TMI Blog1988 (1) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... aper mill of 90000 tonnes capacity. As and when Bills of Entry were filed by the clearing agents of the respondent, the goods imported were assessed to duty under the Heading No. 84.66 of the Customs Tariff Act. 3. Section 2 of the Customs Tariff Act, provides for levy of duties as specified in the First and Second Schedules to the Act, which is commonly known as 'basic duty'. Section 3 of the said Act provides for levy of additional duty equal to the excise duty for the time being leviable on a like article if produced or manufacturred in India. A practice came into existence during recent years to levy a duty under the heading 'auxiliary duty' as a provision in the Annual Finance Acts, with a life period of only one year from 1st of April of a year to the 31st March of the next year. The Finance Act relevant in this case is the Finance Act, 1983. Section 45 thereof provided for levy and collection of auxiliary duty of customs at an amount equal to fifty per cent of the value of the goods, in the case of goods mentioned in the First Schedule to the Customs Tariff Act. According to Section 45(4) of the Finance Act, 1983, the provisions of the Customs Act and the rules and regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause has, by virtue of the declaration made in the said Bill under the Provisional Collection of Taxes Act, 1931 (16 of 1931), the force of law, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in column (3) of the Table annexed hereto and falling within the Chapter of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), specified in the corresponding entry in column (2) of the said Table, when imported into India, from so much of the auxiliary duty of customs leviable thereon under sub-clause (1) of Clause 45 of the said Finance Bill as is in excess of the amount calculated at the rate of 20 per cent of the value of such goods as determined in accordance with the provisions of Section 14 of the first mentioned Act. Table S.No. Chapter No. in the First Schedule to the Customs Tariff Act, 1975 Description of goods .... .... .... .... 11. 84 Goods falling under Heading No. 84.31 but excluding paper making machinery and component parts thereof. 12. 84 Goods falling under Heading No. 84.66. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1962), and such contract or contracts has or have been so registered before any order is made by the proper officer of Customs permitting the clearance from home consumption, or deposit in a warehouse of items, component of raw materials; (ii) All spare parts other raw materials (including semi-finished materials), or consumable stores imported, as a part of a Contract or contracts, registered in terms of sub-heading (i) provided the total value of such spare parts, raw materials, and consumable stores does not exceed ten per cent of the value of the goods covered by sub-heading (i) and further provide that such spare parts, raw materials or consumables stores are essential for the maintenance of the plant or project mentioned in sub-heading (i) 40% 7. Regulations were framed in 1965 with reference to the contracts to be registered under the Heading No. 84.66. They are called Project Imports (Registration of Contract) Regulations, 1965. Regulation No. 2 provides that the Regulations shall apply to every contract referred to in sub-heading No. (i) of Heading No. 84.66 of the First Schedule to the Customs Tariff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and a provisional assessment will be made immediately obviating to the maximum possible extent the need for detailed assessment of individual lots, after the goods arrive. The equipment is imported under the item will be charged to duty at the machinery rate...." 9. A reading of the entry under the Heading 84.66 shows that it is not a residuary heading or a general heading relating to any class of goods. It is a specific entry introduced with the purpose and it relates only to goods imported for the initial setting up of a unit or a substantial expansion of an existing unit of a specified industrial plant, irrigation project etc. 'When an importer registers a contract as required in the entry under the Heading 84.66 all the goods imported by him under that contract will be subjected to duty only as per that entry. It will not be open to the Revenue to pick out some of the goods imported under the contract and impose a different rate of duty on the footing that they would be covered by a different heading. If the conditions prescribed under the Heading No. 84.66 are satisfied, the duty is imposed on the goods imported under that heading, as if they form the composite unit. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condition is that the goods must fall under Heading No. or sub-heading No., of Heading No. of the First Schedule specified in column (2) of the Table. If certain goods fall under a description found in column (3) of the Table and do not fall under the heading specified in column (2), they would not be covered by the Notification. Similarly, if certain goods fall under the Heading specified in column (2) but do not satisfy the description in column (3) of the Table, they would also not be covered by the Notification. Thus, on a plain reading of the Notification, it is clear that the paper making machinery and parts thereof would be exempted from the whole of the auxiliary duty of customs only if they fall under the Heading No. 84.31. When Notification No. 61/83 refers to both Heading Nos. 84.31 and 84.66 but excludes paper making machinery and component parts thereof falling under Heading No. 84.31 only, it is clear that the Central Government did not intend to treat paper making machinery and component parts thereof as a separate class by itself fit for exemption from the whole of the auxiliary duty, whether they were imported under a contract registered under the Heading 84.66 or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the importer or to the Customs Department to contend that the Notification would apply to all goods of such description whether they fall under that heading or not. In our view, the relevant Notification, viz. Notification No. 61/83 and Notification No. 62/83 are unambiguous in their terms and there is no question of overlapping. We hold that the respondent is not entitled to the benefit of Notification No. 62/83 and the appellants are right in levying auxiliary duty as per the terms of Notification No. 61/83. 13. A somewhat similar question arose before the Supreme Court of India in Jain Engineering Co. v. Collector of Customs, Bombay and Others -1987 (32) E.L.T. 3 (S.C.) = 1887 4 SCC 492, and it happened to be a converse case. The appellant before the Supreme Court claimed the benefit of the Notification No. 281/76-Cus. granting part exemption from payment of customs duty in respect of the rod bushes and camshaft bushes imported by the appellant therein. The entry in the exemption notification referred to internal combustion piston engines for industrial and agricultural tractors and power tillers and parts thereof, which covered bushes imported by the appellant in that cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included under another heading. The intention of the notification is clear enough to provide that the parts of the engine, mentioned under Heading No. 84.06 will get the exemption under the notification and in the absence of any provision to the contrary, we are unable to hold that the parts of the engines, which are included under a heading other than Heading No. 84.06, are excluded from the benefit of the notification." 14. The aforesaid ratio will apply on all fours to the present case. When the exemption notification refers specifically to Heading No. 84.31, and describes certain goods falling under that heading, it will not be open to the importer to contend that the goods falling under another heading, viz., Heading No. 84.66 would be covered by the notification. 15. Learned counsel for the respondent repeated the contentions urged before the learned Single Judge and upheld by him. The first contention is that the principle generalia specialibus non derogant would apply to this case. According to the learned counsel, Heading No. 84.66 is a general entry and Heading No. 84.31 is a special entry and the exemption notification grants exemption to goods of a specific descrip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for purposes of levying duty and another heading for purposes of exemption. When the notification refers to the heading and exempts goods falling within that category, that cannot be availed of in cases where the goods are not covered by that category. Hence, the decisions of the Supreme Court in Superintendent of Central Excise, Surat v. Vac Met Corpn (P) Ltd., AIR 1986 S.C. 1167 and M/s. Atul Glass Industries (P) Ltd. v. Collector of Central Excise, AIR 1986 SC 1730 relied on by learned counsel for the respondent are not applicable to the present case. These two decisions lay down that when certain articles will fall under a specific entry, they cannot be dealt with under a general entry, presumption as to a tax." Far from helping learned counsel for the respondent, the dictum of Rowlatt J. favours the appellants in this case. On a plain reading of what is crearly said in the notification, we have no doubt that the respondent is not entitled to the benefits of the exemption granted therein. 17. Learned counsel for the respondent drew our attention to the decision of the Bombay High Court in Bombay Paints and Allied Products Ltd. v. Union of India and others, 1985 (21) E.L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excises and Salt Act, as envisaged in Rule 2, clause (v), and that it cannot in the circumstances bear an extended meaning so as to include special excise duty and auxiliary excise duty. It was, therefore, held that the assessee was entitled to exemption only in respect of basic duty of excise leviable under the Central Excises and Salt Act, and not entitled to claim any exemption in respect of special duty of excise or additional duty of excise of auxiliary duty of excise. We are at a loss to understand how this decision can help the respondent in the present case. Auxiliary duty is levied under Section 45(1) of the Finance Act. As we have seen already, the headings found in the First Schedule to the Customs Tariff Act are adopted for the purpose of auxiliary duty. Exemption from auxiliary duty is granted by the power under Section 45(4) of the Finance Act read with Section 25 of the Customs Act. The said headings as are relevant for levying the auxiliary duty will be applicable for the application of the notification of exemption. 20. It was next argued that just because the respondent had the benefit of exemption from thewhole of the additional duty under Notification No. 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the General Agreement on Tariffs and Trade (GATT) after that organization came into being in 1948. GATT members include virtually all major trading nations of the world, but only the more developed countries have participated in the successive rounds of tariff reductions. But such reductions are automatically applied to imports from developing member countries, under the most-favoured-nation clauses, the contracting parties to GATT assume the obligation to extend one another the tariff concessions accorded to any one member country. Another central feature of GATT is the principle of reciprocity; mutual tariff concessions are designed to lead to equivalent increases in the exports and imports of each participant. The principles of non-discrimination and reciprocity of ten conflict, since the agreed-upon tariff reductions are extended to countries not obliged to reciprocate. To lessen this effect of giving 'free ride' to third countries, much tariff bargaining was carried out in an item-by-item bastis in the post-war period. This approach limited the scope of tariff reduction and, after initial successes, the progress of multilateral trade liberalisation slowed down." It is t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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