Court declares illegal levy of additional duty on natural rubber, orders refund applications. Importers to file under relevant provisions.

The Court dismissed the writ petitions seeking refund of duty already collected, declared the levy of additional duty on natural rubber illegal, and directed importers to file refund applications under relevant provisions. The Court forbade Authorities from collecting such duty and rejected challenges to the writ petitions based on alternative remedies, citing undue delay and injustice. No costs were awarded.

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Issues Involved:
1. Levy of additional duty under Section 3(1) of the Customs Tariff Act, 1975.
2. Refund of duty paid by importers.
3. Legality of the writ petitions in light of alternative remedies.

Detailed Analysis:

1. Levy of Additional Duty under Section 3(1) of the Customs Tariff Act, 1975:

The appellants imported natural rubber, known as smoked rubber sheets, and the Customs Department insisted on additional duty under Section 3(1) of the Customs Tariff Act, 1975. The learned Judge allowed the writ petitions, reasoning that:
- The duty under Section 3(1) should be equal to the excise duty leviable on a like article if produced in India. No excise duty was levied on natural rubber under the Central Excises and Salt Act, 1944, as it was not listed in the first Schedule, and items under item 68 manufactured outside a factory were exempt.
- No manufacturing process was involved in producing natural rubber, hence no excise duty was applicable.
- The Central Board of Excise and Customs' Tariff Advice dated 23-6-1981 included smoked rubber sheets as natural rubber.
- A notification under Section 11C of the Central Excises and Salt Act exempted natural rubber, including smoked rubber sheets, from duty from 1-3-1975 to 7-7-1983.

The appellants contended that Section 3 of the Customs Tariff Act imposes additional duty based on import, not manufacture, and that exemption notifications under the Central Excise Act do not absolve importers from paying duty. They also argued that the only remedy for refund was under Sections 11B of the Central Excise Act and 27 of the Customs Act.

The Court referred to the Supreme Court's judgment in Khandelwal Metal & Engg. Works v. Union of India, which held that the duty under Section 3(1) of the Customs Tariff Act is not countervailing duty and is based on import, not manufacture. However, the Court found that this ruling did not support the appellants because, in the present case, no excise duty was payable on natural rubber due to the exemption notifications.

The Court also cited Tata Exports Ltd. v. Union of India, which held that goods exempt from excise duty if manufactured in India are not liable for additional duty under Section 3(1) of the Customs Tariff Act. Similarly, in Thermax Private Ltd. v. Collector of Customs, the Supreme Court stated that the test is to imagine the goods as manufactured in India and determine the excise duty payable, which in this case would be zero.

The Court noted that the Supreme Court in Hyderabad Industries Ltd. v. Union of India referred the matter for reconsideration, questioning the assumption that imported articles can be produced or manufactured in India.

The Court concluded that natural rubber, including smoked rubber sheets, involves no manufacturing process and is exempt from excise duty under the relevant notifications. Therefore, the additional duty under Section 3 of the Customs Tariff Act should be zero.

2. Refund of Duty Paid by Importers:

The Court addressed the refund of duty already paid by importers. The appellants argued that refund applications should be made under Section 11B of the Central Excise Act or Section 27 of the Customs Act, and the Supreme Court has held that these sections apply to pending proceedings.

The respondents conceded that refund applications should be made under the relevant provisions, and the Court directed that such applications be considered by the concerned Authorities within six months. The Court also allowed the existing bank guarantees furnished by the writ petitioners to remain in force until the refund applications are disposed of.

3. Legality of the Writ Petitions in Light of Alternative Remedies:

The appellants contended that the writ petitions should be dismissed due to the availability of alternative remedies. However, the Court rejected this argument, noting that the writ petitions had been pending for fourteen to fifteen years, and dismissing them now would cause grave injustice and undue hardship to the petitioners. The Court cited previous judgments supporting the view that the existence of alternative remedies does not bar the entertainment of writ petitions.

Conclusion:

The Court dismissed the writ petitions seeking refund of duty already collected and allowed the relevant writ appeals, directing the petitioners to file refund applications under the relevant provisions. The Court declared the levy of additional duty on natural rubber to be illegal and forbade the Authorities from collecting such duty. The Court also dismissed the writ appeals challenging the legality of the writ petitions based on alternative remedies. There were no orders as to costs.

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