2020 (11) TMI 151 - AT - Customs

Tribunal: Duty of customs excludes integrated tax for re-imported aircraft parts

The Tribunal held that the term 'duty of customs' in the Exemption Notification does not encompass integrated tax. Consequently, the Appellant, a ... Interpretation of 'duty of customs' in an exemption notification - exemption from integrated tax on re-import of repaired goods - distinction between duty of customs and additional duties/taxes collected under the Tariff Act - collection of integrated tax by customs under section 3 of the Customs Tariff Act - construction of subordinate legislation/notifications where different expressions are usedInterpretation of 'duty of customs' in an exemption notification - exemption from integrated tax on re-import of repaired goods - Whether the phrase 'Duty of customs' in column (3) of serial no. 2 of the Exemption Notification includes integrated tax and compensation cess, or whether integrated tax and compensation cess are wholly exempted on re-import of repaired aircraft/parts. - HELD THAT: - The Court examined the statutory scheme and the Exemption Notification in light of the definitions and charging provisions. Section 2(15) of the Customs Act defines 'duty' to mean a duty of customs leviable under that Act; section 12 provides that duties of customs are to be levied at rates specified under the Tariff Act. Section 3 of the Tariff Act separately provides for additional levies including the mechanism for collection of integrated tax (sub-section (7)) but does not recast integrated tax as a 'duty of customs' under the Customs Act. Integrated tax is levied under section 5 of the Integrated Tax Act and its collection at the time of import is provided for by section 3 of the Tariff Act. Judicial authorities were applied to the effect that defined expressions must be given their statutory meaning and that 'duty' in customs notifications bears the meaning assigned by the Customs Act; additional or auxiliary levies are not to be read into the term 'duty of customs' absent clear intent. The Court noted that the main body of the Exemption Notification separately refers to the duty of customs (as specified in the First Schedule), and to integrated tax and compensation cess, and that the Table's column (3) for serial no. 2 mentions only 'Duty of customs' in specifying the amount payable on re-import after repairs. The omission of the words 'specified in the First Schedule' in column (3) was held not to demonstrate an intention to subsume integrated tax and cess into 'duty of customs', since the statutory meaning and contextual usage compel reading 'duty of customs' as the basic customs duty leviable under the Customs Act. Precedents and principles of construction where different expressions are used in the same subordinate legislation were applied to infer distinct meanings. By parity with earlier notifications and authoritative decisions, the Court concluded that integrated tax and compensation cess are not included within the expression 'duty of customs' in column (3) of serial no. 2 and are therefore exempted under the Exemption Notification on re-import of repaired goods. [Paras 38, 39, 45, 47, 48]The expression 'Duty of customs' in column (3) of serial no. 2 of the Exemption Notification means the basic customs duty leviable under the Customs Act (First Schedule) and does not include integrated tax or compensation cess