.40/2001-Cus. dated 13.7.2001 being contrary to the
notification No.17/2001-Cus. dated 1st March, 2001 could not be sustained as it
cannot override the said notification. In para 16, the High Court observed as
under:
"In relation to entry at Sr.No.29 no condition is prescribed. Similarly
no condition is prescribed in relation to entry at Sr.No.34 or even in entry
No.28. If the Notification 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 Section 25 read with Section 159 of the
Act, a notification under Section 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."
We entirely agree with the view taken by the High Court that the department
could not, by issuing a circular subsequent to the notification, add a new
condition to the notification thereby either restricting the scope of the
exemption notification or whittle it down.
A three Judge Bench of this Court in the case of Tata Teleservices Ltd. v.
Commissioner of Customs reported in (2006) 1 SCC 746 has taken a similar view.
In para 10, it was held as under:
"We are of the view that the reasoning of the Bombay Bench of the
Tribunal as well as that of the Andhra Pradesh High Court must be affirmed and
the decision of the Delhi Tribunal set aside insofar as it relates to the
eligibility of LSP 340 to the benefit of the exemption notification. The Andhra
Pradesh High Court was correct in coming to the conclusion that the Board had,
in the impugned circular, predetermined the issue of common parlance that was a
matter of evidence and should have been left to the Department to establish
before the adjudicating authorities. The Bombay Bench was also correct in its
conclusion that the circular sought to impose a limitation on the exemption
notification which the exemption notification itself did not provide. It was
not open to the Board to whittle down the exemption notification in such a
manner."
Following the aforesaid decision of this Court in Tata Teleservices
Ltd.(supra), we do not find any merit in this appeal and dismiss the same
leaving the parties to bear their own costs.
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