TaxTMI 
TaxTMI 
2017 (5) TMI 1440
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....ufacturer of phosphoric acid which in turn, is mixed with ammonia to produce phosphatic fertilizers. Two of the raw materials used in the manufacture of phosphoric acid are sulphur and rock phosphate and both of them are imported. They are classified under Tariff Headings 25.03 (sulphur of all kinds) and 25.10 (natural calcium phosphates etc.) of the Customs Tariff. The customs duty on both the products at the relevant time was 5% ad valorem. Phosphoric acid is also imported by other manufacturers of fertilisers. 3. SAD was introduced, on articles imported into India, by insertion of Section 3A of the Customs Tariff Act, 1975 ('CTA'), by Section 104 of the Finance Act, 1998. The relevant portion of Section 3A reads as under: 3A. Special Additional Duty: (1) Any article which is imported into India shall in addition be liable to a duty (hereinafter referred to in this section as the special additional duty), which shall be levied at a rate to be specified by the Central Government, by notification in the Official Gazette, having regard to the maximum sales tax, local tax or any other charges for the time being leviable on a like article on its sale or purchase in India. Provided....
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....Finance Minister where the rationale and reason for introduction of SAD was explained, as under: "119. The domestic industry has responded favourably to the restructuring of customs duties and has shown commendable resilience. They need to improve their competitive efficiency to meet the challenges of global competition. But they also have legitimate concerns which cannot be ignored. In this background, the path of transition has to be carefully calibrated to ensure that the adjustment process for the Indian industry is orderly without leading to serious disruption. 120. I have received representations from a cross section of the industry about the regime of import duties. Many Hon'ble Members have also written to me expressing their concern on the general health of the domestic industry. The demands are diverse and asymmetrical in most cases. This is for obvious reasons. While the users of imported raw materials and other inputs or the consumers of finished imported goods would benefit from further reduction in import duties, the domestic producers have made a convincing case for urgent relief to the domestic industry. 121. I have given by earnest consideration to these con....
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....on (1) of section 3A of the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the Customs Tariff Act), the Central Government, having regard to the maximum sales tax, local tax or any other charges for the time being leviable on the like goods on their sale or purchase in India, hereby specifies the rates of special additional duty as indicated in Column (4) of the Table below in respect of goods when imported into India, specified in corresponding entry in column (3) of the said Table and falling within the Chapter, heading No. or sub-heading No. of the First Schedule to the Customs Tariff Act as are specified in the corresponding entry in column (2) of the said Table: Provided that in respect of the goods specified against S. Nos. 30, 31, 32,42 and 43 of the said Table, 'Nil' rate shall be subject to the conditions, if any, subject to which the goods are exempt either partially or wholly from the duty of customs leviable thereon which is specified in the First Schedule to the Customs Tariff Act. S.No. Chapter or heading No. or sub-heading No. Description of goods Standard rate (1) (2) (3) (4) 7. 25.03 Crude or unrefined sulphur Nil 26. 10.01, 2301.2....
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....ustoms duty almost twice the rate payable by importers of phosphoric acid. In other words while the importers would pay the customs duty @ 5% ad valorem the Petitioner and indigenous manufacturers of phosphoric acid have to pay customs duty on both sulphur and phosphoric acid at 5% plus 4% SAD. The impugned notification is stated to have placed the indigenous manufacturers of phosphoric acid "in severe jeopardy'. It is submitted that despite representations made by the Petitioner to the Government of India, on several occasions there has been no response received. 9. However, in the 2003 Union Budget, the Respondents have remedied the situation, but only prospectively. Notification No. 29/2003-Cus dated 1st March 2003 was issued amending Notification No. 23/2002-Cus. By this time, both sulphur and rock phosphate were included amongst those items on which nil rate of SAD was payable. However, since the notification No. 29/2003-Cus dated 1st March 2003 was only prospective, SAD paid by the fertilizer manufacturers who imported sulphur and rock phosphate in 200203 has been lost forever and even refund could not be claimed. Submissions of Senior counsel for the Petitioner 10. Mr. Ra....
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.... of India AIR 2013 SC 3127. 13. Mr. Narula drew attention to the distinction between a notification granting exemption and a notification that either imposed or increased rates of SAD in place of an earlier notification which levied nil or a lower rate of SAD. Mr. Narula explained the difference between the basic customs duty and the SAD and additional duty which was also evident from Sections 2,3 and 3 A of the CTA. He referred to the decision of the Supreme Court in Colgate Palmolive (India) Limited v. Commissioner of Customs, Patna 2016 (339) DLT 161 (SC). 14. Mr. Narula also referred to the counter-affidavit which explained that a conscious decision has been taken by the Respondent to increase the rates of duty gradually on specified goods having duty exemption including exemption from SAD." The decision to bring sulphur and rock phosphate within the ambit of SAD by the impugned notification and restoration of nil rate of duty of SAD on both products was also part of the Government's policy of reviewing the tax rates and exemptions. Analysis and reasons 15. The above submissions have been considered. At the outset, it requires to be noticed that there is indeed distinct....
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....jective. However, in exercise of the powers under Article 226 of the Constitution, it would not be for this Court to determine whether the rate of duty should be 'x' or 'y'. The Court can at best examine if all relevant considerations have been taken into account and whether the procedure envisaged has been followed while arriving at the decision to keep the rate at 'nil' or raise it to 'x' or 'y' percent. The decision making process and not the decision itself is amenable to judicial review. The merits of the decision can be reviewed only where it is shown to be vitiated by malice in law or in fact or is so irrational or unreasonable that it cannot be considered to be just and fair. 19. It is not as if in the present case, the impugned notification reflected in Notification No. 23/2002-Cus dated 1st March 2002 has no basis. The counter-affidavit filed by Respondent No. 2 explains the factors that were taken into consideration. The mere fact that the government made a reference to the prevailing rates of customs duty and not to sales tax or local tax and the impact thereof would not per se render the decision contrary to section 3 A CTA. The....