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M/s Colgate Palmolive (India) Ltd. v. Commissioner of Customs - (Supreme Court) (24 Aug 2016)

Incidence of duty in two Enactments independent to each other and one duty can be levied without other

MANU/SC/0937/2016

Customs

Notification No. 37 of 1996 dated 23.7.1996, issued by Government pursuant to trade treaty whereby specified goods in Notification when imported into India from Nepal were exempted “from whole” of customs duty leviable under Customs Tariff Act, 1975 subject to conditions. Appellant was importing various dental hygiene products from Nepal was entitled to avail exemption under Notification. Appellant was availing exemption from customs duty.

Appellant was asked to pay Special Additional Duty (SAD) and it paid under protest. Thereafter, Notification No. 124/2000-Customs was issued amending Notification No. 37/96-Customs dated 23rd July, 1996. After said Notification was issued, Appellant filed an application for refund of Special Additional Duty (SAD) paid in respect of imports made from Nepal. Authority concerned rejected said application. Eventually, matter came up in appeal before Tribunal. Stand of Appellant before Tribunal was that Notification No. 124/2000 which amended the earlier Notification No. 37/96 and enlarged scope of exemption from basic customs duty by including SAD, should be considered as retrospective in view of language employed in Treaty entered into between two countries.

High Court of Patna in Kaur Sain Traders v. Union of India observed that, incidence of duty in the two Acts, i.e., Customs Act and the Tariff Act are independent to each other and one duty can be levied without the other. Section 3A of Tariff Act was enacted in year 1998. This was a new provision and had stipulated that in addition to customs duty and additional customs duty, special additional customs duty would be payable on goods imported into India, having regard to maximum sales-tax, local tax or other charges for time being leviable on like article on sale and purchase in India. Proviso stipulated that until such rates were specified by Central Government, special additional duty shall be leviable and collected @ 8% on imported product. In terms of said proviso, Notification No.18/2000-Customs was issued on 1st March, 2000. Protocol to Treaty of Trade did not deal with special additional duty. Special additional duty was not leviable and enforced, when Treaty of Trade was signed and protocol was executed. Under these circumstances, it was not possible to accept position that Clause 1 of protocol had included and had embraced “special additional duty”, which was introduced in form of Section 3A enacted in 1998.

Exemption which was granted by Notification dated 29th September, 2000 was, therefore, in nature of specific and new exemption from payment of special additional duty, which was otherwise payable in view of introduction of Section 3A to Tariff Act. It is difficult to appreciate that, exemption granted vide notification dated 20th September, 2000 to special additional duty was clarificatory or to give effect to existing protocol. Notification of 20th September, 2000 conferred a new benefit which was not earlier stipulated or subject matter of protocol.

Supreme Court opined that, instant case is not suggestive of any mistake or error or even inadvertence. Earlier exemption under protocol was basic customs duty and also additional customs duty equal to duty of excise in some cases and on satisfying conditions stipulated and it did not deal and relate to special additional duty chargeable under Section 3A of Act, which had introduced a new duty altogether. Issue of notification was a conscious act and a deliberate decision which came into existence after due deliberation, when it was decided to grant exemption under Section 3A of Tariff Act.

Relevant : Kaur Sain Traders v. Union of India

Tags : SPECIAL ADDITIONAL DUTY   REFUND   ENTITLEMENT  

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