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2001 DIGILAW 223 (KER)

Prima Agro Products Ltd. v. The Union Of India

2001-04-10

K.K.USHA, KURIAN JOSEPH

body2001
JUDGMENT K.K. Usha, C.J. 1. The common question arising in these appeals is whether the notification No. 127/99-Customs, dtd. 1.12.1999 issued by the Government of India under sub-s.1 of S.8A of the Customs Tariff Act, 1975 is bad for lack of jurisdiction. Appellants are petitioners in O. P. Nos. 1762/2000, 31736 & 32741/1999 and 880/2000 respectively. Under a common judgment the learned Single Judge repelled the contentions raised by the Writ Petitioners. Aggrieved by the above, the present appeals are filed. 2. The relevant portion of the above notification dtd. 1.12.1999 reads as follows: "And whereas the Central Government is satisfied that the import duty leviable on wheat, falling under Chap.10 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), should be increased and that circumstances exist which render it necessary to take immediate action; Now, therefore, in exercise of the powers conferred by sub-s.(1) of S.8A of the said Customs Tariff Act, the Central Government, hereby directs that the First Schedule to the said Customs Tariff Act shall be amended in the following manner namely:- In the said Customs Tariff Act, in the First Schedule, in Chap.10, against sub-heading Nos. 1001.10 and 1001.90 for the entry in column (4) occurring against such of them, the entry "50%" shall be substituted." The contentions raised by the appellants is that the effect of the above notification is not really increasing the rate of import duty levied on the wheat. On the other hand, import duty is levied on wheat which was hither to not an item on which import duty was levied. Therefore, according to the appellants, the notification is beyond the powers given to the Central Government under S.8A of the Customs Tariff Act, 1975. The appellants contended that unlike S.8 where an emergency power is given to the Central Government to increase or levy export duties by directing amendment of the Second Schedule under a notification in the official gazette, the emergency power given to the Central Government under S.8A is limited to an amendment by way of notification to increase export duties and not to levy export duty. 3. In Schedule I to the Customs Tariff Act under Chap.10, against subheading 1001.10 and 1001.90 relating to wheat, the entry under column 4 was 'free', which is substituted as 50% by the impugned notification. 3. In Schedule I to the Customs Tariff Act under Chap.10, against subheading 1001.10 and 1001.90 relating to wheat, the entry under column 4 was 'free', which is substituted as 50% by the impugned notification. According to the appellants the expression 'free', which was the entry in column 4 before the amendment would mean that import duty was not levied on wheat. Therefore when the entry was substituted as 50%, the amendment would amount to bringing wheat under the list of articles on which import duty is leviable. Such an action is impermissible under S.8A of the Customs Tariff Act. According to the revenue wheat was already an article on which import duty was leviable. The term 'free' under column 4 would indicate the rate of import duty as 'nil'. By the substitution of the entry under the impugned notification the rate is increased to 50% which is permissible under S.8A. 4. There is no dispute on the scope of the jurisdiction or the emergency power of the Central Government under S.8A i.e., it empowers the Central Government to increase import duties and not to levy import duties as in the case of S.8A where the emergency power is given both to increase as well as levy export duties. The area of conflict is only one relating to the scope of the impugned notification whether it is one increasing the import duties in respect of wheat or whether it is levying import duty on wheat for the first time. 5. The charging Section, as far as levy of import and export duties is S.12 of the Customs Act, 1962. Sub-s.1 of S.12 reads as follows: "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 rate 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." Sub-s.14 of S.2 of the Customs Act defines dutiable goods as any goods which are chargeable to duties and on which duty has not been paid. The rate at which dutiable goods are to be charged to duty is provided in the Schedules under the Customs Tariff Act, 1975. The First Schedule deals with the import tariff and the Second Schedule with export tariff. The rate at which dutiable goods are to be charged to duty is provided in the Schedules under the Customs Tariff Act, 1975. The First Schedule deals with the import tariff and the Second Schedule with export tariff. The Schedule is divided into five columns. The relevant portion of the Schedule dealing with wheat is quoted below: Heading No. Sub-heading Description of article Rate of Standard duty Preferential Areas (1) (2) (3) (4) (5) 1001.10 Durum wheat Free . 1001.90 Other Free . 10.01 Wheat and meslin Column No. 4 refers to rate of standard duty under which the entry is 'free'. The contentions raised by the appellants is that since the entry under column 4 is free, it has to be taken that until the impugned notification was issued, wheat is not dutiable and it is only when the entry was substituted at 50% under the impugned notification it is treated as a dutiable goods. We find it difficult to accept the above contention. If wheat had not been a dutiable goods as defined under S.2(14) of the Customs Act, 1962, there was no question of its being included in the Schedule at all before the impugned notification came into effect. Only when the wheat comes under the definition of dutiable goods and the duty is levied on it, it would find a place in the Schedule under the Customs Tariff Act, 1975. Therefore, the entry 'free' under column 4 with the heading 'rate of duty standard' can only signify the rate of duty as nil. 6. In Collector of C.Ex., Hyderabad v. Vazir Sultan Tobacco Co. Ltd. ( 1996 (83) ELT 3 , the Apex Court had held that 'nil' rate of duty is also a rate of duty. A similar view was taken in Kasinka Trading v. Union of India, 1995 (1) SCC 274 , when the effect of an exemption granted under S.25(1) of the Customs Act, 1962 was considered by the Supreme Court. Sub-s.1 of S.25 gives power to the Central Government to exempt by a notification in an official gazette generally either absolutely or subject to that condition as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon, if it is satisfied that such an action is necessary in the public interest. While considering the effect of such a notification, the Supreme Court observed as follows: "The liability to pay customs duty or additional duty under the Act arises when the taxable event occurs. They are then subject to the payment of duty as prevalent on the date of the entry of the goods. An exemption notification issued under S.25 of the Act had the effect of suspending the collection of customs duty. It does not make items which are subject to levy of customs duty etc. as items not leviable to such duty". The above would show that even when an exemption is granted under S.25 and the rate of duty is reduced to 'nil', the goods continued to be a dutiable goods. When the exemption is withdrawn fully or partially, it cannot be said that the relevant goods for the first time became dutiable. Same is the effect of the entry 'free' under column 4 in the heading 'rate of duty'. The word 'free' can be used in the same sense as 'exempt' (Law Lexicon by P. Ramanatha Iyer, 1987 Edition, page 465). If wheat had not been treated as a dutiable item, there was no necessity to include the same in Schedule I. 7. The appellants have a further contention that the classification of goods in Chap.10 of Schedule I of the Customs Tariff Act under the Finance Act, 1999 is an act on the part of the legislature to keep the said goods beyond the purview of the charging provision under the Customs Act, 1962. Under such circumstances, only the legislature can impose a duty on the above items mentioned in Chap.10. We find no merit in this contention also. If the intention of the legislature was to keep those items referred in Chap.10 out side the net of import duty, then there was no need to refer them at all in Schedule I. On the other hand, their inclusion in the Schedule itself would make it clear that they are considered as dutiable items, but the rate of duty shall be 'nil'. This is the only natural meaning that could be given to the entries in Chap.10 of Schedule I. In the result, the Writ Appeals fail and they stand dismissed.