2011 (12) TMI 669 - HC - Customs

Court upholds jurisdiction for show cause notice on imported rubber under Customs Tariff Act

MRF Limited represented V. Deivasigamani (General Manager Indirect Taxes) Versus Union of India (Ministry of Finance) through Secretary Department of Revenue, New Delhi, Additional Commissioner of Customs (Group 2), Chennai

MRF Limited represented V. Deivasigamani (General Manager Indirect Taxes) Versus Union of India (Ministry of Finance) through Secretary Department of ... Issues Involved:1. Jurisdiction to reopen a concluded issue.2. Levy of Additional Duties of Customs under Section 3(1) of the Customs Tariff Act, 1975.3. Levy of cess under Section 12 of the Rubber Act, 1947 on imported rubber.4. Applicability of the doctrine of unjust enrichment.5. Validity of the show cause-cum-demand notice dated 23.09.2011.Issue-wise Detailed Analysis:1. Jurisdiction to Reopen a Concluded Issue:The petitioner argued that the respondent had no authority to reopen an issue already concluded in favor of the assessee. The court noted that the previous orders, including those of the Tribunal and the Apex Court, had settled the issue of cess levied under the Rubber Act on imported rubber. However, the current proceedings were for levying additional duty under Section 3 of the Customs Tariff Act, 1975, which was a separate matter. The court upheld the jurisdiction of the respondents to issue the show cause notice under Section 3(1) of the Customs Tariff Act, 1975.2. Levy of Additional Duties of Customs under Section 3(1) of the Customs Tariff Act, 1975:The court examined Section 3(1) of the Customs Tariff Act, which mandates additional duty on imported articles equivalent to the excise duty on like articles produced in India. The court referred to the Apex Court's decision in Hyderabad Industries Ltd. v. Union of India, which clarified that additional duty under Section 3 is independent of customs duty under Section 12 of the Customs Act, 1962. The court concluded that the levy of additional duty on imported rubber was valid as it aimed to counterbalance the excise duty on similar indigenously produced goods.3. Levy of Cess under Section 12 of the Rubber Act, 1947 on Imported Rubber:The petitioner contended that cess under Section 12 of the Rubber Act could not be levied on imported rubber. The court noted that previous Tribunal decisions, supported by the Apex Court, had ruled that cess under the Rubber Act was applicable only to rubber produced in India, not imported rubber. However, the court clarified that the current proceedings were for additional duty under Section 3 of the Customs Tariff Act, not cess under the Rubber Act.4. Applicability of the Doctrine of Unjust Enrichment:The court noted that the issue of unjust enrichment had been remanded by the Apex Court to the Tribunal for consideration. The Tribunal had directed the authorities to verify the aspect of unjust enrichment before granting a refund. The court did not delve deeply into this issue, as it was not directly relevant to the current proceedings for additional duty under Section 3 of the Customs Tariff Act.5. Validity of the Show Cause-Cum-Demand Notice Dated 23.09.2011:The petitioner challenged the validity of the show cause-cum-demand notice on the grounds that it was an attempt to reimpose cess in the guise of additional duty. The court examined the nature of the levy and concluded that the notice was for additional duty under Section 3 of the Customs Tariff Act, which was distinct from cess under the Rubber Act. The court upheld the validity of the show cause notice and dismissed the writ petition.Conclusion:The court dismissed the writ petitions, upholding the respondents' jurisdiction to levy additional duty under Section 3 of the Customs Tariff Act, 1975, on imported rubber. The court directed the respondents to provide the petitioner with an opportunity for a hearing before passing adjudication orders. The connected miscellaneous petitions were also closed.