ORDER
G. Sankaran Vice-President
1. The captianed appeal was originally filed as a revision application before the Central Government which, under Section 131-B of the Customs Act, 1962 has come as transferred proceedings to this Tribunal for disposal as if it were an appeal filed before it.
2. When, the matter was takes up for hearing, Shri N.M. Verma, Liaison Officer, representing the appellant, and Shri K.C. Sachar, Departmental Representative, representing the respondent, drew the affention of the Bench toe Order Na 44a/84-B, dated 1st August, 1984 in Appeal No. E.D.(S.B.) (T) A. No. 595/89-D, filed by the same appellant on a similiar issue and stated that they had no new submissions to put forward. When the Bench observed that the judgment of the Bombay Court in Apar Private Ltd. and Ors. v. Union of India and Ors., 1985 (22) E.L.T. 644 might have a bearing on the issue under consideration by the Bench, both sides stated that they had not had an opportunity to study the judgment and, therefore, they did not make any submission in this behalf.
3. The facts of the case, very briefly stated, are that the appellant imported acrylic fibre prior to 4-10-1978 and warehoused the goods in accordance with the provisions of the Customs Act, 1962. The goods were cleared after 4-10-1978 from the warehouse in terms of Section 68 of the Customs Act. On 4-10-1978, the President of India promulgated the Additional Duties of Excise (Textiles and Textile Articles) Ordinance in terms of which an additional duty of excise (in addition to the duty of excise leviable in terms of the First Schedule to the Central Excises and Salt Act, 1944) was imposed on certain specified articles. Acrylic fibre was one of the articles which attracted such additional duty of excise. At the time of removal of the acrylic fibre from the warehouse, it appears that the Customs Authorities assessed the goods to additional duty of customs (popularly known as countervailing duty of customs) equivalent to not only the duty of excise leviable on indigenous goods in terms of the First Schedule to the Central Excises and Salt Act but also the additional duty of excise leviable on indigenous goods in terms of the aforesaid Ordinance. After clearance of the goods on payment of the duty so assessed, the appellant filed claims for refund of the additional duty of customs charged in terms of the Ordinance on the ground that such levy was not in force on the date the goods were imported into the country. The order of the Assistant Collector rejecting the claim was upheld by the Appellate Collector and the matter has now come up before us.
4. The issue for determination is whether, in the facts and circumstances aforesaid, additional duty of customs -corresponding to the additional duty of excise in terms of the Ordinance was leviable on the imported goods cleared from the bonded warehouse in terms of Section 68 of the Customs Act. This very issue came up for detailed consideration by the Tribunal in Appeal No, CD (S.B.) (T) 595/80-D disposed of by Order No. 448/84-D, dated 1-8-1984 which was referred to by both sides before us. - 5. In the said order, the Tribunal came to the conclusion that such additional duty of customs was liable to be charged on imported goods which were cleared on and after 4-10-1978 from the bonded warehouse in terms of Section 68 read with Section 15 (1) (b) of the Customs Act. 6. In coming to this conclusion, the Bench had inter alia placed reliance on the Supreme Court's judgment in Prakash Cotton Mills Pvt. Ltd. v. B. Sen and Ors., 1979 E.L.T. J 241. In the case before the Supreme Court, the appellant had imported certain goods on or about 23-8-1965 and warehoused them on 22-12-1965. The goods were removed in lots on various dates, the first lot being cleared on or about 1-9-1966. In the meantime, the devaluation of the Indian Rupee took place on the 6th June, 1966 and, in terms of the Customs (Amendment) Act 1966, which replaced an Ordinance -promulgated on the 7th July, 1966, the customs authorities applied the revised; rate of exchange and rate of customs duty as in force on the date of clearances of the goods from the warehouse. The controversy related to the short question whether the customs authorities were justified in applying the rate of duty (to the imported goods in question) according to the rate prevalent on the date of their actual removal from the warehouse. Construing the amended Section 15 of the Customs Act, the Court observed that it was the clear requirement of Clause (b) of Sub-section (1) of Section 15 of the Customs Act that the rate of duty, rate of exchange and tariff valuation applicable to any imported goods shall be the rate and valuation in force on the date on which the warehoused goods were actually removed from the warehouse. The Court negatived the argument that the requirement of the amended Section 15 should have been ignored simply because the goods were imported before it came into force or that the bill of lading and bill of entry were lodged before that date.
7. In the case of Apar Private Limited, the Bombay High Court had occasion to discuss the aforesaid judgment of the Supreme Court in the Prakash Cotton Mills case. The Bombay High Court noted that the Prakash Cotton Mills case was not one of goods which were totally exempt from customs duty (as was the case of Apar Private Limited case before the Bombay High Court). They were chargeable to duty under Section 12 and only the rate of duty at which they were chargeable was in question. On the date the goods were imported i.e. when the goods entered the territorial waters of India, the taxable event occurred and, if on that date, the goods were wholly exempt from duty, observed the Bombay High Court, the question of calculating the rates did not arise at all and, therefore, the further question whether the rate prevalent on the date of importation i.e. when the goods entered the territorial waters or when they were sought to be removed from the warehouse for home consumption (applied) also did not arise. The Bombay High Court further held that there was nothing in the Supreme Court’s decision in the Prakash Cotton Mills case which warranted a different conclusion than the one reached by the High Court in respect of goods which were totally exempt from duty on the date they were imported into India. The conclusion of the Bombay High Court was that, if on the date the goods were imported i.e. they entered the territorial waters of India, they are exempt from duty, there would be no question of charging any duty on them applying the rate of duty in force on the date a bill of entry is presented to the customs authorities for clearance of the goods for home consumption.
8. The Bombay High Court in its judgment in the Apar Private Limited case has considered several decisions of other High Courts which have taken a different view in the matter. The Delhi High Court, in Jain Shudh Vanaspati Limited and Anr. v. Union of India and Ors., 1983 E.L.T. 1688 has considered the matter elaborately and taken the view that the issue of a notification under Section 25 (1) of the Customs Act exempting the goods from duty does not mean that the goods in question are not chargeable to levy of duty under Section 12 of the Act and the rate of duty chargeable shall be as in force on the relevant date as laid down in Section 15 of the Act. The entire issue has come up for detailed consideration at the hands of the Madras High Court also and in M. Jamal and Company v. Union of India and Ors., (1985) 6 E.C.C. 292 the court has taken the view that the fact that goods are exempted by a notification from payment of customs duty when they entered the territorial waters of India would not lead to the conclusion that on the date of their clearance into the country, the rate of duty with reference to the relevant date as laid down in Section 15 of the Customs Act would not be chargeable.
9. Thus, it may be seen that there are conflicting decisions of the High Courts on the issue. But in so far as the issue before us is concerned, we think, this conflict in decisions does not and need not have a bearing on the conclusion. If we apply the ratio of the Delhi and Madras High Court decisions referred to earlier, the obvious conclusion is that the goods in the appeal before us rightly attracted additional duty of customs equivalent to the additional duty of excise in terms of the Additional Duties of Excise (Textiles and Textile Articles) Ordinance (later, Act) of 1978, on the date of their clearance from the bonded warehouse in terms of Section 68 of the Customs Act.
10. Let us now see whether any different conclusion emerges by applying the ratio of the Bombay High Court decision in the Apar Private Limited ease to the appeal before us. Section 3 (1) of the Customs Tariff Act, 1975, read with the Explanation to that Section, constitutes the authority for levy of additional duty of customs on imported goods equal to the duty of excise leviable on indigenous goods. The duty of excise referred to in the section has been defined in the explanation as the “excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India…” Therefore, it would comprehend not only the duty of excise leviable under the First Schedule to the Central Excises and Salt Act, but also duties of excise leviable on indigenous goods under any other enactment as in the present case. The charging section for all types of duties of customs is no doubt Section 12 of the Customs Act, but the authority for levy of additional duty of customs is Section 3 (1) of the Customs Tariff Act, Therefore, it is reasonable to take the view that there is no need to ascertain the nature of the different components of the additional duty of customs and enquire as to whether a particular duty of excise was in force on the date the goods were imported. Even applying the ratio of the Bombay High Court decision, if some additional duty of customs in terms of Section 3 (1) of the Customs Tariff Act was chargeable on the date the goods entered the territorial waters [i.e. the goods were not wholly exempted from the additional duty of customs leviable on them under Section 3 (1) of the Customs Tariff Act], then, such goods on their clearance from the bonded warehouse in terms, of Section 68 of the Customs would be liable to the increased additional duty of customs whatsoever may, be the manner in which duty of excise on indigenous goods has gone up. This view, gains support from the Bombay High Court’s decision, in the Apar Private Limited case wherein, in answer to question No. 3 [see para 61 on page 638 of the report in 1985 (22) E.L.T.], the Court held that ii goods are chargeable to some basic customs duty under the Customs, Act, when they entered the territorial waters of India, then, the rates in force at the time when the bill of entry is presented or at the time when the goods are sought to be cleared for home consumption, as the case may be, would be applicable and the basic duty would be quantified and demanded at those rates.
11. The above view would also be in consonance with the express verdict of the Supreme Court in the Prakash, Cotton Mills, case that in the case of imported goods cleared from a bonded warehouse in terms of Section 68 of the Customs Act, the rate of duty applicable would be that in force on the date of clearance of the goods from the warehouse, in terms of Section 15 (1) (b) of the Customs Act.
12. In the above view of the matter, the action of the customs authorities in charging additional duty of customs on the subject goods at the increased quantum consequent on the levy of additional duty of excise on indigenous goods under the Additional Duties of Excise (Textiles and Textile. Articles) Ordinance (Act) of 1978 was correct. The impugned order is confirmed and the appeal is rejected.
M. Gouri Shankar Murthy, Member (J)
13. I regret my inability to agree with the order proposed by my learned Brother.
14. (a) Admittedly, the levy in terms of the Additional Duties of Excise (Textiles and Textile Articles) Ordinance (hereinafter, the ordinance) was not in force on the date of import-the exigible event. (Section 12 of the Customs Act, 1962-hereinafter, the Act for short). Once the goods are leviable to duty, the assessment or quantification of the duty payable is in terms of the rate of duty and tariff valuation in force on the date when a bill of entry is filed under Section 46 or goods cleared from a warehouse in terms of Section 68 amongst other specified events. [Section 15 of the Act]. Such an event is wholly unrelatable in point of time with the actual import [AIR 1979 S.C. 675 : 1979 Cencus 193D- Prakash, Cotton, Mills v. B. Sen].
(b) The determination of the applicable rate of duty should not be confused with the charge to duty itself or its incidence. It is only by the appreciation of the distinction between the two that a Larger Bench of this Tribunal in, 1985 (24) E.L.T. 757 (Vazir Sultan Tobacco Company Ltd. v. Collector of Excise, Hyderabad) had over-ruled the majority decision and upheld the minority view in 1984 (16) E.L.T. 546 [Sirpur Paper Mills v. Collector of Central Excise]. (c) In 1983 E.L.T. 1688 (Jain Sudh Vanaspati Ltd. v. Union of India) as well as 1985. (6) E.C.C. 292 (M. Jamal and Company v. Union of India) Their Lordships were concerned with the applicable rate of duty, once the levy was, indisputably, attracted on import. The two aforesaid decisions ate clearly distinguishable from a case where, as in the instant appeal, the levy itself was imposed after the taxable event- namely, the import. (d) Once it is import that attracts the levy and it was not the legislative intent in the ordinance to levy the additional duty retrospectively, obviously the fresh impost is not attracted to goods imported prior to its imposition. Where the import preceded the levy, which is wholly prospective, it is not attracted, notwithstanding that the event that is determinative of the rate of the levy occurred thereafter. (e) In the decision of the Full Bench of the Bombay High Court in If 85 (22) E.L.T. 644 as well it was held inter alia, that- (i) it is with reference to the taxable event that the chargeability or livability of the tax or duty, as the case may be, has to be determined (para 19 of the report) ; (ii) the taxable event may occur at one time and the tax or duty payable on the occurrence of that event may be quantified at a later date (para 26 of the report) ;
(iii) “import” occurs when goods from outside India no sooner eater the territorial waters of India and not subsequently thereafter when the goods become incorporated and get mixed up with the mass of other local goods, as held in 1981 E.L.T. 162 (K. Jamal & Co. v Union of India), 1981 (8) E.L.T. 298 (Shewbuxrai Onkarmull v. Assistant Collector of Customs) and 1983 E.L.T. 65 (Ker.) ( Shri Ramaiinga Mills Pvt. v. Assistant Collector of Customs) on an erroneous application of the ratio of the decision of the Supreme Court in AIR 1958 S.C. 341 (Empress Mills Nagpur v. Municipal Committee, Wardha). Since “import” and “imported goods” had been defined in the Act, unlike the C.P. and Berar Municipalities Act in the case of the Empress Mills or the Sea Customs Act in AIR 1963 S.C. 1760 (In re. The Seas Customs Act), there is no warrant for applying the ratio of the said decisions to cases under the Act. Nor is it correct to say that a construction contrary to the ratio of the aforesaid Supreme Court cases would result in a levy on goods in transit through “India”. This is to lose sight of the provisions of Chapter VIII of the Act altogether (paras 30, 34, 35, 39, 50, 52, 53, 54 and 57 of the report). [Incidentally, it may not be amiss to recall that our ratio in 1983 (11 and 12) E.L.T. 1938 decided on 10-5-1983 (Shri Pargan Singh v. Collector of Customs and Central Excise) was identical on the issue of “import” and the applicability of the decisions of the Hon’ble Supreme Court in the Empress Mills case to a construction of the said word as defined in the Act. Subsequently, in AIR 1984 S.C. 667 (Gramophone Company of India v. Birendra Bahadur Pandey) as well, “import” was construed by the Hon’ble Supreme Court in an identical manner where it was observed that “import” in the Copyright Act, 15S7, means, “to bring into India from out of India” i.e. precisely how it was defined in the Customs Act. Adverting to the original package doctrine enunciated by Chief Justice Marshall and reliance upon the said doctrine in the case of the Empress Mills (A.I.R. 1958 S.C. 341) leading to the conclusion that an “import” cannot occur prior to an incorporation or mixing up of the goods imported with the mass of local goods, the Hon’ble Supreme Court had observed that the aforesaid, doctrine was disapproved in 1942 F.C.R. 90 (Province of Madras v. Boddu Paidannd) and 1951 S.C.R. 682 (State of Bombay v. F.N. Bulsara) and these decisions were not brought to the notice of the Court which decided the Empress Mills case] ;
(iv) if, at the time of “import”, the goods are chargeable to duty, then the duty has to be assessed and quantified as per the valuation under Section 14 and at the rates specified in Section 15 of the Act (Para 42 of the report).
(f) This is, however, not to say that an exemption from even the whole of the levy on the occurrence of the taxable event (import, in this case) will negate the levy. An exemption from a levy is not the levy itself. An exemption has relation to the computation of duty, once a levy, indisputably, exists. The rate of duty applicable is determined in accordance with Section 15 of the Act, rather than in terms of Section 12 of the Act. Once this is so, an exemption from a levy, admittedly in force on the date of import, does not, it may be observed with the utmost respect, imply that the computation of duty assessable should not be in terms of Section 15 of the Act, i.e. the rate of duty prevailing on the date of clearance of goods warehoused in terms of Section 68 of the Act.
(g) While it may be that the charging provision, Section 12 of the Act, speaks of duties of Customs and consequently comprehends the additional duty leviable under Section 3 of the Customs Tariff Act, 1975, as a supplementary levy, which in character and incidence is identical with an impost of Customs- AIR 1985 S.C. 1211-Khandelwal Metal and Engineering Works v. Union of India}, still, unless the supplementary levy is, in fact, imposed by statute, it is not attracted. Where the taxable event, namely, the import occurs before the imposition of the supplementary levy (as distinguished from a mere change in the existing rate of duty) the goods cannot be subjected to the levy, just because it partakes of the character of Customs duty, unless such supplementary levy was retrospective. What is of significance is that it is a new supplementary levy imposed after the import and not merely a variation in the applicable rate of duty existing on the day the import occurred. While it is true that in the case of Prakash Cotton Mills, [AIR 1979 S.C. 675] it was observed that Section 15 of the Act was the relevant provision for purposes of assessment, that by itself does not dispense with a levy in the first instance. That was a case of a change in the rates of exchange and duty applicable in the computation of the assessable value and not of a levy after the import. Indisputably, Section 15 of the Act is relevant for the determination of the applicable rate of duty as well as exchange but not for the determination of the existence of levy on the crucial date when the taxable event occurred.
(h) (i) In the Tribunal’s Order No. 448/84-D in Appeal No. CD(SB)(T) 595-D (between the same parties) it was observed in para 13 that-
“It has been rightly observed in another judgment of the same High Court, namely, in case of Synthetics and Chemicals Ltd.(supra) that the rate of duty, rate of exchange and the tariff valuation are three facets of valuation of goods on importation and once the goods are chargeable to duty on importation, the rate prevalent on the date of actual clearance from warehouse will apply under Section 15(1 )(b) of the Act, whether it is the rate of duty or the rate of exchange.” But the question was and is-were the goods chargeable to the additional duties of excise on the date of importation? There was in point of fact, no such levy on the day of import. The levy was subsequent, even if it partook on its levy, the character of an excise duty and became leviable as additional duty in terms of Section 3 of the Indian Tariff Act, 1975. It was not a change or variation in the rate of any duty prevailing on the date of import but a fresh levy taking place after the import. Once the taxable event is the import and not manufacture of the goods in question, where is any necessity to stray into the realm of conjecture in ascertaining whether the goods – were in existence or not by the date of the levy ? All that one has to see is if the levy was prior or subsequent to the import. Surely, the date of import cannot be so uncertain as to be left to conjecture.
(ii) Nor does it appear correct to say that the effect of the Ordinance of 4-10-J978 was merely to make an addition of 10% in the rate of excise duty and correspondingly the additional duty in terms of Section 3 of the Indian Tariff Act, 1975, i.e., a mere change in the rate of an existing levy. The additional duties of excise (Textiles and Textile Articles) Ordinance (4 of 78 hereinafter, the ordinance) promulgated on 4-10-78 and enacted later, was described in the ordinance itself as one providing for the levy and collection of additional duties of excise. Section 3 of the ordinance spoke of the levy, in these terms- “Section 3(1) When goods of the description in the Schedule charged with a duty of excise under the Central Excises and Salt Act, 1944 (1 of 1944), read with any notification for the time being in force issued by the Central Government in relation to the duty so chargeable, are assessed to duty, there shall be levied and collected a duty of excise equal to ten per cent of the total amount so chargeable on such goods. (2) The duties of excise referred to in Section 1 shall be in addition to duties of excise chargeable on such goods under the Central Excises and Salt Act, 1944 (1 of 1944) or any other law for the time being in force…” It was this additional levy of excise that was sought to be recovered from the importer as additional duty in terms of Section 3 of the Indian Tariff Act, 1975.
(iii) Section 3 of the Indian Tariff Act, 1975 is a study in contrast. Although the heading of the section spoke of a levy of additional duty, there is nothing in the provision itself that spoke of a levy and collection of an additional duty. It says the goods are liable to an additional duty and not that there shall be levied and collected an additional duty of customs. Further, Sub-section (2) of the Ordinance makes a clear distinction between the duties of excise levied under the Central Excises and Salt Act, 1944 and the duties of excise levied under Sub-sectiontion 3(1) itself. Accordingly, the ratio of the Supreme Court in the Khandelwal case AIR 1985 S.C. 1211 is inapplicable for a construction of Section 3 of the Ordinance levying expressly an additional duty. This is apart from the fact that its inapplicability even otherwise for the reasons set for in para (g) Supra.
(iv) Again, a comparison of Section 3 of the Ordinance with Section 37 of the Finance Act, 1978 would reveal that they are adidem-Sub-sections (1) and (2) of Section 3 of the Ordinance with Sub-section (1) and (3) of Section 37 of the Finance Act, 1978. It was in the construction and application of the latter that the majority of the Larger bench of the Tribunal in 1985 (21) E.L.T. 757 (Vazir Sultan Tobacco Co. Ltd. v. Collector of Excise, Hyderabad), adverted to in (b) Supra, categorically held that it was a fresh levy and is not attracted to goods manufactured prior to the date of the levy. By parity of reasoning, the levy in Section 3 of the Ordinance as well cannot be said to have come into existence prior to 4-10-1978 and not have been attracted to goods manufactured prior to the said date. This being so could it have been levied in (he shape of additional duty in terms of Section 3 of the Indian Tariff Act, 1975 when the import occurred prior to 4-10-1978? The additional duty under the Tariff Act; was also in the nature of Customs duty. Its levy is in terms of Section 12 of the Act. The incidence is on import – the taxable event. [AIR 1985 S.C. 1211- Khandelwal Metal and Engg. Works v. Union of India}. Can the additional duty be anything other then the excise levy that was in force on the day of import?
(v) The decision of the Larger Bench in the aforesaid 1985 (21) E.L.T. 757 ( Vazir Sultan Co. Ltd. v. Collector of Excise, Hyderabad) dated 25-3-1985 was subsequent to the decision in the appeal in CD (SB) (T) 595-D.
15. For all the aforesaid reasons the decision of the Tribunal in the aforesaid appeal No. CD (SB) (T) 595-D requires to be reconsidered and papers be placed before the Hon’ble President for suitable directions in that behalf.
In view of the majority opinion, the impugned order is confirmed and the appeal is rejected.