Full Judgment Text
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PETITIONER:
INDIAN FARMERS FERTILIZERS CO-OPERATIVE LTD. AHMEDABAD
Vs.
RESPONDENT:
UNION OF INDIA & ORS.
DATE OF JUDGMENT: 14/12/1999
BENCH:
R.C.Lahoti, S.P.Bharucha
JUDGMENT:
Santosh Hegde,J.
The appellant, who is a registered multi-unit
cooperative society under the Bombay Cooperative Societies
Act, filed writ petitions under Special Civil Application
Nos.94 and 472 of 1977 before the High Court of Gujarat at
Ahmedabad seeking issuance of a writ of certiorari to quash
and set aside the order made by the Appellate Collector of
Customs, Bombay, dated 25.2.1976 confirming the order made
by the Collector of Customs at Kandla dated 26.2.1975.
It was contended before the High Court that the
appellant manufactures chemical fertilizer and other allied
products in its factory at Kalol and new Kandla Port in the
State of Gujarat. It is also stated that for the purpose of
manufacture of chemical fertilizers, the appellant imports
phosphoric acid for use in the manufacture of Nitrogen
phosphorous potash, and by the impugned order the
respondents had levied auxiliary duty of customs at the rate
of 15 per cent purporting to levy the same under Clause 1 of
Notification No.14 dated 1.3.1974 issued by the Central
Government in exercise of its power under Section 25(1) of
the Customs Act, 1962 read with Clause 19(4) of the Finance
Bill, 1974. The appellant contended before the High Court
that, as a matter of fact, the phosphoric acid imported by
the appellant was subjected to a levy of 5% of auxiliary
duty of customs under the above Notification because the
goods imported by the appellant would fall under Clause 2 of
the said Notification. Since the appellant was wrongly
levied higher auxiliary duty at 15 per cent, it had prayed
for refund of the excess amount collected from it.
It is not in dispute that at the relevant time the
rates at which the customs duty was to be recovered was
specified in the First and the Second Schedule of the Indian
Tariff Act, 1934 which had provided for levy of duty at
standard rate, preferential rate and protective rate as
specified in the First Schedule. The import made by the
appellant was referable to Item No.28(16) which prescribed a
standard rate and preferential rate of duty for phosphoric
acid.
Section 19 of the Finance Act, 1974 has made a
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provision for levy of auxiliary duty on goods covered by the
First Schedule to the Tariff Act, as amended from time to
time, at 20% of the value of goods as determined in
accordance with the provisions of the Customs Act, 1962.
The auxiliary duty is in addition to the duties chargeable
under the Act. Therefore, in exercise of the power
conferred upon Section 25(1) of the Act and Section 19(4) of
the Finance Act, 1974, the Central Government by
Notification dated 1.3.1974 exempted the goods specified in
column 2 of the Table being goods mentioned in the First
Schedule to the Act, from so much of the auxiliary duty as
is in excess of the rate specified in column 3 of the said
Table. The relevant part of the Notification is as under :-
. Sl.No. Description
of Goods Rate of auxiliary Duty of Customs (1) (2) (3)
. 1. Goods in respect of which
the rate Fifteen percent of the of duty of customs specified
in the goods as determined in said First schedule read with
any accordance with the pro- relevant notification of the
Govern- visions of Section 14 ment of India for the time
being in of the Customs Act, force is 60 per cent ad valoram
or 1962 (52 of 1962). more but less than 100 per cent ad
valoram.
2. Goods in respect of which the rate Five per cent
of the of duty of customs specified in the value of the
goods as said First schedule read with of determined in
accor- the Govt. of India for the time being dance with the
pro- in force, is less than 60% ad or nil. visions of
Section 14 of the Customs Act, 1962 (52 of 1962) 3. xx xx
4. xx xx
Explanation: For the purposes of Serial Nos.1 and 2
in the above table, the expression the rate of duty of
customs specified in the said First Schedule read with any
relevant notification of the Government of India, in
relation to any article liable to two or more different rate
of duty, means that rate of duty which is the highest of
those rates.
Before the High Court, it was contended on behalf of
the appellant that the phosphoric acid imported by the
appellant for the manufacture of fertilizer is liable to
auxiliary duty @ 5% under clause 2 of the aforesaid Table
and not @ 15% under Clause 1. Section 12 of the Act
provides that except as otherwise provided or any other law
for the time being in force, duties of customs shall be
levied at such rates as may be specified under the Indian
Tariff Act, 1934 (presently known as the Customs Tariff Act,
1985) or any other law for the time being in force, on goods
imported into or exported from India. Therefore, on the
import of the goods into India duties of customs as
specified in the First and Second Schedules of the Indian
Tariff Act, 1934 are required to be levied. This is
provided in Section 2 of the Indian Tariff Act. The said
Act empowers the Central Government for levy of preferential
rates of duties and protective rates of duties. For the
import of phosphoric acid, Tariff Item is 28(16) which
provides the standard rate of duty if it is imported from
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Burma at 10% ad valorem. Pursuant to the power vested in it
under Section 26 of the Act, the Central Government by
Notification dated 28.4.1969 has exempted phosphoric acid
falling under Item 28(16) when imported for the manufacture
of fertilizer so much of that portion of the duty of customs
leviable thereon which is in excess of 30% ad valorem.
Therefore, for phosphoric acid , the standard rate of duty
is 60% ad valorem, preferential rate of duty is 10 per cent
ad valorem if it is imported from Burma and 30 per cent ad
valorem if imported from a country other than Burma.
Therefore, it is apparent that for phosphoric acid, three
different rates of duty are fixed. For determining
auxiliary duty, Explanation to the Table provides that for
the purpose of serial Nos.1 and 2, the expression rate of
duty of customs specified in the First Schedule read with
any relevant notification of the Government of India in
relation to any article liable to two or more different
rates of duty, means that rate of duty which is the highest
of those rates. In the instant case, it is seen that the
highest rate of duty specified in the First Schedule for the
phosphoric acid as per Item 28(16) is 60 per cent. Hence,
in the instant case, the highest rate for import of
phosphoric acid would have been 60 per cent but for the
Notification referred to above, since the import in question
was from Burma, the duty payable is 30 per cent ad valorem.
Hence, from a perusal of the First Schedule read with
Notification dated 28.4.1969 it is clear that so far as the
import of phosphoric acid by the appellant is concerned, it
falls at serial No.1 of the aforesaid Table and 15 per cent
auxiliary duty is required to be paid. We also find support
to the above reasoning of ours from the judgment of this
Court in the case of Collector of Customs v. Western India
Plywood Manufacturing Co. Ltd. (1989 (44) ELT 595) wherein
while considering the levy of auxiliary duty on the import
of timber from Burma, this Court held thus :-
When different rates slab of the auxiliary duty under
an Exemption Notification are provided based on the
effective rate of Basic customs duty and the Explanation
thereto provides in case of two or more rates of Basic duty
in relation to an Article because of the reasons of the
country of origin, the rate of auxiliary duty is to be fixed
as per the highest rate of Basic duty, the reference to the
two or more rates of Basic duty does not confine to two
effective rates under two Exemption Notifications but would
also include one effective rate under Exemption Notification
and the other rate under the Schedule. Accordingly the
timber which was subject to 60% rate of duty under the
Tariff Schedule and totally exempted from Basic duty by an
Exemption Notification would amount to two rates of duty for
the purposes of Notification No.126/84-Cus. and accordingly
the Auxiliary duty at the rate of 40% is applicable.
The Notification which was considered by this Court in
the said case and the Notification applicable in this case
are similar, hence, the said pronouncement of this Court
would apply on all fours to the present case. We find no
reason to differ from the view taken by this Court in the
said case. For the reasons stated above, these appeals fail
and are dismissed. No costs.