Rubber cess on imported natural rubber latex cannot be sustained where additional duty of customs does not support the demand.

Rubber cess on imported natural rubber latex was examined in light of Section 28(2) of the Customs Act and Section 12 of the Rubber Act, 1947. The Tribunal noted competing views, but followed the later Supreme Court-approved position that additional duty of customs under Section 3 of the Customs Tariff Act could not validly support the cess demand on imported rubber. On that binding legal position, the demand was treated as unsustainable and the cess levy on the import was held illegal.

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Issues: Whether rubber cess was leviable on imported natural rubber latex and recoverable as additional duty of customs.

Analysis: The demand was based on Section 28(2) of the Customs Act read with Section 12 of the Rubber Act, 1947. The Tribunal considered the earlier Larger Bench view, but preferred the later view affirmed by the Supreme Court in a connected matter, which held that the additional duty of customs under Section 3 of the Customs Tariff Act could not validly sustain the cess demand on imported rubber when the Apex Court had upheld the contrary view. Applying that binding position, the demand was found unsustainable.

Conclusion: The cess demand on the imported rubber was illegal and the appeal succeeded.

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