1989 (7) TMI 249 - AT - Customs

Customs Tribunal rules in favor of respondents under Sec. 15(1)(c) of Customs Act, 1962, dissenting opinion supports Sec. 15(1)(a).

The Tribunal, led by P.C. Jain, concluded that Section 15(1)(c) of the Customs Act, 1962 should apply, granting the benefit of Notification 50/85 to the ... Clearance of goods Issues Involved:1. Applicability of Section 15(1)(a) or Section 15(1)(c) of the Customs Act, 1962 for duty assessment.2. Interpretation of bond conditions under Customs Notification 77/80.3. Determination of duty rate for goods cleared from Kandla Free Trade Zone (KAFTZ) to Domestic Tariff Area (DTA).Issue-wise Detailed Analysis:1. Applicability of Section 15(1)(a) or Section 15(1)(c) of the Customs Act, 1962 for duty assessmentThe primary issue was whether the duty on surplus soda ash cleared from KAFTZ to DTA should be assessed under Section 15(1)(a) or Section 15(1)(c) of the Customs Act, 1962. The Assistant Collector originally held that the duty should be assessed under Section 15(1)(a), which pertains to the rate of duty applicable at the time of import. The Collector of Customs (Appeals), however, held that the rate of duty should be determined under Section 15(1)(b) read with Section 68 of the Customs Act, 1962, applicable to goods cleared from a warehouse.The Tribunal found that the unit in KAFTZ is not a warehouse and thus Section 15(1)(b) would not apply. The Tribunal also noted that the provisions of Section 15(1)(a) were exhausted at the time of the original importation of the goods. Therefore, the Tribunal concluded that the residuary clause, Section 15(1)(c), should apply, which pertains to the rate of duty at the time of clearance for home consumption. This conclusion was based on the interpretation that the clearance from KAFTZ to DTA cannot be treated as clearance for home consumption at the time of importation.2. Interpretation of bond conditions under Customs Notification 77/80The respondents executed a bond under Customs Notification 77/80, which stipulated that they must pay duty on raw materials not used for manufacturing and export as per the notification's conditions. The Assistant Collector emphasized this bond condition, asserting that duty should be paid as if the goods were imported for home consumption initially.The Tribunal, however, found merit in the respondents' argument that the bond conditions should not exceed the terms of the notification. The notification required the importer to pay 'an amount equal to the duty leviable,' which the Tribunal interpreted as the duty rate applicable at the time of clearance to DTA, not the original import duty rate. This interpretation was supported by the difference in language between Notification 77/80 and the older Notification 55/66, which explicitly stated the duty rate at the time of import.3. Determination of duty rate for goods cleared from KAFTZ to DTAThe Assistant Collector and the department argued that the duty rate should be as per Section 15(1)(a) of the Customs Act, 1962, based on the bond conditions and previous practices. The respondents contended that since KAFTZ is a warehousing station, the duty rate should be as per Section 15(1)(b) or Section 15(1)(c).The Tribunal ultimately held that the duty rate should be determined under Section 15(1)(c), given that the provisions of Section 15(1)(a) were exhausted at the time of original importation. The Tribunal rejected the department's reliance on previous practices and instructions, noting the significant difference in the language of the relevant notifications.Separate Judgments:- Majority Judgment: The Tribunal, led by P.C. Jain, concluded that Section 15(1)(c) should apply, thereby granting the benefit of Notification 50/85 to the respondents and rejecting the appeal.- Dissenting Opinion: D.C. Mandal disagreed, asserting that Section 15(1)(a) should apply since the goods were imported under home consumption bills of entry and not warehoused under Chapter IX of the Customs Act. He argued that the bond conditions necessitated applying the original import duty rate, thus allowing the appeal.Conclusion:The majority decision of the Tribunal favored the respondents, holding that the duty rate should be determined under Section 15(1)(c) of the Customs Act, 1962, and granting the benefit of Notification 50/85. The dissenting opinion, however, supported the department's stance of applying Section 15(1)(a).