Customs, Excise and Gold Tribunal - Delhi
Gujarat State Cooperative Cotton ... vs Collector Of Customs on 14 January, 1987
Equivalent citations: 1987(11)ECR624(TRI.-DELHI), 1987(28)ELT557(TRI-DEL)
ORDER G. Sankarn, Member (T)
1. The captioned appeal was originally filed as a Revision Application before the Central Government against order-in-appeal mentioned above. On the setting up of this Tribunal, the Revision Application was transferred to it in terms of Section 131B of the Customs Act, 1962 to be disposed of as if it were an appeal filed before the Tribunal.
2. The undisputed facts of the case, briefly stated are that the appellants exported three consignments of raw cotton vide three shipping bills Nos. 1416 and 1417 dated 12-3-79 and 3757 dated 27-3-79. Export duty, as leviable at the relevant time, was assessed on the goods and paid by the appellants. Armed with ad hoc exemption order No. 96 dated 18-4-79 issued under Section 25(2) of the Customs Act, 1962 by the Central Government, the appellants claimed refund of the export duty paid on the three consignments. The Assistant Collector by an order dated 4-11-80 rejected the claim on the basis that the goods had been exported prior to the issue of the ad hoc exemption order and the exemption order would apply only where duty was leviable and not where duty had been levied. An appeal against the order was dismissed on like grounds by the Appellate Collector by his order dated 21-7-81 which is now under challenged before us.
3. We have heard Shri Dilip Dalal, Advocate assisted by Shri R.L. Mehta, Advocate for the appellants and Shri K.C. Sachar, D.R. for the respondent.
4. Ad hoc exemption order No. 96 dt. 18th April 1979, issued by the Central Government under Section 25(2) of the Customs Act, exempts 3808 bales of raw cotton, export sale particulars of which were furnished in the appendix to the Order, from payment of the export duty leviable thereon. To similar effect is ad hoc order NO. 15 dated 26th June 1979 in respect of 600 bales of raw cotton. Admittedly, both the orders were issued after the subject consignments were exported. There is no dispute about the position that the two orders pertain to the subject goods.
5. The question, therefore, is whether the said ad hoc exemption orders issued after the goods had been exported would entitle the appellants to refund of the duty already paid on the goods at the time of their export which duty was leviable at the relevant time and therefore, properly collected.
6. A similar question though it was with reference to ad hoc exemption orders issued after the import of certain goods) came up for consideration before the Madras High Court in Indian Leaf Tobacco Development Co. Ltd. & I.T.C. Ltd. v. Union of India and Ors., 1984(16) ELT 234. In para 12 of its judgment the Court observed as follows :-
"12. Section 25(2) does not put any restriction on the Central Government as to the time at which it should grant exemption. Exemption could be granted under circumstances of an exceptional nature even before levy is made or after the levy, but before the recovery of the amount. Even in a case where Customs duty has been collected, it will certainly be open to the Central Government, in exercise of its powers under S.25(2) to grant exemption and refund the levy. I am, therefore, unable to hold that when once demand of Rs. 90,76,680/- made against the petitioners by the Collector of Customs had become final by the dismissal of the revision petition filed by the petitioners by the revisional authority, the Central Government has no power to grant exemption under Section 25(2)."
In para 11 ibid, the Court rejected the contention for the Union of India that the power under Section 25(2) of the Act could be exercised only before the levying of the customs duty, and not in a case where customs duty had been levied and the appeal and revision filed by the petitioners had been dismissed.
7. In Food Corporation of India v. Collector of Customs, Bombay, 1984(17) ELT 180, a Bench of this Tribunal dealt with a similar question but concerning an adhoc order exempting goods (which had already been imported and cleared on payment of duty) from duty. The Bench held that the importer was entitled to refund of the duty paid in terms of the ad hoc order.
8. To the same effect is also the Tribunal's decision in FCI v. Collector of Customs, Bombay, 1985(21) ELT 128.
9. The question again came up for detailed consideration of the Tribunal in Collector of Customs and Central Excise, Rajkot v. Cotton Corporation of India and Ors., 1986(25) ELT 327. The up shot of the Tribunal's decision was the same as in the earlier decisions.
10. It is, however, the learned Departmental Representative's contention that the ad hoc Orders do not, as they ought to, in terms of the law, disclose the "circumstances of exceptional nature" which necessitated the exemption to be granted. The Orders, we see, in terms, say that the Central Government was satisfied in the "public interest" to grant the exemption. The Central Government should be deemed to have considered the exceptional circumstances relating to the cases. In any event, it is not for this Tribunal to say anything on the very validity or vires of the Section 25(2) Orders. But we would only say that it is rather strange to hear from the representative of the Department that the Orders are vitiated because the "exceptional circumstances" necessitating their issue are not disclosed on the face of the Orders.
11. The learned D.R. has referred to certain decisions bearing on Section 25(1)/Central Excise Rule 8(1) notifications [Ayodaya Spinning & Weaving Co. Ltd. v. Union of India and Ors., 1981 ELT 274 (GUJ.) and Jain Shudh Vanaspati Ltd. & Anr. v. Union of India and Ors., 1983 ELT 1688 (DEL)] to urge that exemption notifications and Orders are subordinate legislations and cannot have retrospective effect. While it is settled law that exemption notifications under Section 25(1)/Central Excise Rule 8(1) cannot have retrospective effect, all the known decisions go to show that the same is not the case in respect of Section 25(2) Orders.
12. Shri Sachar, D.R. drew our attention to Sub-section (3) of Section 25 of the Customs Act. This sub-section was inserted by the Finance Act of 1983. It provides that an exemption under Sub-section (1) or Sub-section (2) in respect of any goods from any part of the duty of customs leviable thereon may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method idfferent from the form or method in which the statutory duty is leviable and any exemption granted in relation to any goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of customs chargeable on such goods shall in no case exceed the statutory duty. Though the exact significance of the reference to the sub-section has not been clearly spelt out before us, apparently the object was to put forth the proposition that this subsection authorises the Government to grant exemption by means of a levy. In other words, exemption is one form of levy and since any levy cannot be retrospective unless specifically authorised by Parliament, the exemption in the present case could also not be retrospective in character. If this be the true purport of the reference to Sub-section (3) of Section 25, then, we have to discard the argument as a fanciful proposition. Exemption can never be the means to impose a levy. The purpose of exemption is to grant exemption from part or whole of the levy. As the explanation to Sub-section (3) itself makes it clear, the object of the sub-section is to authorise the government to provide for the reduced levy by means of exemption, in a form or method (i.e. the basis of the rate of duty, namely valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable) different from the one specified in the Tariff Schedule. In other words, for example, if the statutory schedule specifies duty at an ad valorem rate, the reduced rate by means of exemption could be in terms of weight or volume so long as the reduced rate does not exceed the statutory rate. And so far as retrospectivity is concerned, the decisions already referred to and discussed have made it amply clear that there is no element of retrospectivity in applying ad hoc exemption Orders issued under Section 25(2) to goods which have already been imported and cleared so long as the exemption Orders could be related to them and were issued with reference to them.
13. The submission of the learned D.R. that the ad hoc orders only exempt but do not authorise refunds has only TO be stated to be rejected. The exemption orders could not have been evidently given effect to at the time of export of the subject goods, they having been issued later. The Orders were issued with reference to the subject goods and if they are not to remain dead pieces of paper, as they should not, they must be given effect to and the only way to do so is by refunding the duty already collected.
14. In the result, we set aside the impugned order and allow the appeal with consequential relief. Since the duty was collected almost 8 years ago, the Collector is directed to effect the refund within 3 months from the date of receipt of this Order.