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Wednesday, August 5, 2015

. 1. The appellant is engaged in the manufacture of pig iron. The appellant imported Low Ash Metallurgical (LAM) Coke under seven Bills of Entry, against four advance licenses without payment of basic customs duty (BCD) levied under Section 12 of the Customs Act, 1962, special customs duty (SCD) levied under Section 68 of the Finance Act, 1996, special additional duty (SAD) levied under Section 3A of Customs Tariff Act, 1975 and Anti-dumping duty (ADD) levied under Section 9A of the Customs Tariff Act, 1975 during the period June 1998 to August 1998, which were exempt from duty vide (i) Notifications No. 30/97 Cus dated 1.4.1997, (ii) Sr. No.4 of Notification No.12/97 Cus dated 1.3.97, (iii) Sr. No.3 of the Notification No.34/98-Cus dated 13.6.1998, and (iv) Notification No.41/97-Cus dated 30.4.97 respectively.We may add, that after 2002, Sections 3(2) and 3A(2) have been amended with effect from 1.3.2002 so as to expressly not include Anti- dumping duty.= 1. Doubts have been expressed about the method of computing the additional duty of customs (CVD) under section 3 of the Customs Tariff Act, 1975. The doubt raised is on the point that whether anti-dumping duty, safeguard duty and other duties etc. should be taken into account while computing the CVD. In this regard, it is clarified that for computing the CVD,only the value of the imported article as determined under section 14 of the Customs Act, 1962, including the landing charges, if any and the basic customs duty chargeable at the rates specified in the First Schedule to the said Customs Tariff Act (read with any notification for the time being in force in respect of the basic customs duty) needs to be taken into account. Other duties such as anti-dumping duty, safeguard duty, etc. should not be taken into account.” “In the explanatory notes for the last year’s budget it was clarified that for computing the CVD, only the value of imported article as determined under section 14 of the Customs Act, 1962, including the landing charges, if any and the basic customs duty chargeable at the rates specified in the First Schedule to the Customs Tariff Act (read with any notification for the time being in force in respect of the basic customs duty) needs to be taken into account. Other duties such as anti-dumping duty, safeguard duty, etc. should not be taken into account. A view has been expressed that section 3A of the Customs Tariff Act does not permit such interpretation. To place the matter beyond doubt, it is proposed to amend section 3 and section 3A of the Customs Tariff Act so as to make it very clear that for computation of additional duty of customs, only the c.i.f. price, landing charges and basic customs duty will be included. Similarly for determining special additional duty of customs (SAD), only the c.i.f. price, landing charges, basic customs duty and the additional duty of customs will be included. Other duties such as anti- dumping duty safeguard duty, etc. shall not be taken into account. This amendment will have effect from 1.3.2002.” As far as penalty is concerned, we feel that the appellant before us has not diverted goods meant for export to the domestic tariff area. We are satisfied that market considerations made it difficult, if not impossible, for the appellant to fulfill its export obligations and are, therefore, of the view that the penalty imposed in the present case ought to be set aside. 38. The appeal is, accordingly, allowed in the aforesaid terms and the judgment of CESTAT is set aside.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION


                        CIVIL APPEAL NO.7189 OF 2005




      M/S. JASWAL NECO LTD.                   … APPELLANT




                                   VERSUS
      COMMISSIONER OF CUSTOMS,
      VISAKHAPATNAM                                ...RESPONDENT




                              J U D G M E N T

      R.F. Nariman, J.




      1.    The appellant is engaged in the manufacture of  pig  iron.   The
      appellant imported Low Ash Metallurgical (LAM) Coke under seven  Bills
      of Entry, against four  advance  licenses  without  payment  of  basic
      customs duty (BCD) levied under Section 12 of the Customs  Act,  1962,
      special customs duty (SCD) levied under Section 68 of the Finance Act,
      1996, special additional duty (SAD) levied under Section 3A of Customs
      Tariff Act, 1975 and Anti-dumping duty (ADD) levied under  Section  9A
      of the Customs Tariff Act, 1975 during the period June 1998 to  August
      1998, which were exempt from duty vide (i) Notifications No. 30/97 Cus
      dated 1.4.1997, (ii) Sr.  No.4  of  Notification  No.12/97  Cus  dated
      1.3.97,  (iii)  Sr.  No.3  of  the  Notification  No.34/98-Cus   dated
      13.6.1998,  and   (iv)   Notification   No.41/97-Cus   dated   30.4.97
      respectively.

      2.    At the time of import, the appellant furnished a bond containing
      an  undertaking  to  pay  duty  on  imported   goods   cleared   under
      Notification No.30/97 and 41/97 in the event of failure to fulfill its
      export obligation.

      3.    It is an admitted position that the appellant failed to  fulfill
      its export obligation in the terms of the exemption notifications. The
      entire LAM so imported has instead been used by the appellant  in  its
      factory for the manufacture of pig iron.

      4.    Demand of duty of Rs.7.21 crores was sought to be  raised.   The
      break up of demand of Rs.7.21 crores is as under:

           1.    Basic Customs Duty                Rs.1.01 crores

           2.    Antidumping Duty            Rs.5.00 crores

           3.    Special Customs Duty              Rs.0.50 crore

           4.    Special Additional Duty                Rs.0.66 crore

           5.    Cess                              Rs.0.02 crore

                 Total                             Rs.7.21 crores.




      5.    Pending final adjudication of  the  show  cause  notice  by  the
      Commissioner, the appellant duly paid the entire duty payable  towards
      BCD, SAD and SCD after considering partial exports already made.   The
      appellant did not make any payment towards ADD.

      6.    The Commissioner of Customs vide Order dated 4.11.2004 confirmed
      the duty demand of Rs.3.37 crores and  imposed  a  penalty  of  Rupees
      Twenty  lakhs.  According  to  the  learned  Commissioner,  since  the
      appellant after issuance  of  the  show  cause  notice  paid  duty  of
      Rs.1,66,18,563/-,  the  differential  duty  to  be  paid  amounted  to
      Rs.1,70,98,510/-.  Further, interest on the said  amount  at  24%  was
      also held to be payable.

      7.    The appellant appealed to CESTAT.  Vide  the  impugned  judgment
      dated 18.8.2005, CESTAT partly allowed the  appeal  by  remanding  the
      matter to the original authority  to  calculate  duty,  interest,  and
      penalty in accordance with the findings  contained  in  its  judgment.
      The basic difference  between   CESTAT’s  judgment  and  that  of  the
      Commissioner is that interest was reduced from 24%  to  15%,  but  the
      Anti-dumping duty was increased by applying the higher rates specified
      by the final Notification No.69 of 2000.

      8.    Shri Lakshmikumaran, learned advocate for the appellant did  not
      dispute before us that the appellant failed in its export  obligations
      and was, therefore, not liable to be exempted so far as  customs  duty
      is concerned.  He, therefore, conceded that basic customs duty and the
      special customs duty as well as special additional duty was payable by
      the appellant.   However,  he  disputed  that  Anti-dumping  duty  was
      payable  at  all  stating  that  the  appellant   was   exempt   under
      Notification No.69 of 2000.  He further argued  that  no  interest  is
      chargeable on any of the four duties inasmuch as  the  bond  that  was
      furnished under Notification No.30 of 1997 did not stipulate  that  in
      the  event  of  default,  interest  would  become  payable.   Further,
      according to him, it is clear that the assessment in the present  case
      is only provisional and that being the case, even if the provisions of
      the Customs Act are made applicable insofar as  Anti-dumping  duty  is
      concerned, under the Customs Act itself there  was  no  provision  for
      collection of interest for the period in dispute  as  Section  18  was
      amended to include such a provision  only  prospectively  with  effect
      from 2006.  He further argued, that  in  any  case  Anti-dumping  duty
      could not be added for purposes of  computing  customs  duty,  special
      customs  duty  and  special  additional  duty.   Also  no  penalty  is
      imposable inasmuch as nothing contumacious was done by  the  appellant
      and the export obligation could  not  be  fulfilled  only  because  of
      bonafide commercial impossibility.  It is contended that  nothing  has
      been diverted to the domestic tariff area and sold in that  area,  and
      the entire imports made have been used by the appellant  captively  in
      its factory for the manufacture of pig iron.  He further  argued  that
      he could not be worse off in an appeal filed  only  by  the  appellant
      herein to CESTAT and that on the assumption  that  the  appellant  was
      liable to pay Anti-dumping duty, they should only pay the said duty at
      the lower rate prescribed by  the  Commissioner  as  Revenue  had  not
      appealed to the Tribunal against the Commissioner’s order.

      9.    Shri Radhakrishnan, learned senior counsel appearing  on  behalf
      of the revenue countered the aforesaid submissions and submitted  that
      the exemption contained in the Anti-dumping duty  Notification  69  of
      2000 was only prospective and, hence Anti-dumping duty had to be  paid
      for the relevant period. He further submitted  that  interest  in  any
      case was payable as Notification No.30 of 1997 independently levied  a
      charge of interest.  Further, he  also  supported  the  Commissioner’s
      order and the Tribunal so far as the various  other  aspects  of  this
      appeal are concerned.

      10.   We have heard learned counsel  for  the  parties.  In  order  to
      appreciate the first submission of Shri Lakshmikumaran,  namely,  that
      Anti-dumping duty in the present case ought to be nil, we set out  the
      relevant Notifications –

                 “Notification: 22/98-Cus. Dated 06-May-1998

           Metallurgical coke originating in or exported from China PR –
           Anti-dumping duty

            In exercise of  the  powers  conferred  by  sub-section  (2)  of
           section 9A of the Customs Tariff Act, 1975 (51  of  1975),  read
           with rule 13 of the Customs Tariff  (Identification,  Assessment
           and Collection of Anti-dumping Duty on Dumped Articles  and  for
           Determination of Injury) Rules, 1995, the Central Government  on
           the  basis  of  the  preliminary  findings  of  the   designated
           authority, published in the  Gazette  of  India,  Extraordinary,
           Part I, Section 1, dated the 20th  March,  1998  that  there  is
           dumping in respect  of  the  Metallurgical  coke  falling  under
           Heading No. 27.04 of the First Schedule to  the  said  Act,  and
           originating in or exported from China PR, hereby imposes on  the
           said Metallurgical coke originating in or  exported  from  China
           PR, and imported into India, an anti-dumping duty at the rate of
           one thousand eight hundred rupees per metric tonne.

            This notification shall have effect upto and  inclusive  of  the
           5th day of November, 1998.”

                 “Notification: 82/98/Cus. Dated 27-Oct-1998

           Metallurgical coke originating in, or exported from, China PR –
           Anti-dumping duty – Notification No. 22/98-Cus. Rescinded

            In exercise of  the  powers  conferred  by  sub-section  (2)  of
           section 9A of the Customs Tariff Act, 1975 (51  of  1975),  read
           with rule 13 of the Customs Tariff  (Identification,  Assessment
           and Collection of Anti-dumping Duty on Dumped Articles  and  for
           Determination of Injury) Rules,  1995,  the  Central  Government
           hereby rescinds the notification of the Government of  India  in
           the Ministry of Finance  (Department  of  Revenue),  No.  22/98-
           Customs, dated the 6th May, 1998, published in  the  Gazette  of
           India, Extraordinary, Part II, Section 3, Sub-section  (i)  vide
           G.S.R. 243 (E), dated the 6th May, 1998.”

            Notification: 81/98-Cus. Dated 27-Oct-1998

            Metallurgical coke (Metcoke) originating in, or  exported  from,
           China PR – Anti-dumping duty

           “Now, therefore, in exercise of the  powers  conferred  by  sub-
           section (1) of section 9A of the said Customs Tariff  Act,  read
           with rules 18 and 20  of  the  Customs  Tariff  (Identification,
           Assessment  and  Collection  of  Anti-dumping  Duty  on   Dumped
           Articles and for  Determination  of  Injury)  Rules,  1995,  the
           Central Government, after considering the aforesaid findings  of
           the Designated Authority,  hereby  imposes  on  Metcoke  falling
           under heading No. 27.04  of  the  First  Schedule  to  the  said
           Customs Tariff Act, originating in or exported from China PR and
           imported into India, an anti-dumping duty calculated at  a  rate
           as equivalent to the difference between Rs. 4673 and the  landed
           value of Metcoke, per metric tonne;

           2.    The anti-dumping  duty  imposed  under  this  notification
           shall be levied with effect  from  the  date  of  imposition  of
           provisional duty i.e. 6th of May, 1998.”




      11.   The final Notification dated 27.10.1998 was  challenged  by  the
      Pig Iron Manufacturers Association.  By its judgment reported  in  Pig
      Iron Manufacturers Association v. Designated  Authority,  Ministry  of
      Commerce, 2000 (116)  ELT  67  (Tribunal),  the  Tribunal  passed  the
      following order:-

           “12.  In the light of the above discussions and  findings  based
           on the data available on record, we pass the following orders:-

              1. All imports of metcoke exported from or originating in the
           People’s Republic of China to India be subjected to anti-dumping
           duties  at  the  following  rates  as  indicated  against   each
           exporter:-

            1. China  National Coal Industry       : 18.35US$  Import/Export
               (Group) Corporation.




            2.     China    National     Mineral     Import     and        :
               24.51US$
                    Export Corporation.


            3.  Shanxi Coal Import Export Group    :           19.22US$

                   Corporation. (Minmetal Group).




            4. Ningxia Xiacheng Import & Export    :     24.95 US$

                  Corporation.

            5. China North Industries Corporation. :     22.69 US$




            6. Shanghai Pacific Chemicals (Group)  :     19.22 US$
                   Corporation Ltd.


            7. All other  exporters.            :                      24.95
               US$



           2.    Subject to these modifications, the final  findings  dated
           27th August, 1998 of the D.A. are  confirmed.   The  Corrigendum
           dated 2nd September, 1998 is set aside.”




      12.   Pursuant to the  Tribunal’s  judgment,  the  Central  Government
      issued a Notification dated 26.5.2000 as follows:-

           “Now, therefore, in exercise of the  powers  conferred  by  sub-
           section (1) of Section 9A read with sub-section  (6) of  Section
           3 of the said Customs Tariff Act and sub-section (1) of  Section
           25 of the Customs Act, 1962 (52 of 1962), and in supersession of
           the notification of the Government of India in the  Ministry  of
           Finance (Department of Revenue) No. 81/98-  Customs,  dated  the
           27th October, 1998 [ G.S.R. 644 (E),  dated  the  27th  October,
           1998], except as respects things done  or  omitted  to  be  done
           before such supersession, the Central Government hereby  imposes
           on Metcoke falling under heading No. 27.04 of the First Schedule
           to the said Customs Tariff  Act,  originating  in,  or  exported
           from, China  PR  and  imported  into  India,  by  the  exporters
           mentioned in column (2) of the Table hereto  annexed,  an  anti-
           dumping duty of an amount equivalent to the  rate  indicated  in
           column (3) of the said Table,  converted  into  Indian  currency
           with reference to the rate of exchange as in force on  the  date
           on which a bill of entry is presented under section  46  of  the
           said Customs Act, 1962 (52 of 1962).”




           |S. No.      Name of the Exporter        Rate  per |
|metric tone                                       |
|                    (2)                           |
|(3)                                               |
|1.         China  National Coal Industry          |
|US$ 18.35                                         |
|Import/Export (Group) Corporation                 |
|2.         China National Mineral Import and   US$|
|24.51                                             |
|Export Corporation.                               |
|                                                  |
|3.         Shanxi Coal Import Export Group     US$|
|19.22                                             |
|Corporation. (Minmetal Group)                     |
|4.         Ningxia Xiacheng Import & Export   US$ |
|24.95                                             |
|Corporation                                       |
|5.         China North Industries Corporation     |
|US$ 22.69                                         |
|                                                  |
|6.         Shanghai Pacific Chemicals (Group) US$ |
|19.22                                             |
|Corporation Ltd.                                  |
|                                                  |
|7.         All other exporters.                   |
|US$ 24.95                                         |


           Nothing contained in this notification shall apply to imports of
           Metcoke by a manufacturer of pig iron or  steel  using  a  blast
           furnace if he follows the  procedure  set  out  in  the  Customs
           (Import of Goods at Concessional Rate of Duty for Manufacture of
           Excisable Goods) Rules, 1996.”

      13.   The bone of  contention  in  the  present  appeal  is  the  last
      paragraph of this Notification.

      14.   It is clear that under  Rule  20(2)(a)  of  the  Customs  Tariff
      (Identification, Assessment And  Collection  of  Antidumping  Duty  on
      Dumped Articles and For Determination of Injury) Rules, 1995, where  a
      provisional duty has been levied and where  the  designated  authority
      has recorded a final finding of injury or threat  of  injury  and  the
      further  finding  that  the  effect  of  imports  in  the  absence  of
      provisional duty would have led to injury, the Anti-dumping  duty  may
      be levied from the date of imposition of  provisional  duty.   In  the
      present  case,  therefore,  it  will  be  noticed   that   the   final
      Notification dated 27.10.1998 is said to come into force from the date
      of the first Notification dated 6.5.1998 imposing provisional duty  in
      the present case.  It is clear that as the  final  Notification  dated
      27.10.1998 has been superseded by the  Notification  dated  19.5.2000,
      the appellant would have had to pay Anti-dumping duty at the  rate  of
      US$ 24.95 per metric tonne as indisputably it falls within  Item  No.7
      of the said Notification.

      15.   It will  be  noticed  that  the  exception  carved  out  in  the
      Notification dated 19.5.2000 was pursuant  to  a  minutes  of  meeting
      dated 25.11.1999 by the Secretary (Steel) and representatives of  Mini
      Blast Furnace producers  of  Metallurgical  Coke.   These  minutes  of
      meeting state as follows:-

           “The  Representatives  of  IMCOM  (Indian   Metallurgical   Coke
           Manufacturers Association) said that IMCOM represents  both  the
           petitioners i.e. M/s. BLA Industries and Industries and Commerce
           Association in the anti dumping duty petition against import  of
           metcoke of Chinese  origin.   They  explained  that  while  anti
           dumping duty was essential for the survival of the domestic coke
           producers, the blast furnaces have never  been  their  principal
           customers and it was not  their  intention  to  harm  the  blast
           furnaces industry.

           5.    After detailed deliberations it was agreed between  Indian
           Metallurgical  Coke  Manufacturers   Association   (IMCOM)   and
           Association of Indian Mini Blast Furnaces (AIM) that  the  blast
           furnace units were not the principal market  that  the  domestic
           coke producers cater to.  The market to which the domestic  coke
           producers cater to companies ferrous and non-ferrous  foundries,
           ferro alloys producers, soda ash producers, zinc usmelting units
           some other chemical units and various SSI units.

           6.    Since the imposition of the anti dumping  duty  the  blast
           furnace units had to resort to  import  from  expensive  sources
           like Russia, Japan etc.  In view of this it was suggested by the
           AIM that the blast furnace units could be exempted  from  paying
           ADD on import of metallurgical coke of Chinese origin,  provided
           this import is for actual use by the blast furnace  units.   The
           list of blast furnace  units  which  will  be  covered  by  this
           exemption is also enclosed.

           7.    Considering the financial difficulty  of  the  members  of
           AIM, IMCOM agreed that they have no objection if the  government
           exempts the blast furnace industry from the purview of the anti-
           dumping duty.  Metcoke will be imported under  OGL  with  Actual
           user Conditions for blast furnace industry without  ADD.   IMCOM
           reiterated that while the continuation of the ADD on metcoke  of
           Chinese origin is vital for the survival of the indigenous  coke
           manufacturers they also agreed that the exemption of  the  blast
           furnace units from ADD was vital for their survival.”




      16.   On reading these minutes  it  becomes  clear  that  Anti-dumping
      duties that had been imposed upon the Blast Furnace  Industry  had  an
      adverse impact upon the industry and that the intention of levying  an
      Anti-dumping duty was not to harm their interests.  Paragraphs 6 and 7
      of the said minutes in particular seem to suggest that  the  exemption
      that was contemplated by the minutes of such Blast Furnace  units  was
      something that could take place only in the future.

      17.   Quite apart from this, it is clear that no exception was  carved
      out before 19.5.2000 in favour of Blast Furnace  Manufacturers  either
      when the provisional Anti-dumping duty was first imposed or  when  the
      final Notification dated 27.10.1998 was issued.  It is clear that  the
      last part of the Notification dated 19.5.2000 creating an exception in
      favour of persons like the appellant has no reference to  the  earlier
      proceedings in the case  and  is  obviously  intended  to  apply  only
      prospectively.  This is also clear from the language used in the  said
      clause – ‘nothing  contained  in  the  Notification  “shall  apply  to
      imports” …. Using a Blast Furnace “if he follows”  the  procedure  set
      out in the Customs “import of goods at concessional rate of  duty  for
      manufacture of excisable goods” Rules, 1996’.   The  language  of  the
      aforesaid clause applies only in futuro and we are  afraid  that  Shri
      Lakshmikumaran’s first argument must, therefore, fail.

      18.   However,  Shri  Lakshmikumaran  is  on  firmer  ground  when  he
      submitted before us that the Commissioner has held that the  appellant
      is liable to pay Anti-dumping duty only under the  Notification  dated
      27.10.1998. The rate prescribed in the  said  Notification  is  lesser
      than the rate that would apply under the Notification dated 19.5.2000.
       As there was no appeal by the revenue against  this  finding  of  the
      Commissioner, the Tribunal could not have enhanced the rate  at  which
      the appellant would have to pay Anti-dumping duty in  the  appellant’s
      own appeal.  The appellant cannot be worse off by reason of filing  an
      appeal. To  this  limited  extent,  the  appellant  succeeds  and  the
      Tribunal’s order is set aside.  The appellant will have to  pay  Anti-
      dumping duty calculated at the rates specified  only  in  Notification
      No. 81/98 dated 27.10.1998.

      19.   It was argued by Shri Lakshmikumaran that the appellant was  not
      liable to pay interest on any of the customs duties for which  it  was
      held  liable  by  the  Commissioner’s  order.   He  referred   us   to
      Notification No.30 of 1997,  the  relevant  part  of  which  reads  as
      follows:

           “In exercise of the  powers  conferred  by  sub-section  (1)  of
           section 25 of the Customs Act, 1962 (52  of  1962)  the  Central
           Government, being satisfied that it is necessary in  the  public
           interest so to do, hereby exempts materials imported into India,
           against an Advance Licence with Actual User Condition  in  terms
           of para 7.4 of the Export & Import Policy 1997-2002 notified  by
           the Government  of  India  in  the  Ministry  of  Commerce  vide
           Notification  No.1/1997-2002  dated   the   31st   March,   1997
           (hereinafter referred to as the said licence), from the whole of
           the duty of customs leviable thereon which is specified  in  the
           First Schedule to the Customs Tariff Act, 1975 (51 of 1975)  and
           from the whole of the additional  duty  leviable  thereon  under
           Section 3 of  the  said  Customs  Tariff  Act,  subject  to  the
           following conditions namely:-

              i) xxx xxx

             ii) That the importer at the time of clearance of the  imported
                 materials executes a bond with such surety or security  and
                 in such form and for such sum as may be  specified  by  the
                 Assistant Commissioner of Customs binding himself to pay on
                 demand an amount equal to the duty leviable,  but  for  the
                 exemption, on the imported materials in  respect  of  which
                 the conditions specified in this notification have not been
                 complied with, together with interest at the rate of twenty-
                 four percent per annum from the date of  clearance  of  the
                 said materials.”



      20.   A reading of this Notification makes it clear that  interest  at
      the rate of 24% per annum is only liable to be paid if at the time  of
      clearance of the imported materials the importer executes  a  bond  in
      which such interest is stated to be payable.  We have been  shown  the
      bond executed in the present case.  It says nothing about any interest
      that is payable in case the conditions of the  Notification  No.30  of
      1997 are not met.  On this short ground alone, it  is  clear  that  no
      interest is payable on any of the customs duties that are due from the
      appellant.

      21.   It was also argued by Shri Lakshmikumaran that  Section  101  of
      the Finance Act, 2009 has been given a retrospective application  with
      effect from 1.1.1995.  Section 9A sub-section (8) as substituted  with
      effect from 1.1.1995 reads as follows:-

           “(8)  The provisions of the Customs Act, 1962 (52 of  1962)  and
           the rules  and  regulations  made  thereunder,  including  those
           relating to date of determination of rate of  duty,  assessment,
           non-levy, short levy, refunds, interest, appeals,  offences  and
           penalties shall, as far as maybe, apply to the  duty  chargeable
           under this section as they apply in relation to duties  leviable
           under that Act.”




      22.   Even though the Customs Act would necessarily  become  attracted
      to Section 9A of the Customs Tariff Act insofar as  Anti-dumping  duty
      is concerned, learned counsel further submitted that the  Customs  Act
      itself contained no provision for levy of  interest  until  13.7.2006.
      Section 18(3) was added only with effect from 13.7.2006 and  reads  as
      follows:-

           “(3)  The importer or exporter shall be liable to pay  interest,
           on any amount payable to the Central Government,  consequent  to
           the final assessment order under sub-section (2),  at  the  rate
           fixed by the Central Government  under  Section  28AB  from  the
           first day of the  month  in  which  the  duty  is  provisionally
           assessed till the date of payment thereof.”

      23.   It  is  clear  that  on  the  facts  of  the  present  case  the
      provisional assessment had been made in 1998 and the final  assessment
      only on 4.11.2004 by the Commissioner.  Both these dates  being  prior
      to  13.7.2006,  Shri  Lakshmikumaran  is  right  and  no  interest  is
      chargeable under Section 18 of the Customs  Act,  for  the  period  in
      question.

      24.   In Commissioner of Customs (Preventive) v. Goyal Traders, (2014)
      302 ELT 529, the Gujarat High Court has held as under:-

           “17. In the present case, we find that prior to introduction  of
           sub-section (3) of Section 18 of the Act in  the  present  form,
           there was no liability to pay  interest  on  difference  between
           finally assessed  duty  and  provisionally  assessed  duty  upon
           payment of which the assessee may have cleared  the  goods.   It
           was only with effect from 13.7.2006 that such charging provision
           was introduced in the statute.  Upon introduction therefor  such
           provision created interest liability for the first  time  w.e.f.
           13.7.2006.  In absence of any indication in the  statute  itself
           either  specifically  or   by   necessary   implication   giving
           retrospective effect to such a statutory provision,  we  are  of
           the opinion  that  the  same  cannot  be  applied  to  cases  of
           provisional assessment which took place prior to the said  date.
           Any such application would in our view amount  to  retrospective
           operation of the law.”




           We respectfully agree with the aforesaid view.  In addition,  it
      is clear that this Court has held that the  levying  of  interest  can
      only be by a substantive  provision  (See:  J.K.  Synthetics  Ltd.  v.
      Commercial Taxes Officer, (1994) 4 SCC 276 at paragraph  16),  thereby
      making it clear that such levy can only be prospective.

      25.   Further, in India Carbon Ltd. v. State of Assam,  (1997)  6  SCC
      479, this Court held:-

           “11. Section 9(2-A) makes  applicable  to  the  assessment,  re-
           assessment, collection and enforcement of Central sales tax  the
           provisions relating to offences and penalties contained  in  the
           State Acts as if the Central sales tax was a  State  sales  tax.
           But Section 9(2-A) makes no reference to interest.
           12.    There  is  no  substantive  provision  in   the   Central
           Act requiring the payment of  interest  on  Central  sales  tax.
           There is, therefore, no substantive provision in the Central Act
             which obliges the assessee to pay interest on delayed payments
           of Central sales tax.
           13.   Now, the  words  "charging  or  payment  of  interest"  in
           Section 9(2) occur  in  what  may  be  called  the  latter  part
           thereof. Section 9(2) authorises the sales tax authorities of  a
           State to assess, reassess, collect and enforce  payment  of  the
           Central sales tax payable by a dealer as if it was payable under
           the State Act; this is the first part of Section  9(2).  By  the
           second part thereof, these authorities are empowered to exercise
           the powers they have under the State Act and the  provisions  of
           the State Act, including provisions  relating  to  charging  and
           payment of interest, apply accordingly. Having  regard  to  what
           has been said in the case of Khemka & Co., it must be held  that
           the substantive law that the States' sales tax authorities  must
           apply is the Central Act. In such  application,  for  procedural
           purposes alone, the provisions of the State  Act are  available.
           The provision relating to interest in the latter part of Section
           9(2) can be employed by the States' sales tax  authorities  only
           if the Central Act makes a substantive provision  for  the  levy
           and charge of interest on Central sales tax  and  only  to  that
           extent. There being no  substantive  provision  in  the  Central
           Act requiring the payment of interest on Central sales  tax  the
           States'  sales  tax  authorities  cannot,  for  the  purpose  of
           collecting and enforcing payment of Central  sales  tax,  charge
           interest thereon.
           14.    The  requirement  of  the  1st  respondent's  sales   tax
           authorities that the appellants should pay interest at the  rate
           of 24% p.a. on delayed payment of Central sales  tax  under  the
           provisions of Section 35(A) of the State Act must, therefore, be
           held to be bad in law.”



      26.   Given the aforesaid, it is clear that no interest is  chargeable
      on any of the customs duties that are payable  on  the  facts  of  the
      present case.

      27.   It now remains to consider  whether  Anti-dumping  duty  can  be
      included in calculating special customs duty  and  special  additional
      duty.

      28.   Special customs duty is levied under Section 68 of  the  Finance
      Act No.2 of 1996, which reads as follows:-

           “68. Special duties of customs. – (1)   In  the  case  of  goods
           mentioned in the First Schedule to the Customs Tariff Act, or in
           that Schedule, as amended from  time to  time,  there  shall  be
           levied and collected as a special duty  of  customs,  an  amount
           equal to two per cent of the value of the goods as determined in
           accordance with the provisions of section 14 of the Customs Act.

           (2)   Sub-section (1) shall cease to have effect after the  31st
           day of March, 1999, and upon  such  cesser,  section  6  of  the
           General Clauses Act, 1897) shall  apply  as  if  the  said  sub-
           section had been repealed by the Central Act.

           (3)   The special duties of customs referred to  in  sub-section
           (12) shall be in addition to any duties of customs chargeable on
           such goods under the Customs Act or any other law for  the  time
           being in force.

           (4)   The provisions of  the  Customs  Act  and  the  rules  and
           regulations made thereunder, including those relating to refunds
           and exemptions from duties shall, as far as  may  be,  apply  in
           relation to the levy and collection of  the  special  duties  of
           customs leviable under this section in respect of  any  gods  as
           they apply in relation to the levy and collection of the  duties
           of customs on such goods under  that  Act  or  those  rules  and
           regulations, as the case may be.”




      29.   Similarly, special additional duty is levied under Section 3A of
      the Customs Tariff Act inserted by the Finance Act of  1998.   Section
      3A reads as under:-

           “Special additional duty.- (1)    Any article which is  imported
           into India shall in addition be liable to  a  duty  (hereinafter
           referred to in this section as  the  special  additional  duty),
           which shall be levied at a rate to be specified by  the  Central
           Government, by notification  in  the  Official  Gazette,  having
           regard to the maximum sales tax, local tax or any other  charges
           for the time being leviable on a like article  on  its  sale  or
           purchase in India:

                 Provided that until such rate is specified by the  Central
           Government, the special additional  duty  shall  be  levied  and
           collected at the rate of eight per cent  of  the  value  of  the
           article imported into India.

                  Explanation.-     In  this  sub-section,  the  expression
           “maximum sales tax, local tax or any other charges for the  time
           being leviable on a like article on  its  sale  or  purchase  in
           India” means the maximum sales-tax, local tax, other charges for
           the time being in force, which  shall  be  leviable  on  a  like
           article, if sold or purchased in India, or if a like article  is
           not so sold or purchased which shall be leviable on the class or
           description of articles to which the imported article belongs.

           (2)   For the purpose of  calculating  under  this  section  the
           special additional duty on any imported article,  the  value  of
           the imported article shall, notwithstanding  anything  contained
           in section 14 of the Customs Act, 1962 or section 3 of this Act,
           be the aggregate of –

           (i)   the value of the imported article  determined  under  sub-
           section (1) of section 14 of the Customs Act, 1962 (52 of  1962)
           or the tariff value of such article fixed under sub-section  (2)
           of that section, as the case may be;

           (ii)  any duty of  customs  chargeable  on  that  article  under
           section 12 of the Customs Act, 1962), and any sum chargeable  on
           that article under any law for the time being  in  force  as  an
           addition to, and in the same manner as, a duty of  customs,  but
           not including the special additional duty referred  to  in  sub-
           section (1); and

           (iii) the additional duty of customs chargeable on that  article
           under section 3 of this Act.

           (3)   The  duty  chargeable  under  this  section  shall  be  in
           addition to any other duty imposed under this Act or  under  any
           other law for the time being in force.

           (4) The provisions of the Customs Act, 1962 (52  of  1962),  and
           the rules  and  regulations  made  thereunder,  including  those
           relating to refunds and exemptions from duties shall, so far  as
           may be, apply to the duty chargeable under this section as  they
           apply in relation to the duties leviable under that Act.

           (5)   Nothing contained in  this  section  shall  apply  to  any
           article, which is chargeable to additional duties  levied  under
           sub-section (1) of section 3 of the Additional Duties of  Excise
           (Goods of Special Importance) Act, 1957 (58 of 1957).”




      30.   Section 3(2) of the Customs  Tariff  Act  as  it  stood  at  the
      relevant time reads as under:

           “(2)  For the purpose of calculating  under  this  section,  the
           additional duty on any imported  article,  where  such  duty  is
           leviable at any percentage  of  its  value,  the  value  of  the
           imported article shall, notwithstanding  anything  contained  in
           Section 14 of the  Customs  Act,  1962  (52  of  1962),  be  the
           aggregate of-

              i) The value of the imported  article  determined  under  sub-
                 section (1) of the said Section 14 or the tariff  value  of
                 such article fixed under sub-section (2) of  that  section,
                 as the case may be; and



             ii) Any duty  of  customs  chargeable  on  that  article  under
                 Section 12 of the Customs Act, 1962 (52 of 1962),  and  any
                 sum chargeable on that article under any law for  the  time
                 being in force as an addition to, and in  the  same  manner
                 as, a duty of customs”




      31.   Similarly, Section 3A(2) dealing with special additional duty as
      it stood at the relevant time reads as under:-

           “(2)  For the purpose of  calculating  under  this  section  the
           special additional duty on any imported article,  the  value  of
           the imported article shall, notwithstanding  anything  contained
           in section 14 of the Customs Act, 1962 or section 3 of this Act,
           be the aggregate of –

              i) The value of the imported  article  determined  under  sub-
                 section (1) of section 14 of the Customs Act, 1962  (52  of
                 1962) or the tariff value of such article fixed under  sub-
                 section (2) of that section, as the case may be;



             ii) Any duty  of  customs  chargeable  on  that  article  under
                 section 12 of the Customs Act, 1962 (52 of 1962),  and  any
                 sum chargeable on that article under any law for  the  time
                 being in force as an addition to, and in  the  same  manner
                 as, a duty of customs; and



            iii) The additional duty of customs chargeable on that article
                 under section 3 of this Act.”




      32.   It will be noticed that additional duty and  special  additional
      duty would include “any sum chargeable on that article under  any  law
      for the time being in force as an addition to, and in the same  manner
      as, a duty of customs”.  What has been contended  before  us  is  that
      these words would refer only to a surcharge provision  and  not  to  a
      provision which levies an independent duty, as the relevant words  are
      “an addition” and not “in addition”.  This argument  has  considerable
      force.  For example, the  Finance  Act  of  1963  made  a  distinction
      between a surcharge on duties of customs  and  a  regulatory  duty  of
      customs.  Sections 23 and 24 of the said Act are set out hereinbelow:-

           “23. Surcharge on duties of customs.

           1) In the case of goods chargeable with a duty of customs  which
              is specified in the First  Schedule  to  the  Tariff  Act  as
              amended by this Act or any subsequent Act of  Parliament,  or
              in that Schedule read with any notification  of  the  Central
              Government for the time being in force, there shall be levied
              and collected as an addition to, and in the same  manner  as,
              the total amount so chargeable, a sum equal to 10 per cent of
              such amount:

                 Provided that in computing the total amount so  chargeable,
                 any duty chargeable under Section 2A of the Tariff  Act  or
                 Section 24 of this Act shall not be included.

           2)  Sub-section(1) shall cease to have effect after the 31st day
              of March, 1964 except as respects things done or  omitted  to
              be done before such cesser; and  Section  6  of  the  General
              Clauses Act, 1897 shall apply upon such cesser as if the said
              sub-section had then been repealed by a Central Act.

           24. Regulatory duty of customs.

           (1) There shall be levied and collected, with effect  from  such
           date  as  may  be  specified  in  this  behalf  by  the  Central
           Government by notification in the Official Gazette, on all goods
           mentioned in the First Schedule to the Tariff Act as amended  by
           this Act or any subsequent Act of Parliament, a regulatory  duty
           of customs which shall be –

           (a) twenty-five per cent of the rate, if any, specified  in  the
           said First Schedule read  with  any  notification  issued  under
           Section 3A or sub-section (1) of Section 4 of the Tariff Act; or



           (b) ten per cent of the value of  the  goods  as  determined  in
           accordance with the provisions of Section 14 of the Customs Act,
           1962 whichever   is higher:

           Provided that different dates may be specified  by  the  Central
           Government for different kinds of goods.

           1)  Sub-section (1) shall cease to have effect  after  the  31st
              day of March, 1964 except as respects things done or  omitted
              to be done before such cesser; and Section 6 of  the  General
              Clauses Act, 1897 shall apply upon such cesser as if the said
              sub-section had then been repealed by a Central Act.

              (3) The duty  of  customs  leviable  under  this  section  in
              respect of any goods referred to in sub-section (1) shall  be
              in addition to any other duty of customs chargeable  on  such
              goods under the Customs Act, 1962.

              (4) The provisions of the Customs Act, 1962 and the rules and
              regulations made  thereunder,  including  those  relating  to
              refunds and exemptions from duties, shall, as far as may  be,
              apply  in  relation  to  the  levy  and  collection  of   the
              regulatory duty of customs leviable  under  this  section  in
              respect of any goods as they apply in relation  to  the  levy
              and collection of the duties of customs on such  goods  under
              that Act or those rules and regulations.

              (5) Every notification issued under sub-section (1) shall, as
              soon as may be after it is  issued,  be  placed  before  each
              House of Parliament.”




       33.  It will be noticed that the very words “as an addition  to,  and
      in the same manner as” used in Section 3(2) and 3A(2) of  the  Customs
      Tariff Act have been used in Section 23 of the  Finance  Act  of  1963
      when what was sought to be levied was only a  surcharge.   By  way  of
      contrast, Section 24(3) when it levies a different duty – a regulatory
      duty of customs – uses the  expression “in  addition”.  It  is  clear,
      therefore, that what is referred to in Section 3(2) and 3A(2) is  only
      a surcharge or an additional duty of customs.  The words “in the  same
      manner” also point to the same conclusion.  It is clear on  a  reading
      of the Customs Tariff (Identification, Assessment  And  Collection  of
      Antidumping Duty on Dumped Articles and For Determination  of  Injury)
      Rules, 1995, that Anti-dumping duty apart from being a  separate  levy
      from a levy of customs duty is also levied in a  completely  different
      manner from that of customs duty.

      34.   We may add, that after 2002, Sections 3(2) and 3A(2)  have  been
      amended with effect from 1.3.2002 so as to expressly not include Anti-
      dumping duty.  The amended Section 3(2) reads as follows:-

           “(2)  For the purpose of calculating  under  this  section,  the
           additional duty on any imported  article,  where  such  duty  is
           leviable at any percentage  of  its  value,  the  value  of  the
           imported article shall, notwithstanding  anything  contained  in
           Section 14 of  the  Customs  Act  1962  (52  of  1962),  be  the
           aggregate of –

        i) The value of the imported article determined  under  sub-section
           (1) of the said Section 14 or the tariff value of  such  article
           fixed under sub-section (2) of that section, as the case may be;
           and



       ii) any duty of customs chargeable on that article under Section  12
           of the Customs Act, 1962 (52 of 1962), and any sum chargeable on
           that article under any law for the time being  in  force  as  an
           addition to, and in the same manner as, a duty of  customs,  but
           does not include –

              a) the special additional duty referred to in section 3A;

              b) the safeguard duty referred to in sections 8B and 8C;

              c) the countervailing duty referred to in section 9;

              d) the anti-dumping duty referred to in section 9A; and

              e) the duty referred to in sub-section (1)”

      The amended Section 3A(2) reads as follows:-

           “(2)  For the purpose of  calculating  under  this  section  the
                 special additional duty on any imported article, the  value
                 of the imported  article  shall,  notwithstanding  anything
                 contained in section 14 of the Customs Act, 1962 or section
                 3 of this Act, be the aggregate of –

              i) The value of the imported  article  determined  under  sub-
                 section (1) of section 14 of the Customs Act, 1962  (52  of
                 1962) or the tariff value of such article fixed under  sub-
                 section (2) of that section, as the case may be;

             ii) Any duty  of  customs  chargeable  on  that  article  under
                 section 12 of the Customs Act, 1962 (52 of 1962),  and  any
                 sum chargeable on that article under any law for  the  time
                 being in force as an addition to, and in  the  same  manner
                 as, a duty of customs, but does not include-

              a) the safeguard duty referred to in sections 8B and 8C;

              b) the countervailing duty referred to in section 9;

              c) the anti-dumping duty referred to in section 9A;

              d) the special additional duty referred to in sub-section (1);
                 and

            iii) the additional duty of customs chargeable on that article
                 under section 3 of this Act.”




      35.   The relevant budget circulars of the Finance Bill 2002 and  2003
      respectively read as follows:-

           “Miscellaneous

              1. Doubts have been expressed about the  method  of  computing
                 the additional duty of customs (CVD) under section 3 of the
                 Customs Tariff Act, 1975. The doubt raised is on the  point
                 that whether anti-dumping duty, safeguard  duty  and  other
                 duties etc. should be taken into  account  while  computing
                 the CVD.

                 In this regard, it is clarified that for computing the CVD,
                 only the value of the imported article as determined  under
                 section 14 of the Customs Act, 1962, including the  landing
                 charges, if any and the basic customs  duty  chargeable  at
                 the rates specified in  the  First  Schedule  to  the  said
                 Customs Tariff Act (read with any notification for the time
                 being in force in respect of the basic customs duty)  needs
                 to be taken into account. Other duties such as anti-dumping
                 duty,  safeguard  duty,  etc.  should  not  be  taken  into
                 account.”

                 “In the explanatory notes for the last year’s budget it was
                 clarified that for computing the CVD,  only  the  value  of
                 imported article as determined  under  section  14  of  the
                 Customs Act, 1962, including the landing  charges,  if  any
                 and  the  basic  customs  duty  chargeable  at  the   rates
                 specified in the First Schedule to the Customs  Tariff  Act
                 (read with any notification for the time being in force  in
                 respect of the basic customs duty) needs to be  taken  into
                 account. Other duties such as anti-dumping duty,  safeguard
                 duty, etc. should not be taken into  account.  A  view  has
                 been expressed that section 3A of the  Customs  Tariff  Act
                 does not permit such interpretation. To  place  the  matter
                 beyond doubt, it is proposed to amend section 3 and section
                 3A of the Customs Tariff Act so as to make  it  very  clear
                 that for computation of additional duty  of  customs,  only
                 the c.i.f. price, landing charges and  basic  customs  duty
                 will  be  included.  Similarly  for   determining   special
                 additional duty of customs (SAD), only  the  c.i.f.  price,
                 landing charges, basic customs duty and the additional duty
                 of customs will be included. Other  duties  such  as  anti-
                 dumping duty safeguard duty, etc. shall not be  taken  into
                 account.  This amendment will have effect from 1.3.2002.”




      36.   Though it is stated that the  object  of  the  amendment  is  to
      clarify and set at rest doubts, it is not necessary to decide  whether
      this amendment is clarificatory and, therefore, retrospective in  view
      of what has already been held by us above.

      37.   As far as penalty is  concerned,  we  feel  that  the  appellant
      before us has not diverted goods meant  for  export  to  the  domestic
      tariff area.  We are satisfied  that  market  considerations  made  it
      difficult, if not impossible, for the appellant to fulfill its  export
      obligations and are, therefore, of the view that the  penalty  imposed
      in the present case ought to be set aside.

      38.   The appeal is, accordingly, allowed in the aforesaid  terms  and
      the judgment of CESTAT is set aside.



                                        ……………………J.

                                        (A.K. Sikri)







                                        ……………………J.

                                        (R.F. Nariman)

New Delhi;

August 4, 2015.

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