Excise exemption on like goods bars additional customs duty on imports under the Customs Tariff Act, 1975.

Additional duty under Section 3(1) of the Customs Tariff Act, 1975 is measured by the excise duty leviable on a like article if manufactured in India. Where the identical indigenous goods are wholly exempt from excise duty under a valid exemption notification, the imported goods cannot be subjected to countervailing duty merely because they are imported. The preferred view was that the excise exemption affects the measure of additional duty, not only local manufacturers. The writ petition succeeded, and assessment was directed to be finalised accordingly, with bank guarantees to continue until finalisation.

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Issues: Whether additional duty under Section 3(1) of the Customs Tariff Act, 1975 could be levied on imported orthoxylene when the identical goods, if manufactured and sold in India, were wholly exempt from excise duty under the relevant exemption notification.

Analysis: The governing principle applied was that the additional duty under Section 3(1) is to be measured by the excise duty for the time being leviable on a like article if produced or manufactured in India. If the like article would attract no excise duty because of a valid exemption, the imported article cannot be subjected to countervailing duty merely because it is imported. The Court preferred the line of authority holding that exemption from excise duty on the indigenous article necessarily affects the measure of additional duty on the imported article, and rejected the contrary view that the exemption is confined only to local manufacturers.

Conclusion: Additional duty under Section 3(1) of the Customs Tariff Act, 1975 could not be levied on the imported orthoxylene so long as the identical goods were exempt from excise duty when manufactured in India.

Final Conclusion: The writ petition succeeded and the respondents were directed to finalise assessment in accordance with the declared legal position, with the bank guarantees to continue till such finalisation.

Ratio Decidendi: Where the like article, if produced or manufactured in India, is exempt from excise duty, no additional or countervailing duty can be levied under Section 3(1) of the Customs Tariff Act, 1975 on the imported article.

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