ORDER
K. Sankararaman, Member (T)
1. Appellant imported a consignment of CRGO steel sheets and bonded the same in Customs bonded warehouse on 2.5.1996. At the time of clearance for home consumption from the customs bonded warehouse on 30.8.1996, the Finance Bill 1996 had been introduced in terms of which Special Duty of Customs at the rate of 2% had been proposed w.e.f. 22.7.1996. The customs authorities directed the appellant to clear the goods on payment of customs duty + the aforesaid special duty of customs on the ground that the said levy had come into effect at the time of removal for home consumption from the warehouse. Appellant paid the duty as demanded and thereafter obtained a speaking order from the Assistant Collector and filed an appeal before the Commissioner of Customs (Appeals). The latter upheld the order of the Assistant Commissioner and rejected the appeal. Thereby the present appeal.
2. On behalf of the appellant, Learned Counsel submitted that their case is fully covered by the judgment of the Supreme Court in CCE v. Vazir Sultan Tobacco Ltd. . In this case, the Supreme Court held that goods manufactured prior to the imposition of special excise duty would not attract the same, even if the clearance of the goods took place after the levy had come into effect. She also referred to the judgment of the Full Bench of High Court of Bombay in Apar Private Ltd. and Ors. v. UOI and of another Division Bench of same High Court in M.S. Sawhney, Assistant Collector of Customs and Another v. Sylvania and Laxman Ltd. and also the decision of High Court of Madras in Sundaram Textiles Ltd. v. A.C. of Customs 1984 ECR 431 (Mad).
3. Resisting the submissions of the Ld.Counsel, Shri R.Victor Thiagaraj, Senior Departmental Representative supported the impugned order, relying upon the decision of the Gujarat High Court in Surat Silk Cloth Manufacturers’ Association v. UOI . He contended that the judgment of the Supreme Court in Vazir Sultan case is not applicable to the present case which relates to a customs matter whereas the Supreme Court decision was in respect of Central Excise duty. He also referred to the wording of Section 15(1)(b) of the Customs Act, 1962 which specifically refers to rate of duty applicable for goods cleared from the Warehouse under Section 68, according to which, the rate of duty will be the one prevailing on the date on which the goods are actually cleared from the warehouse. He also referred to the judgment of the Supreme Court in the case of Prakash Cotton Mills (P) Ltd. 1979 ELT (J241) : 1979 Cen-Cus 193D (SC) : ECR C Cus 1022 SC which also upheld the applicability of the rate of customs duty in force on the date of clearance from bonded warehouse.
4. We have taken note of the rival submissions. We find that Commissioner (Appeals) had distinguished the judgment of the Supreme Court in Vazir Sultan Tobacco Co. Ltd. case mainly on the ground that if related to levy of Central Excise duty which is not applicable to the present matter which is governed by the Customs Act. This stand taken by the Commissioner (Appeals) was supported by Shri Victor Thiagaraj, Senior Departmental Representative. This contention that a decision on Central Excise Act is not applicable to levy of Customs Duty is not based upon on a correct understanding of the relevant provisions. We find that even in the Gujarat High Court judgment relied upon by the Learned SDR, that High Court itself had sought support for their conclusion in a matter relating to levy of Customs duty on the decision of the Supreme Court in Wallace Flour Mills which related to Central Excise Duty. The scheme of Section 15(1 )(b) of Customs Act follows the pattern of Rule 9(a) (sic) of Central Excise Rules applicable to rates of duty of excise and in that view of the matter, the decision on the Central Excise,duty will equally be applicable to a case under the Customs Act.
5. Moreover, as held by the Bombay High Court in Sylvania and Laxman Ltd., the applicability of the provisions of Section 15(1)(b)for warehoused goods will arise only after the dutiability of the goods under Section 12 gets crystallized. In the present case the goods were imported at a time when special duty of customs was not in force and was introduced only subsequently. Actually, the provisions of Section 15(1)(b) would come into play where special duty of customs was applicable at the time of import as also at the time of clearance from the warehouse and not in a situation where it was not in force at the time of import. The present case is one where such duty was not applicable at the time of import and hence the provisions of Section 15(1)(b) will not come into play at all to apply a rate of duty. Accordingly, we set aside the impugned orders and allow the appeal.
(Pronounced and Dictated in the Open Court).