Madras High Court
M/S.Century Flour Mills Ltd vs The Union Of India on 3 October, 2013
Author: T.S.Sivagnanam
Bench: Chitra Venkataraman, T.S.Sivagnanam
IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 03.10.2013 Coram The Honourable Mrs.Justice CHITRA VENKATARAMAN and The Honourable Mr.Justice T.S.SIVAGNANAM Writ Petition Nos.20358 to 20362 of 1999, 19722/1999, 3/2000, 297/2000, 1057/2000 and 1286/2000 and connected MPs. --- W.P.No.20358 of 1999:- M/s.Century Flour Mills Ltd represented by its Joint Managing Director, 6, Govindaswamy Ravindran, Indian Chamber Buildings I floor, Esplanade Chennai-108 ... Petitioner -vs- 1.The Union of India rep. By its Secretary Ministry of Finance Department of Revenue New Delhi-1 2.The Commissioner of Customs Custom House 33, Rajaji Salai Chennai-600 001 3.The Assistant Commissioner of Customs (Appraising Group) Custom House 33, Rajaji Salai Chennai-600 001 ... Respondents Prayer in W.P.20358 of 1999:- Writ Petition filed under Article 226 of the Constitution of India, praying to issue a writ of Declaration to declare that the impugned Notification No.127/99-Customs dated 01.12.1999 issued by the first respondent, imposing levy of import duty at the rate of 50% on the imported wheat falling under Customs Tariff Sub-heading 1001.90 of the Customs Tariff Act, 1975 is ultra-vires of Section 8A of the Customs Tariff Act, 1975 and Section 12 of the Customs Act, 1962 and null and void so far as the petitioner is concerned. For petitioners : Mr.Hari Radhakrishnan For respondents in W.P.20358 to 20362/1999 and 19722/1999 : Mr.K.Mohanamurali, Standing Counsel for Customs For respondents in W.P.297,1057,1286 and 3/2000 : Mr.K.Ravi Anantha Padmanabhan Standing Counsel for Customs COMMON ORDER
(The Order of the Court was made by T.S.SIVAGNANAM, J.) In these batch of Writ Petitions, the petitioners have challenged the validity of the Notification issued by the Government of India, Ministry of Finance, in Notification No.127/99-Customs, dated 01.12.1999. Since the prayer in all the writ petitions are identical, it is suffice to refer to the facts in the lead case viz., W.P.No.20358 of 1999.
2. The petitioner imported wheat falling under Customs Tariff Sub-heading 1001.90 of Chapter X of the Customs Tariff Act, 1975 from Australia. The petitioner filed Bill of Entry for home consumption on 01.12.1999. The assessable value of the bill of entry were Rs.14,86,132.54 and Rs.21,58,008.02 respectively. The petitioner claimed duty free clearance, but the same was denied by the Department on the ground that in terms of the impugned Notification No.127/99, they shall be subjected to the rate of 50% customs duty.
3. The Notification is challenged on the ground that it is ultra-vires Section 8-A of the Customs Tariff Act, 1975 (hereinafter called as the "Tariff Act"). It is further contended that Section 12 of the Customs Act, 1962 is the charging section, wherein it is stated that duties of the customs shall be levied at such rates as may be specified under the Customs Tariff Act on the goods imported into or exported from India and wheat has been classified under Sub Heading 1001.90 provided for duty free clearance and in Column No.4 of the Tariff Table, no rate of duty or Nil rate of duty is specified, but only the word free is mentioned. Unless the rate of duty is mentioned in the Customs Tariff Act, imposition of fresh levy by way of Notification cannot be issued under Section 8-A of the Customs Tariff Act to increase the rate of duties. Therefore, it is contended that the imposition of 50% of the Customs Duty on the imported wheat is ultra-vires of Section 12 of the Customs Act and Section 8-A of the Customs Tariff Act.
4. The respondents resisted the petitioners contention by filing a counter affidavit inter-alia contending that in exercise of power conferred on the Central Government under Sub Section (1) of Section 8A of the Customs Tariff Act, to enhance the duty in case of emergency, the Notification has been issued and in terms of Section 7(3) of the Tariff Act, the Notification has been approved by the Parliament and the Lok Sabha has passed the resolution in the sitting held on 21.12.1999. It is further contended that the contention of the petitioner that merely because under the Tariff, in Column No.4, it has been mentioned as free, such levy of duty at 50% cannot be incorrect; as per Section 12(1) of the Customs Act, duty of Customs shall be levied at such rates as may be specified under the Customs Tariff Act and prior to 01.12.1999, the item wheat was importable free of duty, which was amended by imposing duty of 50% as per the impugned Notification. It is further submitted that the rate of import duty under Free is Zero, as in the duty under the rate of duty Nil , which is also a rate of duty and that the rate has been increased to 50% from Zero rate in the impugned Notification, which is well within the power conferred under Section 8-A of the Customs Tariff Act. Therefore, it is submitted that the impugned Notification is wholly within the jurisdiction of the Central Government and the same is not ultra-vires of Section 8A of the Customs Tariff Act and Section 12 of the Customs Act.
5. We have heard Mr.Hari Radhakrishnan, learned counsel appearing for the petitioners, Mr.M.Mohanamurali and Mr.Ravi Anantha Padmanabhan, learned Standing counsel appearing for the respondent Department.
6. The learned counsel appearing for the appellant reiterated the contentions noted above and submitted that under Section 8A of the Customs Tariff Act, it is an emergency power of the Central Government to increase import duties, wherein, it has been stated that in respect of any article included in the First Schedule, the Central Government is satisfied that the import duty leviable thereon under Section 12 of the Customs Act, should be increased and that circumstances exist, which render it necessary to take immediate action, the Central Government by Notification in the Official Gazette, direct an amendment of that Schedule. It is submitted that under Sub Section 1 of Section 8A of the Customs Tariff Act, the expression "leviable" has been used and if the Tariff Viz., Chapter X is perused, the rate of duty has been mentioned as Free and not that Nil rate of duty. When the expression Nil has been used, it denotes no duty is leviable and in such circumstances, the question of invoking the said provision under Section 8A of the Customs Tariff Act for levying 50% of duty is wholly without jurisdiction. In this regard, the learned counsel also referred to Section 12 of the Customs Act, which states that duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act. Therefore, the learned counsel submitted that unless a duty is either levied or leviable, then alone the question of increase or decreasing the rate of duty will arise and the entry "Free" denotes that 'no duty' is leviable and therefore, the impugned Notification is bad in law. The learned counsel referred to the decision of the Honourable Apex Court in the case of Associated Cement Companies Limited., Vs. Commissioner of Customs reported in 2001 (128) E.L.T.21 (SC).
7. The Central Government counsel appearing for the respondents submitted that the validity of the impugned Notification was challenged before Kerala High Court and the Division Bench of the Kerala High Court in W.A.2651/2000 etc batch, by order dated 10.04.2001 dismissed the appeals and the Special Leave Petition filed against the said judgment in S.L.P.(Civil) Appeal Nos.7309 to 7312 of 2001 was dismissed by the Honourable Supreme Court on 08.05.2001. Therefore, it is submitted that the issue having attained finality, the challenge to the impugned notification is not sustainable.
8. The short question that falls for consideration is as to whether the impugned Notification is ultra-vires the provisions of Section 8A of the Customs Tariff Act read with Section 12 of the Customs Act. For better appreciation, both these provisions are extracted herein Section 8A of the Customs Tariff Act:-
" Section 8A. Emergency power of Central Government to increase import duties (1) Where in respect of any article included in the First Schedule, the Central Government is satisfied that the import duty lieviable thereon under section 12 of the Customs Act, 1962 (52 of 1962) should be increased and that circumstances exist which render it necessary to take immediate action, it may, by notification in the Official Gazette, direct an amendment of that Scheduel to be made so as to provide for an increase in the import duty leviable on such article to such extent as it thinks necessary"
Section 12 of the Customs Act.
"12. Dutiable goods.- (1) Except as otherwise provided in this Act, 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 Customs Tariff Act, 1975 (51 of 1975) or any other law for the time being in force, on goods imported into, or exported from, India.
[(2) The provisions of sub-section (1) shall apply in respect of all goods bringing to Government as they apply in respect of goods not belonging to Government.]"
9.1 Section 2 (14) of the Customs Act, 1962 defines dutiable goods to mean any goods which are charegeable to duty and on which duty has not been paid.
9.2 Section 2(22) of the Customs Act defines goods to include vessels, aircrafts and vehicles, stores, baggage, currency and negotiable instruments and any other kind of movable property.
9.3 Section 2(23) of the Customs Act defines import to mean bringing into India from place outside India.
9.4 Section 12 of the Customs Act, which falls under Chapter V of the Customs Act dealing with levy of, and exemption from, Customs Duties.
9.5 Section 12(1) of the Customs Act states that except as otherwise provided under the Customs Act, duty of customs shall be levied at such rate as may be specified under Customs Tariff Act or any other law for the time being in force, on goods imported into or exported from, India.
9.6 Therefore, the levy of customs duty in terms of Section 12 of the Customs Act is on the goods imported into or exported from India and rate of levy is as per the Customs Tariff Act, 1975.
10. The Customs Tariff Act, 1975 was enacted to amend the laws relating to Customs Duties specified in the Schedules at the rates, at which duties of customs shall be levied under the Customs Act, 1962 (52 of 1962), as specified in the First and Second Schedules. The First Schedule deals with import duties/tariff and Second schedule deals with export duties/tariff.
11. Section 8A of the Customs Tariff Act deals with Emergency power of the Central Government to increase import duties.
12. The first test which is required to be fulfilled for the purpose of issuance of Notification under Section 8A of the Customs Tariff Act is that the article should have been included in the First Schedule. The next requirement is that the Central Government should be satisfied that the import duty leviable thereon under Section 12 of the Customs Act should be increased and that circumstances exist which render it to take immediate action.
13. It is not in dispute that wheat which was imported by the petitioner has been included in the First Schedule. On a perusal of the impugned Notification, it is seen that the Central Government opined that on account of large scale imports, the off take from Central pool was affected and therefore, thought fit to increase the duty imposed on the import of wheat. There is no serious contest on this aspect and the reasons for issuing the notification are explicit in the Notification itself and therefore the second condition also stands satisfied.
14. The contention of the petitioner is that though the Central Government was satisfied that duty has to be imposed, the satisfaction was to relatable to the import duty leviable in respect of an article mentioned in the First Schedule of the Customs Tariff Act for the purpose of invoking Section 12 of the Customs Act. It is the endeavour of the petitioner to state that under the Tariff Act, the rate of duty is "Free". "Free" is not the rate of duty and therefore, no doubt, the imposition of 50% of the duty is without jurisdiction.
15. It is relevant to point out that the charging mechanism is Section 12 of the Customs Act. Section 12 of the Customs Act mandates that duties of customs shall be levied on goods imported into or exported from India and the measure or the rate of duty is as per the Tariff Schedule. Therefore, the levy is being controlled under Section 12 of the Customs Act. The rate of duty cannot operate as a bar to the charging Section. The rate of duty mentioned in the Tariff Schedule prior to the amendment is Free. It is to be noted that entry "free" occurs in the column "rate of duty". Therefore, Free is also rate of duty and in the event the Central Government is satisfied such duty should be increased, nothing precludes the Central Government from issuing notification under Section 8A of the Customs Tariff Act. Therefore, merely because, the term Free has been used in the Tariff Schedule, does not mean that the power under Section 8A of the Customs Tariff Act cannot be invoked. The correct interpretation would be it is Nil rate or Zero rate of duty, which is varied by virtue of a notification issued under Section 8A of the Customs Tariff Act.
16. The main test that should be satisfied for issuing a notification under Section 8A of the Customs Tariff Act is that the article should be included in the First Schedule of the Act. Section 8 of the Customs Tariff Act is concerned about increasing the import duty in respect of article found in the First Schedule. So the emphasis is on the article and not on the rate.
17. Given the fact that the variation could be brought to the rate as warranted by public interest, it is totally immaterial whether the duty prescribed therein should be a matter of concern for this Court to advert its attention on the arguments raised by the petitioner.
18. The learned counsel for the petitioner placed reliance on the decision in the case of Associated Cement Companies Limited. Vs. Commissioner of Customs reported in 2001 (128) E.L.T.21 (SC). The question therein was as to whether the goods brought in would fall under Heading No.49.06 or Heading No.98.03. On facts, the Apex Court held as under:-
" Under the Central Excise Act, 1944 in definition of words "excisable goods" under Section 2(d), the very specification or inclusion of goods in the First and Second Schedule of the Central Excise Tariff Act would make them excisable goods subject to duty. Under the Customs Act, the provisions seem to be somewhat different. While by virtue of Section 2(22) all kinds of movable property would be 'goods' but it is only those goods which would be regarded as 'dutiable goods' under Section 2(14) which are chargeable to duty and on which duty has not been paid. The expression "chargeable to duty on which duty has not been paid" indicates that goods on which duty has been paid or on which no duty is leviable, and therefore, no duty is payable, will not be regarded as 'dutiable goods'. It is only if payment of duty is outstanding or leviable that goods will be regarded as dutiable goods".
19. The Apex Court held that the goods brought by the appellant fall under 49.06 for which the rate of duty is free. In considering the claim of the assessee therein, incidentally, the Apex Court referred to Section 2(14) of the Central Excise Act, 1944 on "dutiable goods". The Section points out that by virtue of Section 2(22) of the Central Excise Act, 1944 all kinds of movable property would be 'goods'.
20. Therefore, for the purpose of understanding the issue, it is not necessary for us to look at the definition of "dutiable goods" as given under Section 2(14) of the Customs Act, 1962. On the other hand, one has to look at the wording of Section 8A of the Customs Tariff Act, which states that in respect of any article included in the First Schedule, the Government has the authority to increase the rate of import duty leviable therein under Section 12 of the Customs Act.
21. Even though learned counsel for the assessee submitted that the increase of the rate of duty leviable under under Section 12 of the Customs Act is payable only when there is "Nil" rate of duty or any other rate of duty not in the case of Free, the said aspect has already been dealt with by the Kerala High Court in W.A.No.2651/2000 etc batch by order dated 10.04.2001, with which we respectfully agree. We do not agree with the submissions of the learned counsel for the assessee that the increased rate of duty is payable when only there is a "Nil" rate and not when there is Free rate of duty. We may note that under Section 25 of the Customs Act, the Government has the authority to grant exemption from duty only conditionally or in absolute terms and in which event, the power under Section 25 of the Customs Act will only go for exempting generally and in absolute terms, thus making import free of any liability under the Act or permit import, subject to such conditions as it may deem fit in the given circumstances.
22. Thus principally, we do not find there could be much of difference in an item being notified under the Customs Tariff Act as 'Nil" or "Free". As already pointed out, the Central Government has power under Section 8A of the Customs Tariff Act to increase the rate of duty in respect of goods falling under First Schedule. It matters very little whether the same is on "Nil" or "Free" rate of duty.
23. In the light of the above, we do not find any justifiable ground to accept the plea of the assessee. Consequently, the writ petitions fail and the same are dismissed. Consequently, connected Mps are closed.
(C.V.,J) (T.S.S.,J) Index:Yes Internet:Yes 03.10.2013 nvsri CHITRA VENKATARAMAN, J. and T.S.SIVAGNANAM, J. nvsri To 1.The Secretary Ministry of Finance, Department of Revenue New Delhi-1 2.The Commissioner of Customs Custom House, 33, Rajaji Salai, Chennai-600 001 3.The Assistant Commissioner of Customs (Appraising Group), Custom House, 33, Rajaji Salai Chennai-600 001 Writ Petition Nos.20358 to 20362 of 1999, 19722/1999, 3/2000, 297/2000, 1057/2000 and 1286/2000 and connected MPs. 03.10.2013