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.
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.
