|REPORTABLE |
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.4676-4677 OF 2013
AMIN MERCHANT …. APPELLANT
VERSUS
CHAIRMAN, CENTRAL BOARD OF
EXCISE & REVENUE & ORS. …. RESONDENTS
JUDGMENT
N.V. RAMANA, J.
1. These appeals, by special leave, have been filed against the
impugned judgment and order dated 02.09.2011 in Writ Petition No.1761 of
2009 and order dated 24.11.2011 in Review Petition No.24 of 2011 in Writ
Petition No.1761 of 2009 respectively, of the High Court of Judicature at
Bombay, by which the High Court has dismissed the Writ Petition filed by
the appellant herein and also dismissed the Review Petition by holding
that no error apparent on record has been made out.
2. The facts leading to these appeals, in brief, are that the
appellant imported eight consignments of goods falling under Tariff Sub-
Heading 2208.10 of the Customs Tariff, namely, “Compound alcoholic
preparations of a kind used for the manufacture of beverages” during the
financial years 1993-94 and 1994-95. The customs authorities assessed
the goods imported provisionally and subjected them to a prescribed rate
of duty of Rs.300/- per liter or 400% whichever is higher specified in
respect of Sub-Heading 2208.10 of the Customs Tariff for 1993-94 and 1994-
95. The appellant claims to have deposited the amount of duty
provisionally assessed on the assessable value declared in the eight
bills of entry. According to the appellant, he cleared the goods for
home consumption during financial years 1993-94 and 1994-95. Between the
years 1994 and 2001 the appellant addressed several communications, inter
alia, to the Central Board of Excise and Customs and to the Tariff
Research Unit (TRU) of the Union Ministry of Finance. The grievance of
the appellant is that the rate which has been prescribed for goods
falling under Tariff Sub-Heading 2208.10 is higher than that was
authorized in the Budget Proposals during financial years 1993-94 and
1994-95. The appellant took recourse to the provisions of the Right to
Information Act in order to procure relevant information from the
concerned authorities. According to the appellant, the authorities have
not furnished the relevant information.
3. Not satisfied with the attitude of the authorities, the appellant
preferred a Writ Petition before the High Court seeking the following
reliefs: (a) a writ of Mandamus directing the first and second
respondents herein to issue a notification u/s.25(1) of the Customs Act,
1962 (for short ‘the Act’) in order to exempt goods falling under Tariff
Sub-Heading 2208.10 so as to give effect to the Budget proposal announced
by the Finance Minister (FM) in Parliament for financial years l993-94
and 1994-95; (b) a direction to the Chief Commissioner of Customs to
finalize assessment of the eight bills of entry after a notification is
issued by the first and second respondents u/s.25(1) of the Act; (c) a
writ of Mandamus directing the second respondent to issue a notification
u/s.25(2) of the Act for granting exemption from customs duty for goods
falling under Tariff Sub-Heading 2208.10 for financial years 1993-94 and
1994-95; (d) an order for refund after assessments are finalized and (e)
an order for the payment of interest at the rate of 12% p.a. on the
refund that is ordered.
4. The High Court has dismissed the Writ Petition by the impugned
judgment and order dated 2.9.2011. Being dissatisfied with the dismissal
of his writ petition, the appellant preferred a Review Petition, which
was also dismissed by the High Court by the impugned judgment and order
dated 24.11.2011.
5. Heard the appellant, appearing in person, and learned Senior
Counsel for the respondents.
6. The appellant, appearing in person, vehemently submits that the
budget proposals for 1993-94 stipulated, inter alia, a reduction in
effective rate of import duty on items which had then attracted a rate of
duty higher than 85%, to 85% advalorem, except on dried grapes, almonds,
alcoholic beverages, ball and roller bearings and passenger baggage; the
Budget proposals for 1994-95 similarly contemplated a reduction in
effective rates of customs duty on items which until then attracted a
duty higher than 65%, to 65% except, inter alia, on alcoholic beverages.
‘CAP of a kind used in the manufacture of beverages’ falling under sub-
heading 2208.10 of the Act are not covered by the said exceptions ‘dried
grapes, almonds, alcoholic beverages, ball and roller bearings and
passenger baggage’ as mentioned in the Budge proposal appearing at
Sl.No.B 1. Hence the import duty on ‘CAP of a kind used in the
manufacture of beverages’ falling under sub-heading 2208.10 should have
been read as “85%” for the financial year 1993-1994 in keeping with the
Budget Proposal at Sl.No.B1 duly passed by the Parliament for the
financial year 1993-94 so also for the financial year 1994-95, it should
have been “65%”.
7. The appellant would further submit that all the notifications
contained in the Explanatory Memorandum 1993-94 and 1994-95 were to give
effect to the Budget Proposals duly passed and legislated by the
Parliament and rectify the erroneous tariff rates prescribed by the TRU
department in the Customs Tariff Act, Finance Bill and Finance Act for
1993-94 and 1994-95; Budget proposals announced by the FM in the
Parliament are duly passed and/or approved by the Parliament, no person,
executive, bureaucrat or any authority or Court of Law has the authority
and/or power to alter or amend the same. If the executives are allowed
to prescribe any tariff rates contrary to the Budget Proposals duly
authorized by the Parliament, then the Budget Proposals duly passed by
the Parliament will have no meaning and will be rendered nugatory and
thus opening the flood gates for ‘corrupt practice’.
8. He also submits that the goods falling under sub-heading 2208.10 of
the Customs Tariff Act are not ‘alcoholic beverages’ but ‘Compound
alcoholic preparations of a kind used for the manufacture of beverages’
falling under sub-heading 2208.10 in the Customs Tariff Act 1993-94 and
1994-95, not being ‘alcoholic beverages’ and not being covered by the
exceptions mentioned in the said proposal at Sl.No. B1, the rate of duty
duly passed and legislated by the Parliament should have been prescribed
as 85% for the year 1993-94 and as 65% for the year 1994-95. The
statutory term ‘Compound alcoholic preparations of a kind used for the
manufacture of beverages’ clearly explains that it covers compound
alcoholic preparations for the manufacture of beverages and that it is a
product that precedes the consumable ‘alcoholic beverage’ and hence it
cannot, by any stretch of imagination, be equated to and or termed as
‘alcoholic beverages’ in itself. If “Compound alcoholic preparations of
a kind used for the manufacture of beverages’ are sought to be included
in the term ‘spirits, liquors and other spirituous beverages’ and or
sought to be treated as ‘Alcoholic Beverages’ then the statutory term
‘Compound alcoholic preparations of a kind used for the manufacture of
beverages’ distinctly falling under sub-heading 2208.10 will be redundant
and such a perverse interpretation is not permissible as it will alter
the statutory heading 22.08 and sub-heading 2208.10 in the Customs Tariff
Act, 1975. He would further submit that Harmonized System of
Nomenclature (HSN), an International Regulation evolved in 1986 by the
Customs Co-operation Council, Brussels, which is adopted by the Govt. of
India, clearly recognizes that ‘CAP of a kind used in the manufacture of
beverages’ are distinct and different products from ‘alcoholic beverage’
which are intended for immediate consumption and in the said HSN
Explanatory Notes dealing with sub-heading 2208 it is expressly stated
that “these preparations are not intended for immediate consumption and
thus can be distinguished from the liquors and other spirituous beverages
of this heading”.
9. In this connection, he places reliance on a Judgment of the Bombay
High Court in Bussa Overseas and Properties (Pvt.) Ltd. Vs. Union of
India, reported in 1991 (53) ELT 65 (Bom.), wherein the Bombay High
Court, while dealing with classification has held that goods falling
under sub-heading 2208.10, namely, ‘CAP of a kind used in the manufacture
of beverages’ are not consumable as such, have to be sold to the
distilleries where they undergo a process and cannot be treated as
Whisky, Gin or Brandy as known in the trade. Against the said decision,
Union of India has preferred S.L.P.(C) Nos.13194-210/1991 in this Court
wherein this Court has dismissed the aforesaid SLPs upholding the
decision of the Bombay High Court.
10. He also places reliance on a judgment of the High Court of Delhi in
Seagram Manufacturing Ltd. Vs. Commissioner of Customs, New Delhi,
reported in 2003 (154) ELT 610 (Tri.Del.), which is affirmed by this
Court reported in 2004 (163) ELT A 205 (SC) wherein this Court,
confirming the views of the Tribunal regarding classification, held that
‘goods’ falling under sub-heading 2208.10 are not intended for immediate
consumption and are not ‘alcoholic beverages and are classifiable under
sub-heading 2208.10 of Customs Tariff’.
11. He would further submit that the TRU department has issued
notifications for all other erroneous tariff rates prescribed by them in
the Customs Tariff Act, Finance Bill and Finance Act 1993-94 and 1994-95
to give effect to the Budget proposals duly passed and legislated by the
Parliament and the respondents cannot discriminate in the case of the
appellant and refuse to issue notifications.
12. He further submits that he is seeking a suitable notification
prescribing Customs Tariff of 85% and 65% on goods falling under sub-
heading 2208.10 to give effect to the budget proposals at Sl.No.B 1 duly
passed and legislated by the Parliament for the years 1993-94 and 1994-95
since collection of tax without authority of law is in violation of
Article 265 of the Constitution and violation of the appellant’s right to
property under Article 300 A of the Constitution and return of the excess
amount of Rs.5,62,46,722/- (Rupees Five core sixty two lakhs forty six
thousand seven hundred and twenty two only) collected from him at the
time of provisional assessment for imports made during the years 1993-94
and 1994-95 with simple interest @ 12% p.a. On the point of interest, he
would submit that the respondents are liable to pay interest on the
excess duty unlawfully collected from him since 1993-94 and 1994-95 and
having retained the same since the last 20 years. In this connection, he
places reliance on Sandvik Asia Ltd. Vs. Commissioner of Income Tax,
Pune, reported in [(2006) 150 TAXMAN, 591 (SC)].
13. He would further submit that the Courts can, in exceptional
circumstances like the present one, compel officers of Respondent No.2 to
issue appropriate notification u/s.25(2) of the Customs Act, 1962, in
order to give effect to the Budget Proposals so as to levy duty on the
appellant’s imports only at 85% for the F.Y. 199-94 and 65% for the F.Y.
1994-95. In this connection, he places reliance on a judgment of this
Court in Choksi Tube Co. Vs. Union of India reported in 1998(97) ELT 404
SC.
14. He would further contend that the respondents/revenue have
illegally collected import tax/import duty without any authority of law
and deprived the appellant of profits of the said amount of
Rs.5,62,46,726/- since 1993-94 and 1994-95 and thereby put an
unreasonable restriction on the appellant’s fundamental right as
guaranteed by Article 19(1)(g) of the Constitution, to carry on his trade
and business since 1993-94 and 1994-95. In support of this contention,
he places reliance on a Judgment of this Court in Mohammed Yasin Vs. Town
Area Committee, Jabalpur & Anr. reported in AIR 1952 SC 115.
15. Per contra, learned Senior Counsel for respondents would submit
that the speech of the Finance Minister while presenting the Budgetary
Proposals only highlights the more important proposals of the Budget;
Budgetary changes are, in fact, enacted by the Parliament as contained in
the Finance Bill or ratified by Parliament or implemented through
notifications. The legal force for charging a particular rate of customs
duty on import of goods, is derived from the First Schedule of the
Customs Tariff Act, 1975 read with notifications issued u/s.25(1) of the
Act. If any changes in the rates were intended by Parliament it would
have been reflected in the respective Finance Bills.
16. He further submits that there was no error or discrepancy between
the budget proposals announced by the Finance Minister and the Finance
Bill. According to him, the High Court has rightly held that the
appellant did not dispute the fact that the goods imported by him fell
within Tariff Heading 2208.10 and the position under the Finance Act of
1993 was that the rate of duty prescribed for Tariff sub-heading 2208.10
was Rs.300/- per liter or 400% whichever is higher and the High Court
thus rightly held that budget proposals and the speech of the Finance
Minister in Parliament may or may not accept the proposal as held in B.K.
Industries V. Union of India reported in (1993) 65 ELT 465 (SC) and once
Parliament has duly legislated, and a rate of duty is prescribed in
relation to a particular tariff heading that constitutes the authorities’
expression of the legislative will of Parliament; the speech of the
Finance Minister and the financial/budget proposals duly passed by
Parliament are two separate and distinct documents; the law as enacted is
what is contained in the Finance Act after it is legislated upon by the
Parliament. Budgetary proposals constitute legislative material
antecedent to the enactment of law. The rates of tax are those which are
prescribed by legislation, once it is enacted by Parliament. It is the
law as enacted, which gives expression to legislative will and it is the
law as enacted which prescribes the rate of tax which Parliament has duly
imposed. Consequently, as a matter of first principle, it would be
impermissible for the Court to undertake the exercise of entering upon a
scrutiny of the correctness of the collective expression of legislative
will which finds expression in the legislation as adopted by the
Parliament.
17. In his submission, the Court cannot undertake a scrutiny of whether
there was an error on the part of the Parliament in legislating to
provide a particular rate of duty. The power to issue a notification
u/s. 25(1) of the Act has been conferred upon the Central Government
where it is satisfied that it is necessary in the public interest so to
do. Under sub-section (2) of Section 25, the Central Government may,
where it is satisfied that it is necessary in the public interest so to
do, by special order in each case, exempt from the payment of duty, under
circumstances of an exceptional nature to be stated in such order, any
goods on which duty is leviable and this Court has observed in the case
of Union of India Vs. Jalyan Udyog reported in [1993(68) ELT 9 (SC)] that
“the Parliament cannot constantly monitor the needs of and the emerging
trends in the economy and is in no position to engage itself in day-to-
day regulation and adjustment of import-export trade. Accordingly, the
power is conferred upon the Central Government to provide for exemption
from duty of goods, either wholly or partly and with or without
conditions, as may be called for in public interest. We see no warrant
for reading any limitation into this power.”
18. According to him, the Government of India i.e. the TRU is fully
empowered to decide the quantum of levy of duty on a particular commodity
and to define it. Therefore, no wrong was committed by the TRU when it
held that the commodity imported by the appellant did not enjoy the peak
duty structure of 70% but fell under the exceptions and replied to the
appellant accordingly. The Court, therefore, would not be justified in
directing the Central Government to issue a notification in this case.
19. He would further contend that the goods imported by the appellant
were cleared provisionally on payment of duty prescribed in the Customs
Tariff Act, 1975; the imported compound alcoholic preparation was known
as “concentrated extracts”. Compound Alcoholic Preparations are used in
the manufacture of various beverages and are not for immediate
consumption. The claim of the appellant-importer that duty should have
been imposed at the rate of 85% for 1993-94 and 65% in 1994-95 and the
claim that he had paid excess duty of Rs.5,62,46,726/- cannot be
sustained since all these consignments were assessed provisionally and
the goods were classified under Chapter Tariff Heading No.2208.10 of the
First Schedule to the then Custom Tariff and accordingly, the goods were
assessed provisionally and cleared on payment of appropriate duties.
20. According to him, the further contention of the appellant-importer
that exclusion in peak rate covers alcohol beverages but his imported
goods are “compound alcoholic preparation of a kind used for
manufacturing of beverages” which is not alcohol beverage and, therefore,
not hit by the exclusion clause, cannot also be sustained.
21. According to him, the contention of the importer that during the
impugned period, the peak rate of duty was 150% as announced by the FM in
his Budget Speech also cannot be sustained because the proposed rate of
maximum 150% was applicable to goods other than alcoholic beverages and
passenger baggage. The speech of the FM in this regard was very clear
and there is no ambiguity in the speech. Alcohol beverages and passenger
baggage have been taken out of the cover of maximum 150% rate duty.
Hence the contention of the appellant-importer that the impugned imported
goods were covered by FM speech for 150% rate duty is incorrect and in
fact this is contrary to what was contemplated in the Customs Tariff Act,
1975 and the HSN Explanatory Notes.
22. We have considered the extensive arguments submitted by the
appellant/party-in-person and gone through the voluminous record placed
before us and the respective submissions of the learned senior counsel
for respondents.
23. Before adverting to the various arguments advanced by both sides
and the findings recorded by the Court below, we deem it appropriate to
extract the relevant Tariff Entry 2208.10 under the Customs Tariff 1993-
94 and 1994-95, which reads:
|Heading |Sub- |Description of |Rate of duty |
|No. |heading |article |Stand- |
| |No. | |Preferential |
| | | |ard areas |
|22.08 |2208.10 |Compound alcoholic |Rs.300 per litre |
| | |preparations of a |or 400% whichever|
| | |kind used for the |is higher…. |
| | |manufacture of | |
| | |beverages. | |
24. Though it was already discussed in the preceding paragraphs about
the reliefs sought by the appellant before the High Court, we deem it
appropriate to extract the same hereunder:
“(1) a writ of Mandamus directing the first and second respondents
to issue a notification under Section 25(1) of the Customs Act, 1962, in
order to exempt goods falling under Tariff Heading 2208.10 so as to give
effect to the budget proposal announced by the Finance Minister in
Parliament for financial years l993-94 and 1994-95; (2) a direction to
the Chief Commissioner of Customs to finalize assessment of the eight
bills of entry after a notification is issued by the first and second
respondents under Section 25(1) of the Customs Act, 1962; (3) a writ of
Mandamus directing the second respondent to issue a notification under
Section 25(2) of the Customs Act, 1962, for granting exemption from
customs duty for goods falling under Tariff Heading 2208.10 for financial
years 1993-94 and 1994-95; (4) an order to refund after assessments are
finalized and (5) an order for the payment of interest at the rate of 12%
p.a. on the refund that is ordered.”
25. The High Court of Bombay, after giving a thorough consideration,
dismissed the writ petition on the ground that once a particular Tariff
Heading is prescribed, that constitutes the authoritative expression of
the legislative will of Parliament and the High Court cannot exercise its
power of judicial review and go beyond the law enacted by the Parliament
and it is not permissible for the Court to undertake a scrutiny of
whether there was an error on the part of the Parliament in legislating a
particular rate of duty. Further, the High Court observed that there is
no discriminatory conduct which would compel the interference of the
court. The appellant, unsatisfied with the order, has preferred a
revision before the High Court which ended up in dismissal as no error
apparent on record has been made out.
26. In those circumstances, the appellant is before us by way of these
appeals; one arising out of the original order and one against the order
passed in review. Before this Court, the appellant has amended the
reliefs and sought for the following reliefs: (1) direct the
respondents to perform their duty to issue suitable notification to
rectify the erroneous rate of duty prescribed on sub-heading 2208.10 and
to implement and execute the tariff rate already legislated; (2) direct
the respondents to return the excess amount of Rs.5,62,46,722/- collected
without any authority of law; (3) direct the respondents to pay 12%
simple interest for having willfully and deliberately refused to rectify
the error.
27. The appellant has come up before this Court with a voluminous
record and made submissions at length. The gist of the first and
foremost grievance of the appellant appears to be that he was charged
with the duty @ Rs.300/- per litre or 400% which was already paid by him
for the goods he imported as per the provisional assessment.
28. According to him, the Finance Minister has presented the budget
proposals before the Parliament which were duly approved by the
Parliament. As per the approved budget proposals, the goods imported by
him attracts reduction in duty higher than 85% to 85% advalorem for 1993-
94 and higher than 65% to 65% ad valorem for the year 1994-95 and he does
not fall under the exception of alcoholic beverages. The tariff he was
charged and the tariff rates in the finance bill are contrary to the
approved budget proposals.
29. The second grievance appears to be that whenever the tariff rates
are erroneously prescribed, the 2nd respondent is issuing notification
and in fact they have issued 85 notifications for the financial year 1993-
94 and 94 notifications for the financial year 1994-95. The 2nd
respondent is discriminating the appellant by refusing to issue a
circular in respect of his goods; as such their action is discriminatory
and violative of Article 14 of the Constitution of India.
30. In view of the aforesaid rival submissions, the issues that fall
for consideration are:
1) Whether the budget proposals, as alleged by the appellant, are duly
passed and approved by the Parliament and whether the tariff rates fixed
by the TRU are contrary to the legislative mandate?
2) Whether this Court can direct the Central Government to issue a
notification under Section 25(1) of the Customs Act?
3) Whether the compound alcoholic preparations of a kind used for the
manufacturing of beverages fall under the category of alcoholic
beverage?
4) Whether there is any discrimination on the part of the Central
Government in issuing a notification under Section 25(1) of the Customs
Act in respect of other goods and contrary to Article 14 of the
Constitution of India?
31. In Re Issue No.1:
The whole thrust of the appellant is that the proposals of the
Finance Minister were duly approved by the Parliament. No doubt, the
appellant has placed before this Court the proposals of the Finance
Minister which discloses the intention of the Government but there is no
material placed before us to demonstrate that the budget proposals are
duly accepted by the Parliament. It is an admitted fact that pursuant to
the proposals, the Finance Act was passed by the Parliament wherein for
the goods specified under Tariff Sub-Heading 2208.10, particular tariff
was specified. We are unable to agree with the argument advanced by the
appellant for the reason that he is unable to make note of the difference
between a proposal moved before the Parliament and a statutory provision
enacted by the Parliament, because the process of Taxation involves
various considerations and criteria.
Every legislation is done with the object of public good as said by
Jeremy Bentham. Taxation is an unilateral decision of the Parliament and
it is the exercise of the sovereign power. The financial proposals put
forth by the Finance Minister reflects the governmental view for raising
revenue to meet the expenditure for the financial year and it is the
financial policy of the Central Government. The Finance Minster’s speech
only highlights the more important proposals of the budget. Those are
not the enactments by the Parliament. The law as enacted is what is
contained in the Finance Act. After it is legislated upon by the
Parliament and a rate of duty that is prescribed in relation to a
particular Tariff Head that constitutes the authoritative expression of
the legislative will of Parliament. Now in the present facts of the
case, as per the finance bill, the legislative will of the Parliament is
that for the commodities falling under Tariff Head 2208.10, the tariff is
Rs.300/- per litre or 400% whichever is higher. Even assuming that the
amount of tax is excessive, in the matters of taxation laws, the Court
permits greater latitude to the discretion of the legislature and it is
not amenable to judicial review.
In view of the foregoing discussion, we are unable to concur with
the submission of the appellant that the budget proposals are duly passed
and approved by the Parliament and moreover, if the appellant is
aggrieved by the particular tariff prescribed under the Finance Act and
the same is contrary to the approved budget proposals, he ought to have
questioned the same if permissible. Hence, this issue is answered
against the appellant.
32. In Re : Issue No.2:
It is the case of the appellant that in respect of other categories
of the budgetary proposals, several notifications were issued by the 2nd
respondent altering the Tariff rates, but whereas in his case, the 2nd
respondent refused to issue such a notification and it is nothing but
mala fide and corrupt practice on the part of the respondents. According
to him, the budget proposals passed and approved by the Parliament are
paramount and the Executive or Central Government cannot prescribe Tariff
rates contrary to the budget proposals and he finds fault with the way
the 2nd respondent officials are functioning.
A thorough look at the relevant provisions reveals that the source
of power to issue notification by the Central Government relates to
Section 25 of the Customs Act, 1962, which reads as under:
“Power to grant exemption from duty.
1) If the Central Government is satisfied that it is necessary in the
public interest so to do, it may, by notification in the Official
Gazette, exempt generally either absolutely or subject to such
conditions (to be fulfilled before or after clearance) as may be
specified in the notification goods of any specified description
from the whole or any part of duty of customs leviable thereon.
2) If the Central Government is satisfied that it is necessary in the
public interest so to do, it may, by special order in each case
exempt from the payment of duty, under circumstances of an
exceptional nature to be stated in such order, any goods on which
duty is leviable.”
Section 25 of the Act delegates power to the Central Government
i.e. the executive branch to grant exemption generally from duty whenever
it finds that it is necessary to do so in the larger public interest
either absolutely or subject to such conditions as may be specified in
the notification or by a special order in each case under exceptional
circumstances.
As per Section 159 of the Act, any notification issued under
Section 25 shall be placed before the Parliament and the Parliament may
amend or reject the same. This clearly demonstrates that the ultimate
law making power is vested with the Legislature. Hence, the allegation of
the appellant that the notifications are issued basing on the whims and
fancies of the 2nd respondent is misconceived. Whereas, notifications are
issued generally in the larger public interest, the Legislature has given
the power to exempt duty to the 2nd respondent subject to the amending
power.
In these circumstances, it is not appropriate on our part to issue
any orders directing them to issue a notification under Section 25 (2) of
the Act except on the grounds of discrimination. In the matter of
taxation, the Court gives a greater latitude to the legislative
discretion. Accordingly, the issue is answered.
33. In Re : Issue No.3:
In regard to this issue ‘Whether the compound alcoholic
preparations of a kind used for manufacturing of beverages fall under the
category of alcoholic beverages’, the appellant has relied upon a
judgment of the Bombay High Court which was confirmed by this Court and
the learned senior counsel for respondents made several contra
submissions relying on some judgments. According to us, it is not for
us to do this exercise. It is always open to the parties to settle the
dispute before the appropriate forum if they choose to do so. The issue
is accordingly answered.
34. In Re : Issue No.4:
According to the appellant, the Central Government has issued
notifications under Section 25(1) and he is also entitled to such a
notification in respect of the commodities falling under the category
2208.10. When the appellant alleges discriminatory action on the part of
the respondents, he has to establish that there is no rational basis for
making classification between the goods which are notified and the goods
of the appellant which are not notified. It is also a firmly established
principle that the legislature understands and appreciates the needs of
its people. A Taxing Statute can be held to contravene Article 14 of the
Constitution if it purports to impose certain duty on the same class of
people differently and leads to obvious inequality. Such a material is
not placed before us to come to a just conclusion that the action of the
respondents is discriminative. Hence, the same is held against the
appellant.
35. As far as the interest aspect is concerned, when the appellant is
not entitled for the relief, there is no need for us to express any
opinion on the interest aspect.
36. Before we conclude, we would like to record our appreciation for
the strenuous efforts put forth by the appellant and the kind of efforts
he put in to collect the data. We feel that it is not out of place to
mention that the appellant has presented the case like a seasoned
professional with utmost skill and knowledge.
37. In view of the aforesaid elaborate discussion, we reach to an
irresistible conclusion that the appeals, being devoid of any merit,
deserve to be dismissed and are dismissed accordingly. No costs.
……………………………….J.
(MADAN B. LOKUR)
………………………………..J.
(N.V. RAMANA)
NEW DELHI,
JULY 22, 2016
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.4676-4677 OF 2013
AMIN MERCHANT …. APPELLANT
VERSUS
CHAIRMAN, CENTRAL BOARD OF
EXCISE & REVENUE & ORS. …. RESONDENTS
JUDGMENT
N.V. RAMANA, J.
1. These appeals, by special leave, have been filed against the
impugned judgment and order dated 02.09.2011 in Writ Petition No.1761 of
2009 and order dated 24.11.2011 in Review Petition No.24 of 2011 in Writ
Petition No.1761 of 2009 respectively, of the High Court of Judicature at
Bombay, by which the High Court has dismissed the Writ Petition filed by
the appellant herein and also dismissed the Review Petition by holding
that no error apparent on record has been made out.
2. The facts leading to these appeals, in brief, are that the
appellant imported eight consignments of goods falling under Tariff Sub-
Heading 2208.10 of the Customs Tariff, namely, “Compound alcoholic
preparations of a kind used for the manufacture of beverages” during the
financial years 1993-94 and 1994-95. The customs authorities assessed
the goods imported provisionally and subjected them to a prescribed rate
of duty of Rs.300/- per liter or 400% whichever is higher specified in
respect of Sub-Heading 2208.10 of the Customs Tariff for 1993-94 and 1994-
95. The appellant claims to have deposited the amount of duty
provisionally assessed on the assessable value declared in the eight
bills of entry. According to the appellant, he cleared the goods for
home consumption during financial years 1993-94 and 1994-95. Between the
years 1994 and 2001 the appellant addressed several communications, inter
alia, to the Central Board of Excise and Customs and to the Tariff
Research Unit (TRU) of the Union Ministry of Finance. The grievance of
the appellant is that the rate which has been prescribed for goods
falling under Tariff Sub-Heading 2208.10 is higher than that was
authorized in the Budget Proposals during financial years 1993-94 and
1994-95. The appellant took recourse to the provisions of the Right to
Information Act in order to procure relevant information from the
concerned authorities. According to the appellant, the authorities have
not furnished the relevant information.
3. Not satisfied with the attitude of the authorities, the appellant
preferred a Writ Petition before the High Court seeking the following
reliefs: (a) a writ of Mandamus directing the first and second
respondents herein to issue a notification u/s.25(1) of the Customs Act,
1962 (for short ‘the Act’) in order to exempt goods falling under Tariff
Sub-Heading 2208.10 so as to give effect to the Budget proposal announced
by the Finance Minister (FM) in Parliament for financial years l993-94
and 1994-95; (b) a direction to the Chief Commissioner of Customs to
finalize assessment of the eight bills of entry after a notification is
issued by the first and second respondents u/s.25(1) of the Act; (c) a
writ of Mandamus directing the second respondent to issue a notification
u/s.25(2) of the Act for granting exemption from customs duty for goods
falling under Tariff Sub-Heading 2208.10 for financial years 1993-94 and
1994-95; (d) an order for refund after assessments are finalized and (e)
an order for the payment of interest at the rate of 12% p.a. on the
refund that is ordered.
4. The High Court has dismissed the Writ Petition by the impugned
judgment and order dated 2.9.2011. Being dissatisfied with the dismissal
of his writ petition, the appellant preferred a Review Petition, which
was also dismissed by the High Court by the impugned judgment and order
dated 24.11.2011.
5. Heard the appellant, appearing in person, and learned Senior
Counsel for the respondents.
6. The appellant, appearing in person, vehemently submits that the
budget proposals for 1993-94 stipulated, inter alia, a reduction in
effective rate of import duty on items which had then attracted a rate of
duty higher than 85%, to 85% advalorem, except on dried grapes, almonds,
alcoholic beverages, ball and roller bearings and passenger baggage; the
Budget proposals for 1994-95 similarly contemplated a reduction in
effective rates of customs duty on items which until then attracted a
duty higher than 65%, to 65% except, inter alia, on alcoholic beverages.
‘CAP of a kind used in the manufacture of beverages’ falling under sub-
heading 2208.10 of the Act are not covered by the said exceptions ‘dried
grapes, almonds, alcoholic beverages, ball and roller bearings and
passenger baggage’ as mentioned in the Budge proposal appearing at
Sl.No.B 1. Hence the import duty on ‘CAP of a kind used in the
manufacture of beverages’ falling under sub-heading 2208.10 should have
been read as “85%” for the financial year 1993-1994 in keeping with the
Budget Proposal at Sl.No.B1 duly passed by the Parliament for the
financial year 1993-94 so also for the financial year 1994-95, it should
have been “65%”.
7. The appellant would further submit that all the notifications
contained in the Explanatory Memorandum 1993-94 and 1994-95 were to give
effect to the Budget Proposals duly passed and legislated by the
Parliament and rectify the erroneous tariff rates prescribed by the TRU
department in the Customs Tariff Act, Finance Bill and Finance Act for
1993-94 and 1994-95; Budget proposals announced by the FM in the
Parliament are duly passed and/or approved by the Parliament, no person,
executive, bureaucrat or any authority or Court of Law has the authority
and/or power to alter or amend the same. If the executives are allowed
to prescribe any tariff rates contrary to the Budget Proposals duly
authorized by the Parliament, then the Budget Proposals duly passed by
the Parliament will have no meaning and will be rendered nugatory and
thus opening the flood gates for ‘corrupt practice’.
8. He also submits that the goods falling under sub-heading 2208.10 of
the Customs Tariff Act are not ‘alcoholic beverages’ but ‘Compound
alcoholic preparations of a kind used for the manufacture of beverages’
falling under sub-heading 2208.10 in the Customs Tariff Act 1993-94 and
1994-95, not being ‘alcoholic beverages’ and not being covered by the
exceptions mentioned in the said proposal at Sl.No. B1, the rate of duty
duly passed and legislated by the Parliament should have been prescribed
as 85% for the year 1993-94 and as 65% for the year 1994-95. The
statutory term ‘Compound alcoholic preparations of a kind used for the
manufacture of beverages’ clearly explains that it covers compound
alcoholic preparations for the manufacture of beverages and that it is a
product that precedes the consumable ‘alcoholic beverage’ and hence it
cannot, by any stretch of imagination, be equated to and or termed as
‘alcoholic beverages’ in itself. If “Compound alcoholic preparations of
a kind used for the manufacture of beverages’ are sought to be included
in the term ‘spirits, liquors and other spirituous beverages’ and or
sought to be treated as ‘Alcoholic Beverages’ then the statutory term
‘Compound alcoholic preparations of a kind used for the manufacture of
beverages’ distinctly falling under sub-heading 2208.10 will be redundant
and such a perverse interpretation is not permissible as it will alter
the statutory heading 22.08 and sub-heading 2208.10 in the Customs Tariff
Act, 1975. He would further submit that Harmonized System of
Nomenclature (HSN), an International Regulation evolved in 1986 by the
Customs Co-operation Council, Brussels, which is adopted by the Govt. of
India, clearly recognizes that ‘CAP of a kind used in the manufacture of
beverages’ are distinct and different products from ‘alcoholic beverage’
which are intended for immediate consumption and in the said HSN
Explanatory Notes dealing with sub-heading 2208 it is expressly stated
that “these preparations are not intended for immediate consumption and
thus can be distinguished from the liquors and other spirituous beverages
of this heading”.
9. In this connection, he places reliance on a Judgment of the Bombay
High Court in Bussa Overseas and Properties (Pvt.) Ltd. Vs. Union of
India, reported in 1991 (53) ELT 65 (Bom.), wherein the Bombay High
Court, while dealing with classification has held that goods falling
under sub-heading 2208.10, namely, ‘CAP of a kind used in the manufacture
of beverages’ are not consumable as such, have to be sold to the
distilleries where they undergo a process and cannot be treated as
Whisky, Gin or Brandy as known in the trade. Against the said decision,
Union of India has preferred S.L.P.(C) Nos.13194-210/1991 in this Court
wherein this Court has dismissed the aforesaid SLPs upholding the
decision of the Bombay High Court.
10. He also places reliance on a judgment of the High Court of Delhi in
Seagram Manufacturing Ltd. Vs. Commissioner of Customs, New Delhi,
reported in 2003 (154) ELT 610 (Tri.Del.), which is affirmed by this
Court reported in 2004 (163) ELT A 205 (SC) wherein this Court,
confirming the views of the Tribunal regarding classification, held that
‘goods’ falling under sub-heading 2208.10 are not intended for immediate
consumption and are not ‘alcoholic beverages and are classifiable under
sub-heading 2208.10 of Customs Tariff’.
11. He would further submit that the TRU department has issued
notifications for all other erroneous tariff rates prescribed by them in
the Customs Tariff Act, Finance Bill and Finance Act 1993-94 and 1994-95
to give effect to the Budget proposals duly passed and legislated by the
Parliament and the respondents cannot discriminate in the case of the
appellant and refuse to issue notifications.
12. He further submits that he is seeking a suitable notification
prescribing Customs Tariff of 85% and 65% on goods falling under sub-
heading 2208.10 to give effect to the budget proposals at Sl.No.B 1 duly
passed and legislated by the Parliament for the years 1993-94 and 1994-95
since collection of tax without authority of law is in violation of
Article 265 of the Constitution and violation of the appellant’s right to
property under Article 300 A of the Constitution and return of the excess
amount of Rs.5,62,46,722/- (Rupees Five core sixty two lakhs forty six
thousand seven hundred and twenty two only) collected from him at the
time of provisional assessment for imports made during the years 1993-94
and 1994-95 with simple interest @ 12% p.a. On the point of interest, he
would submit that the respondents are liable to pay interest on the
excess duty unlawfully collected from him since 1993-94 and 1994-95 and
having retained the same since the last 20 years. In this connection, he
places reliance on Sandvik Asia Ltd. Vs. Commissioner of Income Tax,
Pune, reported in [(2006) 150 TAXMAN, 591 (SC)].
13. He would further submit that the Courts can, in exceptional
circumstances like the present one, compel officers of Respondent No.2 to
issue appropriate notification u/s.25(2) of the Customs Act, 1962, in
order to give effect to the Budget Proposals so as to levy duty on the
appellant’s imports only at 85% for the F.Y. 199-94 and 65% for the F.Y.
1994-95. In this connection, he places reliance on a judgment of this
Court in Choksi Tube Co. Vs. Union of India reported in 1998(97) ELT 404
SC.
14. He would further contend that the respondents/revenue have
illegally collected import tax/import duty without any authority of law
and deprived the appellant of profits of the said amount of
Rs.5,62,46,726/- since 1993-94 and 1994-95 and thereby put an
unreasonable restriction on the appellant’s fundamental right as
guaranteed by Article 19(1)(g) of the Constitution, to carry on his trade
and business since 1993-94 and 1994-95. In support of this contention,
he places reliance on a Judgment of this Court in Mohammed Yasin Vs. Town
Area Committee, Jabalpur & Anr. reported in AIR 1952 SC 115.
15. Per contra, learned Senior Counsel for respondents would submit
that the speech of the Finance Minister while presenting the Budgetary
Proposals only highlights the more important proposals of the Budget;
Budgetary changes are, in fact, enacted by the Parliament as contained in
the Finance Bill or ratified by Parliament or implemented through
notifications. The legal force for charging a particular rate of customs
duty on import of goods, is derived from the First Schedule of the
Customs Tariff Act, 1975 read with notifications issued u/s.25(1) of the
Act. If any changes in the rates were intended by Parliament it would
have been reflected in the respective Finance Bills.
16. He further submits that there was no error or discrepancy between
the budget proposals announced by the Finance Minister and the Finance
Bill. According to him, the High Court has rightly held that the
appellant did not dispute the fact that the goods imported by him fell
within Tariff Heading 2208.10 and the position under the Finance Act of
1993 was that the rate of duty prescribed for Tariff sub-heading 2208.10
was Rs.300/- per liter or 400% whichever is higher and the High Court
thus rightly held that budget proposals and the speech of the Finance
Minister in Parliament may or may not accept the proposal as held in B.K.
Industries V. Union of India reported in (1993) 65 ELT 465 (SC) and once
Parliament has duly legislated, and a rate of duty is prescribed in
relation to a particular tariff heading that constitutes the authorities’
expression of the legislative will of Parliament; the speech of the
Finance Minister and the financial/budget proposals duly passed by
Parliament are two separate and distinct documents; the law as enacted is
what is contained in the Finance Act after it is legislated upon by the
Parliament. Budgetary proposals constitute legislative material
antecedent to the enactment of law. The rates of tax are those which are
prescribed by legislation, once it is enacted by Parliament. It is the
law as enacted, which gives expression to legislative will and it is the
law as enacted which prescribes the rate of tax which Parliament has duly
imposed. Consequently, as a matter of first principle, it would be
impermissible for the Court to undertake the exercise of entering upon a
scrutiny of the correctness of the collective expression of legislative
will which finds expression in the legislation as adopted by the
Parliament.
17. In his submission, the Court cannot undertake a scrutiny of whether
there was an error on the part of the Parliament in legislating to
provide a particular rate of duty. The power to issue a notification
u/s. 25(1) of the Act has been conferred upon the Central Government
where it is satisfied that it is necessary in the public interest so to
do. Under sub-section (2) of Section 25, the Central Government may,
where it is satisfied that it is necessary in the public interest so to
do, by special order in each case, exempt from the payment of duty, under
circumstances of an exceptional nature to be stated in such order, any
goods on which duty is leviable and this Court has observed in the case
of Union of India Vs. Jalyan Udyog reported in [1993(68) ELT 9 (SC)] that
“the Parliament cannot constantly monitor the needs of and the emerging
trends in the economy and is in no position to engage itself in day-to-
day regulation and adjustment of import-export trade. Accordingly, the
power is conferred upon the Central Government to provide for exemption
from duty of goods, either wholly or partly and with or without
conditions, as may be called for in public interest. We see no warrant
for reading any limitation into this power.”
18. According to him, the Government of India i.e. the TRU is fully
empowered to decide the quantum of levy of duty on a particular commodity
and to define it. Therefore, no wrong was committed by the TRU when it
held that the commodity imported by the appellant did not enjoy the peak
duty structure of 70% but fell under the exceptions and replied to the
appellant accordingly. The Court, therefore, would not be justified in
directing the Central Government to issue a notification in this case.
19. He would further contend that the goods imported by the appellant
were cleared provisionally on payment of duty prescribed in the Customs
Tariff Act, 1975; the imported compound alcoholic preparation was known
as “concentrated extracts”. Compound Alcoholic Preparations are used in
the manufacture of various beverages and are not for immediate
consumption. The claim of the appellant-importer that duty should have
been imposed at the rate of 85% for 1993-94 and 65% in 1994-95 and the
claim that he had paid excess duty of Rs.5,62,46,726/- cannot be
sustained since all these consignments were assessed provisionally and
the goods were classified under Chapter Tariff Heading No.2208.10 of the
First Schedule to the then Custom Tariff and accordingly, the goods were
assessed provisionally and cleared on payment of appropriate duties.
20. According to him, the further contention of the appellant-importer
that exclusion in peak rate covers alcohol beverages but his imported
goods are “compound alcoholic preparation of a kind used for
manufacturing of beverages” which is not alcohol beverage and, therefore,
not hit by the exclusion clause, cannot also be sustained.
21. According to him, the contention of the importer that during the
impugned period, the peak rate of duty was 150% as announced by the FM in
his Budget Speech also cannot be sustained because the proposed rate of
maximum 150% was applicable to goods other than alcoholic beverages and
passenger baggage. The speech of the FM in this regard was very clear
and there is no ambiguity in the speech. Alcohol beverages and passenger
baggage have been taken out of the cover of maximum 150% rate duty.
Hence the contention of the appellant-importer that the impugned imported
goods were covered by FM speech for 150% rate duty is incorrect and in
fact this is contrary to what was contemplated in the Customs Tariff Act,
1975 and the HSN Explanatory Notes.
22. We have considered the extensive arguments submitted by the
appellant/party-in-person and gone through the voluminous record placed
before us and the respective submissions of the learned senior counsel
for respondents.
23. Before adverting to the various arguments advanced by both sides
and the findings recorded by the Court below, we deem it appropriate to
extract the relevant Tariff Entry 2208.10 under the Customs Tariff 1993-
94 and 1994-95, which reads:
|Heading |Sub- |Description of |Rate of duty |
|No. |heading |article |Stand- |
| |No. | |Preferential |
| | | |ard areas |
|22.08 |2208.10 |Compound alcoholic |Rs.300 per litre |
| | |preparations of a |or 400% whichever|
| | |kind used for the |is higher…. |
| | |manufacture of | |
| | |beverages. | |
24. Though it was already discussed in the preceding paragraphs about
the reliefs sought by the appellant before the High Court, we deem it
appropriate to extract the same hereunder:
“(1) a writ of Mandamus directing the first and second respondents
to issue a notification under Section 25(1) of the Customs Act, 1962, in
order to exempt goods falling under Tariff Heading 2208.10 so as to give
effect to the budget proposal announced by the Finance Minister in
Parliament for financial years l993-94 and 1994-95; (2) a direction to
the Chief Commissioner of Customs to finalize assessment of the eight
bills of entry after a notification is issued by the first and second
respondents under Section 25(1) of the Customs Act, 1962; (3) a writ of
Mandamus directing the second respondent to issue a notification under
Section 25(2) of the Customs Act, 1962, for granting exemption from
customs duty for goods falling under Tariff Heading 2208.10 for financial
years 1993-94 and 1994-95; (4) an order to refund after assessments are
finalized and (5) an order for the payment of interest at the rate of 12%
p.a. on the refund that is ordered.”
25. The High Court of Bombay, after giving a thorough consideration,
dismissed the writ petition on the ground that once a particular Tariff
Heading is prescribed, that constitutes the authoritative expression of
the legislative will of Parliament and the High Court cannot exercise its
power of judicial review and go beyond the law enacted by the Parliament
and it is not permissible for the Court to undertake a scrutiny of
whether there was an error on the part of the Parliament in legislating a
particular rate of duty. Further, the High Court observed that there is
no discriminatory conduct which would compel the interference of the
court. The appellant, unsatisfied with the order, has preferred a
revision before the High Court which ended up in dismissal as no error
apparent on record has been made out.
26. In those circumstances, the appellant is before us by way of these
appeals; one arising out of the original order and one against the order
passed in review. Before this Court, the appellant has amended the
reliefs and sought for the following reliefs: (1) direct the
respondents to perform their duty to issue suitable notification to
rectify the erroneous rate of duty prescribed on sub-heading 2208.10 and
to implement and execute the tariff rate already legislated; (2) direct
the respondents to return the excess amount of Rs.5,62,46,722/- collected
without any authority of law; (3) direct the respondents to pay 12%
simple interest for having willfully and deliberately refused to rectify
the error.
27. The appellant has come up before this Court with a voluminous
record and made submissions at length. The gist of the first and
foremost grievance of the appellant appears to be that he was charged
with the duty @ Rs.300/- per litre or 400% which was already paid by him
for the goods he imported as per the provisional assessment.
28. According to him, the Finance Minister has presented the budget
proposals before the Parliament which were duly approved by the
Parliament. As per the approved budget proposals, the goods imported by
him attracts reduction in duty higher than 85% to 85% advalorem for 1993-
94 and higher than 65% to 65% ad valorem for the year 1994-95 and he does
not fall under the exception of alcoholic beverages. The tariff he was
charged and the tariff rates in the finance bill are contrary to the
approved budget proposals.
29. The second grievance appears to be that whenever the tariff rates
are erroneously prescribed, the 2nd respondent is issuing notification
and in fact they have issued 85 notifications for the financial year 1993-
94 and 94 notifications for the financial year 1994-95. The 2nd
respondent is discriminating the appellant by refusing to issue a
circular in respect of his goods; as such their action is discriminatory
and violative of Article 14 of the Constitution of India.
30. In view of the aforesaid rival submissions, the issues that fall
for consideration are:
1) Whether the budget proposals, as alleged by the appellant, are duly
passed and approved by the Parliament and whether the tariff rates fixed
by the TRU are contrary to the legislative mandate?
2) Whether this Court can direct the Central Government to issue a
notification under Section 25(1) of the Customs Act?
3) Whether the compound alcoholic preparations of a kind used for the
manufacturing of beverages fall under the category of alcoholic
beverage?
4) Whether there is any discrimination on the part of the Central
Government in issuing a notification under Section 25(1) of the Customs
Act in respect of other goods and contrary to Article 14 of the
Constitution of India?
31. In Re Issue No.1:
The whole thrust of the appellant is that the proposals of the
Finance Minister were duly approved by the Parliament. No doubt, the
appellant has placed before this Court the proposals of the Finance
Minister which discloses the intention of the Government but there is no
material placed before us to demonstrate that the budget proposals are
duly accepted by the Parliament. It is an admitted fact that pursuant to
the proposals, the Finance Act was passed by the Parliament wherein for
the goods specified under Tariff Sub-Heading 2208.10, particular tariff
was specified. We are unable to agree with the argument advanced by the
appellant for the reason that he is unable to make note of the difference
between a proposal moved before the Parliament and a statutory provision
enacted by the Parliament, because the process of Taxation involves
various considerations and criteria.
Every legislation is done with the object of public good as said by
Jeremy Bentham. Taxation is an unilateral decision of the Parliament and
it is the exercise of the sovereign power. The financial proposals put
forth by the Finance Minister reflects the governmental view for raising
revenue to meet the expenditure for the financial year and it is the
financial policy of the Central Government. The Finance Minster’s speech
only highlights the more important proposals of the budget. Those are
not the enactments by the Parliament. The law as enacted is what is
contained in the Finance Act. After it is legislated upon by the
Parliament and a rate of duty that is prescribed in relation to a
particular Tariff Head that constitutes the authoritative expression of
the legislative will of Parliament. Now in the present facts of the
case, as per the finance bill, the legislative will of the Parliament is
that for the commodities falling under Tariff Head 2208.10, the tariff is
Rs.300/- per litre or 400% whichever is higher. Even assuming that the
amount of tax is excessive, in the matters of taxation laws, the Court
permits greater latitude to the discretion of the legislature and it is
not amenable to judicial review.
In view of the foregoing discussion, we are unable to concur with
the submission of the appellant that the budget proposals are duly passed
and approved by the Parliament and moreover, if the appellant is
aggrieved by the particular tariff prescribed under the Finance Act and
the same is contrary to the approved budget proposals, he ought to have
questioned the same if permissible. Hence, this issue is answered
against the appellant.
32. In Re : Issue No.2:
It is the case of the appellant that in respect of other categories
of the budgetary proposals, several notifications were issued by the 2nd
respondent altering the Tariff rates, but whereas in his case, the 2nd
respondent refused to issue such a notification and it is nothing but
mala fide and corrupt practice on the part of the respondents. According
to him, the budget proposals passed and approved by the Parliament are
paramount and the Executive or Central Government cannot prescribe Tariff
rates contrary to the budget proposals and he finds fault with the way
the 2nd respondent officials are functioning.
A thorough look at the relevant provisions reveals that the source
of power to issue notification by the Central Government relates to
Section 25 of the Customs Act, 1962, which reads as under:
“Power to grant exemption from duty.
1) If the Central Government is satisfied that it is necessary in the
public interest so to do, it may, by notification in the Official
Gazette, exempt generally either absolutely or subject to such
conditions (to be fulfilled before or after clearance) as may be
specified in the notification goods of any specified description
from the whole or any part of duty of customs leviable thereon.
2) If the Central Government is satisfied that it is necessary in the
public interest so to do, it may, by special order in each case
exempt from the payment of duty, under circumstances of an
exceptional nature to be stated in such order, any goods on which
duty is leviable.”
Section 25 of the Act delegates power to the Central Government
i.e. the executive branch to grant exemption generally from duty whenever
it finds that it is necessary to do so in the larger public interest
either absolutely or subject to such conditions as may be specified in
the notification or by a special order in each case under exceptional
circumstances.
As per Section 159 of the Act, any notification issued under
Section 25 shall be placed before the Parliament and the Parliament may
amend or reject the same. This clearly demonstrates that the ultimate
law making power is vested with the Legislature. Hence, the allegation of
the appellant that the notifications are issued basing on the whims and
fancies of the 2nd respondent is misconceived. Whereas, notifications are
issued generally in the larger public interest, the Legislature has given
the power to exempt duty to the 2nd respondent subject to the amending
power.
In these circumstances, it is not appropriate on our part to issue
any orders directing them to issue a notification under Section 25 (2) of
the Act except on the grounds of discrimination. In the matter of
taxation, the Court gives a greater latitude to the legislative
discretion. Accordingly, the issue is answered.
33. In Re : Issue No.3:
In regard to this issue ‘Whether the compound alcoholic
preparations of a kind used for manufacturing of beverages fall under the
category of alcoholic beverages’, the appellant has relied upon a
judgment of the Bombay High Court which was confirmed by this Court and
the learned senior counsel for respondents made several contra
submissions relying on some judgments. According to us, it is not for
us to do this exercise. It is always open to the parties to settle the
dispute before the appropriate forum if they choose to do so. The issue
is accordingly answered.
34. In Re : Issue No.4:
According to the appellant, the Central Government has issued
notifications under Section 25(1) and he is also entitled to such a
notification in respect of the commodities falling under the category
2208.10. When the appellant alleges discriminatory action on the part of
the respondents, he has to establish that there is no rational basis for
making classification between the goods which are notified and the goods
of the appellant which are not notified. It is also a firmly established
principle that the legislature understands and appreciates the needs of
its people. A Taxing Statute can be held to contravene Article 14 of the
Constitution if it purports to impose certain duty on the same class of
people differently and leads to obvious inequality. Such a material is
not placed before us to come to a just conclusion that the action of the
respondents is discriminative. Hence, the same is held against the
appellant.
35. As far as the interest aspect is concerned, when the appellant is
not entitled for the relief, there is no need for us to express any
opinion on the interest aspect.
36. Before we conclude, we would like to record our appreciation for
the strenuous efforts put forth by the appellant and the kind of efforts
he put in to collect the data. We feel that it is not out of place to
mention that the appellant has presented the case like a seasoned
professional with utmost skill and knowledge.
37. In view of the aforesaid elaborate discussion, we reach to an
irresistible conclusion that the appeals, being devoid of any merit,
deserve to be dismissed and are dismissed accordingly. No costs.
……………………………….J.
(MADAN B. LOKUR)
………………………………..J.
(N.V. RAMANA)
NEW DELHI,
JULY 22, 2016
