Page 1 Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8593 OF 2003

M/s Colgate Palmolive (India) Ltd. ...Appellant(s)

Versus

Commissioner of Customs, Patna ...Respondent(s)

WITH

CIVIL APPEAL NO. OF 2016

(@ SLP (C) NO. 11487 OF 2006)

J U D G M E N T

Dipak Misra, J.

Leave granted in S.L.P. (Civil) No. 11487 of 2006.

2.Keeping in view the need to fortify the traditional

connection and strengthen the economic cooperation for the

purpose of development and mutual benefit, the

Government of India had signed the Treaty of Trade with

Page 2 2

His Majesty’s Government of Nepal in July, 1996. Articles

III, IV and V of the said Treaty read as follows:-

“Article III

Both the contracting parties shall accord

unconditionally to each other treatment no less

favourable than that accorded to any third

country with respect to (a) customs duties and

charges of any kind imposed on or in connection

with importation and exportation and (b) import

regulations including quantitative restrictions.

Article IV

The contracting parties agree, on a reciprocal

basis, to exempt from basic customs duty as well

as from quantitative restrictions the import of

such primary products as may be mutually

agreed upon, from each other.

Article V

Notwithstanding the provisions of Article III and

subject to such exceptions as may be made after

consultation with His Majesty’s Government of

Nepal, the government of India agree to promote

the industrial development of Nepal through the

grant on the basis of non-reciprocity of specially

favourable treatment to imports into India of

industrial products manufactured in Nepal in

respect of customs duty and quantitative

restrictions normally applicable to them”.

3.The protocol to the Treaty with reference to Article V

stipulated many clauses. With reference to Article V

clauses which are relevant are reproduced below:-

Page 3 3

“1. The Government of India will provide access to

the Indian market free of customs duties and the

quantitative restrictions for all articles

manufactured in Nepal.

xxxx xxxx xxxx

3.On the basis of a Certificate issued, for each

consignment of products manufactured in the

small scale units in Nepal, by His Majesty’s

Government of Nepal, or by an agency designated

by His Majesty’s government of Nepal that the

relevant conditions applicable to the products

manufactured in similar small scale industrial

units in India for relief in the levy of applicable

Excise Duty rates are fulfilled for such a parity,

Government of India will extend parity in the levy

of Additional duty on such Nepalese products

equal to the treatment provided in the levy of

effective Excise Duty on similar Indian products

under the Indian customs and Central Excise

Tariff.

4.The “Additional Duty” rates equal to the

effective Indian Excise duty rates applicable to

similar Indian Products under the Indian

Customs & Central Excise Tariff will continue to

be levied on the imports into India of products

manufactured in the medium and large scale

units in Nepal.

4(i)In regard to “additional duty” collected by

the Government of India in respect of

manufactured articles other than those

manufactured in “small” units: Wherever it is

established that the cost of production of an

articles is higher in Nepal than the cost of

production in a corresponding unit in India, a

sum representing such difference in the cost of

production, but not exceeding 25 percent of the

“additional duty” collected by the Government of

Page 4 4

India, will be paid of His Majesty’s Government of

Nepal provided. His Majesty’s Government of

Nepal have given assistance to the same extent to

the (manufacturers) exporters”.

4.Pursuant to the aforesaid Treaty, the Government of

India issued a Notification No. 37 of 1996 dated 23.7.1996,

in exercise of powers under Section 25 of the Customs Act,

1962 (for short, “the Customs Act”) whereby specified goods

in the notification when imported into India from Nepal

were exempted “from the whole” of the customs duty

leviable under the First Schedule to the Customs Tariff Act,

1975 (for brevity, “the Tariff Act”) subject to the conditions,

if any, specified in the corresponding entry in column (3) of

the Table to the notification. There is no dispute that the

appellant who was importing various dental hygiene

products from Nepal was entitled to avail exemption under

the notification. As the factual matrix would unveil, it was

availing the exemption from the customs duty under the

notification.

5.In the year 1998, Section 3A was introduced in the

Tariff Act. To appreciate the scheme of the Tariff Act, it is

desirable to refer to Section 2 of the Tariff Act, which reads

Page 5 5

as follows:-

“Section 2 : Duties specified in the Schedules

to be levied. The “rates at which duties of

customs shall be levied under the Customs Act,

1962 (52 of 1962), are specified in the First and

Second Schedules.”

Schedule I to the Tariff Act incorporates the duties on

the imports and Schedule II on the exports.

6.Section 3 of the Tariff Act specifies about the levy of

additional duty equal to excise duty. It is as follows:-

“Section 3: Levy of additional duty equal to

excise duty. – (1) Any article which is imported

into India shall, in addition, be liable to a duty

(hereafter in this section referred to as the

Additional duty) equal to the excise duty for the

time being leviable on a like article if produced or

manufactured in India and if such excise duty on

a like article is leviable at any percentage of its

value, the additional duty to which the imported

article shall be so liable shall be calculated at

that percentage of the value of the imported

article.

Provided that in case of any alcoholic liquor

for human consumption imported into India, the

Central Government may, by notification in the

Official Gazette, specify the rate of additional

duty having regard to the excise duty for the time

being leviable on a like alcoholic liquor produced

or manufactured in different States, or, if a like

alcoholic liquor is not produced or manufactured

in any State, then, having regard to the excise

duty which would be leviable for the time being in

different States on the class or description of

alcoholic liquor to which such imported alcoholic

Page 6 6

liquor belongs.”

7.Section 3A which has been introduced in 1998

provides for imposition of special additional duty. The

relevant portion of the said Section reads as follows:-

“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 that until such rate is specified by

the Central Government, the special additional

duty shall be levied and collected at the rate of

eight percent of the value of the article imported

into India.”

8.After the said provision came into force, Notification

No. 18/2000-Customs was issued on 1

st

March, 2000. By

the said notification the Central Government prescribed the

rates of special duty. Relevant part of the notification is

reproduced below:-

“Notification No.18/2000-Customs

In exercise of the powers conferred by

sub-section (1) of section 3A of the Customs

Tariff Act, 1975 (51 of 1975) (hereinafter referred

Page 7 7

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 in the like goods on their sale

of 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. 24, 25, 26, 31 and 32 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.”

9.After the rates were prescribed, the appellant was

asked to pay Special Additional Duty (SAD) and it paid

under protest. Thereafter, Notification No.

124/2000-Customs was issued on 29.09.2000 amending

the Notification No. 37/96-Customs dated 23

rd

July, 1996.

For proper appreciation of the controversy, it is appropriate

to reproduce the contents of the said notification:-

“Notification No. 124/2000-Customs

In exercise of powers conferred sub-section (4) of

Section 3A of the Customs Tariff Act, 1975 (51 of

Page 8 8

1975) read with sub-section (1) of section 25 of

the Customs Act, 1962 (52 of 1962), the Central

Government being satisfied that it is necessary in

the public interest so to do, hereby makes the

following further amendment in the notification of

the Government of India in the Ministry of

Finance (Department of Revenue), No.

37/96-Customs, dated the 23

rd

July,1996,

namely:-

In the said notification, for the words and

figures “from the whole of duty of customs

leviable thereon under the First Schedule to the

Customs Tariff Act, 1975”, the words, figure and

letter “from the whole of the duty of customs

leviable thereon under the First Schedule to the

said Customs Tariff Act, and special additional

duty leviable under section 3A of the said

Customs Tariff Act” shall be substituted.”

10.After the said notification was issued, the appellant

filed an application on 15.01.2001 for refund of Special

Additional Duty (SAD) paid in respect of the imports made

from Nepal during the period 01.03.2000 to 29.09.2000.

The authority concerned rejected the said application

preferred by the appellant. Eventually, the matter came up

in appeal being Appeal No.C-216/02 before the Customs,

Excise & Gold (Control) Appellate Tribunal, Kolkata (for

short, “tribunal”).

11.The stand of the appellant before the tribunal was that

Page 9 9

Notification No. 124/2000 which amended the earlier

Notification No. 37/96 and enlarged the scope of exemption

from basic customs duty by including SAD, should be

considered as retrospective in view of the language

employed in the Treaty entered into between the two

countries. It was urged that all goods manufactured in

Nepal and imported into India would be exempted from

customs duty and equal to the excise duty for the time

being leviable on similar products manufactured in India

and as per the said Treaty, no SAD was leviable and hence,

the notification dated 29.09.2000 was clarificatory in

nature. It was further contended that levy of SAD after the

rates were fixed was contrary to the terms of the Treaty and,

therefore, it was rectified by issuing the Notification No.

124/2000 and, therefore, the appellant was entitled to

refund of the amount which was paid towards SAD. It was

further argued that on the basis of the representations

made by the appellant and others seeking clarification on

the leviability of SAD Notification No. 124/2000 was issued

and hence, it was retrospective in nature.

Page 10 10

12.On behalf of the revenue, resisting the stand put forth

by the assessee, it was submitted that prior to 29.09.2000

SAD was correctly levied in respect of the imports and there

is no justification in treating the notification in question as

retrospective, more so, when the notification has clearly

stated about scope of its applicability.

13.The Member (Judicial) analysing the terms of the

Treaty and the need for issuance of notification opined

that:-

“… If the terms of the Treaty by themselves were

to be treated as law, then there was no need for

the Government of India to even issue the

notification exempting imports from the Basic

Customs Duty. As rightly observed by the original

adjudicating authority that undoubtedly, the

Treaty provides the framework for the bilateral

trade between the two countries; but the actual

import and export is governed by the Customs

and Central Excise Statutes and the provisions of

the Treaty do not, ipso facto, translate into import

and export procedures within India until a

corresponding notification in Customs is issued

to bring the same into effect. We are of the view

that it may be lapse on the part of the

Government of India not to issue the notification

exempting the imports from SAD prior to

29.09.2000, but that lacuna cannot be filled by

the judiciary and it is not our job to discuss as to

what notifications the Government should have

issued or not to further the cause of the Treaty

between the two countries.”

Page 11 11

14.After stating so, the learned Member (Judicial)

explaining the stand pertaining to clarificatory aspect of the

notification observed that the exemption notification could

not be considered to be having retrospective effect and any

exemption provision which enlarges the scope of earlier

notification cannot be considered to be clarificatory. The

learned Member (Judicial) further opined that earlier

notification did not even remotely suggest that exemption

from basic customs duty also included the exemption from

SAD. That apart, it was held by the learned Member

(Judicial) that the earlier notification exempted from basic

custom duty and the latter from the SAD. Being of this

view, the learned Member (Judicial) dismissed the appeal.

15.The Member (Technical) expressed his dissent and

opined that once a Treaty had been entered by the Central

Government, the issue of notification under the provisions

of the Customs Act, 1962 is a ministerial act. According to

the learned Member (Technical), the notification dated

29.09.2000 was a belated response to effectuate the terms

Page 12 12

of the Treaty. Elaborating further, the learned Member

(Technical) observed that if it was a simplicitor amendment

to exempt or reduce the rates on certain specified imports,

then an amendment would have been required to be made

to the Notification No. 18/2000-CUS dated 01.03.2000 and

not to Notification No. 37/96 and that having been not

done, it can be safely concluded that there was a belated

reference and the real intention was to give retrospectivity

to the notification.

16.It is apt to reproduce the observations made by the

learned Member (Technical):-

“… A Treaty entered into with a Sovereign State

cannot be reneged, merely for want of an act of

ministerial lapse or delay, the Treaties have to be

given effect to. When such lapses are cured,

subsequently by amendments, such amendment

notifications have to be retrospective in

operation. …”

17.To come to such a conclusion, he placed reliance on

UOI v. Yokasawa Blue Smart

1

and Nestle India Ltd. v.

State of Punjab

2

.

1

2001 (129) ELT 598 (KAR)

2

1999 (13) PHT 132 (P&H)

Page 13 13

18.After so stating, the learned Member (Technical)

opined that the matter should be referred to a larger Bench

for a decision whether amendment in such cases could be

read retrospectively or not. As there was difference of

opinion, the matter was placed before the third Member

who was a Member (Technical). He referred to the point of

difference which is to the following effect:-

“Whether the appeal is required to be rejected as

held by Member (Judicial) or the matter needs to

be referred to the Larger Bench as held by

Member (Technical).”

19.The third Member referred to the views of the Member

(Judicial) and Member (Technical) in extenso; noted the

submissions advanced by the learned counsel for the

parties; scanned the various clauses of the Treaty; analysed

the language employed in the notification dated 29.09.2000;

distinguished the authorities relied upon by the Member

(Technical); declined to accept the submission pertaining to

doctrine of promissory estoppel that was canvassed before

him and eventually, came to hold that both the notifications

are independent and both would be applicable from the date

they had been issued and they do not remotely suggest any

Page 14 14

retrospectivity. He further opined that there was no

ambiguity in the earlier notification or in the subsequent

Notification No.124/2000 and both the notifications operate

in special fields – one granted exemption from basic

customs duty and the other SAD of customs. Being of this

view, he agreed with the Member (Judicial) and ultimately,

the appeal stood dismissed.

20.We have heard Shri S. Ganesh, learned senior counsel

for the appellant in Civil Appeal No. 8593 of 2003 and Shri

A.K. Panda, learned senior counsel appearing for the

respondents.

21.To appreciate the controversy in proper perspective, it

is appropriate to understand the nature of the Treaty, the

protocol appended thereto, the benefits extended

thereunder, the impact of the two notifications and the

nature of duty that was exempted.

22.Article 3 states that the contracting parties shall

accord unconditionally to each other treatment not less

favourable than what was accorded to a third country in

Page 15 15

respect of the customs duties and other charges relating to

import and export including quantitative restrictions.

Article 4 relates to reciprocal arrangement between the two

contracting parties to exempt basic customs duty and

quantitative restrictions on import as would be mutually

agreed. Having referred to Articles 3 and 4, it is necessary

to focus on Article 5. The said Article begins with

non-obstante expression and would apply notwithstanding

to Article 3. It is non-reciprocal. This Article states that the

Government of India had agreed to promote industrial

development of Nepal and further agreed to grant special

favourable treatment to imports into India of industrial

products manufactured in Nepal in respect of customs duty

and quantitative restrictions normally applicable to them.

The words used in Article 5 are “customs duties”. The

non-reciprocal grant would be subject to exceptions as may

be made after consultation with the Government of Nepal.

As is evident, the Treaty was to be operative for a period of

five years from 5

th

December, 2001.

23.We have already reproduced certain paragraphs from

the Protocol. To have the correct perspective it is required

Page 16 16

to be quoted in entirety. It reads as follows:-

“1. The Government of India will provide access

to the Indian market free of customs duties and

the quantitative restrictions for all articles

manufactured in Nepal.

2. (i) Import of articles in accordance with the

para “I” above shall be allowed by the Indian

customs authorities on the basis of a certificate

of Origin to be issued by the agency designated

by His Majesty’s Government of Nepal in the

format prescribed at Annexure ‘B’ for each

consignment of articles exported from Nepal to

India. However, this facility shall not be

available for the articles listed at Annexure ‘C’.

(ii) In the event of the above facility leading to a

surge in the import generally or in the import of

any particular article, the two Governments

shall enter into consultation with a view to

taking appropriate measure.

(iii) In the case of other articles made in Nepal

which do not fulfill the conditions required by

the Certificate of Origin prescribed at Annexure

‘B’ including those Articles listed at Annexure

‘C’ for the purpose of Preferential treatment into

India, the Government of India will provide

normal access to the Indian market consistent

with its MFN treatment.

3. On the basis of a Certificate issued, for each

consignment of products manufactured in the

small scale units in Nepal, by His Majesty’s

Government of Nepal, or by an agency

designated by His Majesty’s Government of

Nepal that the relevant conditions applicable to

the products manufactured in similar small

scale industrial units in India for relief in the

levy of applicable Excise Duty rates are fulfilled

Page 17 17

for such a parity, Government of India will

extend parity in the levy of Additional duty on

such Nepalese products equal to the treatment

provided in the levy of effective Excise Duty on

similar Indian products under the Indian

customs and Central Excise Tariff.

4. The “Additional Duty” rates equal to the

effective Indian Excise duty rates applicable to

similar Indian Products under the Indian

Customs & Central Excise Tariff will continue

to be levied on the imports into India of product

manufactured in the medium and large scale

units in Nepal.

4(i) In regard to “additional duty” collected by

the Government of India in respect of

manufactured articles other than those

manufactured in “small” units: Wherever it is

established that the cost of production of an

articles is higher in Nepal than the cost of

production in a corresponding unit in India, a

sum representing such difference in the cost of

production, but not exceeding 25 percent of the

“additional duty” collected by the Government

of India, will be paid of His Majesty’s

Government of Nepal provided. His Majesty’s

Government of Nepal have given assistance to

the same extent to the (manufacturers)

exporters.

5. Export of consignments from Nepal

accompanied by the Certificate of Origin will

normally not be subjected to any

detention/delays at the Indian Customs border,

border check posts and other places enroute.

In case any need for clarification arises, this

will be obtained expeditiously, by the Indian

border customs authorities from the Indian and

Nepalese authorities, as the case may be.

Page 18 18

6.Where for social and economic reasons,

the import of an item into India is permitted

only through public sector agencies or where

the import of an item is prohibited under the

Indian Trade control regulations, the

Government of India will consider any request

of His Majesty’s Government of Nepal for

relaxation and will permit the import of such an

item from Nepal in such a manner as may be

found to be suitable.

7. For the purpose of calculation of import

duties customs valuation procedures, as

prescribed under the prevailing custom law,

will be followed.”

24.No doubt paragraph 1 states that the Government of

India would provide access to Indian market free from

customs duties and quantitative restrictions of all articles

manufactured in Nepal, but this would be subject to other

paragraphs, for paragraph 2 would indicate that the access

to Indian market free from customs duty was subject to

conditionalities and also restrictions. Paragraph 2

stipulates, the requirement of certificate of origin which

should be as per the proforma prescribed by Annexure B

and would not be applicable to Articles listed in Annexure –

C for which normal access consistent with most favourable

nations’ Treaty would be provided. Clause 3 deals with

Page 19 19

products manufactured by small-scale units in Nepal for

which certificate would be issued by the Government of

Nepal or agency designated by them. For the said imported

products, “reliefs” in the levy of excise duty applicable to

products manufactured by similar small-scale industrial

units in India, while fulfilled by the Nepalese small scale

manufacture would apply. This clause, as we notice, gave

parity and equal treatment to goods/products

manufactured by small scale industrial units in Nepal as

was applicable to small-scale industrial units in India, who

had been granted relief in relation to applicable to Indian

customs and Central Excise Tariff.

25.It is pertinent to note here that the relief agreed related

to duty chargeable under the head of “additional duty”.

Clause 4 dealt with “additional duty applicable” on products

manufactured by medium or large-scale units in Nepal in

which case they were liable to pay additional duty equal to

the effective Indian excise duty rates applicable to similar

Indian products. A reading of paragraphs 1, 3 and 4 would

indicate that a distinction was made between the “basic

Page 20 20

customs duty” and “additional duty” leviable under the

Customs Act and Excise Act on import. “Additional duty”

had reference to excise duty payable on the said products

when manufactured in India.

26.The aforesaid clauses oblige us to read the relevant

portion of the first exemption Notification No. 37/96-COS

dated 23

rd

July, 1996. It is as under:-

“Notification No. 37/96-Customs

In exercise of the powers conferred by sub-section

(1) of Section 25 of the Customs Act, 1962 (52 of

1962), the Central Government, being satisfied

that it is necessary in the public interest so to do,

hereby exempts goods specified in column (2) of

the Table below and falling within the First

Schedule to the Customs Tariff Act, 1975 (51 of

1975), when imported into India from Nepal, from

the whole of the duty of customs leviable thereon

under the First Schedule to the Customs Tariff

Act, 1975, subject to the conditions, if any,

specified in the corresponding entry in column (3)

of the said Table”.

The table contains description of goods and

enumerates certain conditions. What we are concerned with

is the nature of exemption. As is noticeable, what was

exempted under the notification were the goods specified in

column 2 in the First Schedule to the Tariff Act from the

Page 21 21

customs duty leviable thereon under the First Schedule to

the Tariff Act. It was also subject to the conditions specified

therein.

27. It is apt to note here thatSection 3A of the Tariff Act

was enacted in the year 1998. This was a new provision

and had stipulated that in addition to the customs duty and

additional customs duty, special additional customs duty

would be payable on the goods imported into India, having

regard to the maximum sales-tax, local tax or other charges

for the time being leviable on the like article on the sale and

purchase in India. The proviso stipulated that until such

rates were specified by the Central Government, special

additional duty shall be leviable and collected @ 8% on the

imported product. In terms of said proviso, the Notification

No.18/2000-Customs was issued on 1

st

March, 2000 and

the same has been quoted above.

28.It is vivid that the protocol to the Treaty of Trade had

made a distinction between the “basic customs duty” and

“additional customs duty”. The basic customs duty was

granted exemption. However, in respect of “additional duty”

Page 22 22

provisions of paragraph 3 or 4 were applicable. But, it is

significant that the said protocol did not deal with special

additional duty. Thus, per se and ex facie it is not possible

to accept the position that “special additional duty” was

itself exempted under the protocol. Paragraph 1 would not

cover the “special additional duty”, which was specific and

limited as was clear from the exemption notification dated

23

rd

July, 1996. It was restricted to the goods specified in

column 2 of the First Schedule from the customs duty

leviable under the First Schedule to the Tariff Act. In fact,

special additional duty was not leviable and enforced when

the Treaty of Trade was signed and the protocol was

executed. Under these circumstances, it is not possible to

accept the position that Clause 1 of the protocol had

included and had embraced the “special additional duty”,

which was introduced in the form of Section 3A enacted in

1998.

29.The exemption which was granted by notification dated

29

th

September, 2000 was, therefore, in the nature of

specific and new exemption from payment of special

Page 23 23

additional duty, which was otherwise payable in view of the

introduction of Section 3A to the Tariff Act. It is difficult to

appreciate that the exemption granted vide notification

dated 20

th

September, 2000 to special additional duty was

clarificatory or to give effect to the existing protocol. We

think so as protocol appended to the Treaty could not have

conceived of future levy by way of proposition. In any case,

factually it does not. Therefore, the notification of 20

th

September, 2000 conferred a new benefit which was not

earlier stipulated or the subject matter of protocol.

30.We would now refer to the decision of the High Court of

Patna in Kaur Sain Traders v. Union of India

3

. The said

decision rightly observes and highlights the distinction

between the basic customs duty i.e. the import duty, the

additional duty equal to the excise duty, and special

additional duty which has reference to sales-tax, local-tax

and other charges leviable on the articles of sale and

purchase in India. The said distinction is clear from

Sections 2, 3 and 3A of the Tariff Act. Section 12 of the

Customs Act, no doubt a charging Section, has to be read

3

2005 (2) PLJR 744

Page 24 24

along with the Tariff Act. In fact, the Tariff Act also provides

for further duties in the form of safeguarding duty under

Section 8B, countervailing duty under Section 9 and

anti-dumping duty under Section 9A. Section 25 of the

Customs Act stipulates that the Government may exempt

certain goods from all duties of customs under Section 12 of

the Customs Act or Sections 3 or 3A of the Tariff Act. It was

observed that incidence of duty in the two Acts, i.e., the

Customs Act and the Tariff Act are independent to each

other and one duty can be levied without the other.

Decision in Associated Cement Companies Limited v.

Commissioner

4

, was distinguished. The ratio and finding

in Associated Cement Companies Limited (supra) has to

be read in the context of the issue involved in the said case

as drawing, designs of those goods were not chargeable to

duty and were designated as free under the Tariff Act. In

Hyderabad Industries Limited v. Union of India

5

, the

difference in import under the Customs Act and the Tariff

Act was noticed with reference to duty of customs

chargeable under Section 12 of the Customs Act, the

4

2001 (128) ELT 21 SC

5

1999 (108) ELT 321 SC

Page 25 25

additional duty chargeable under Section 3(1) of the Tariff

Act and additional levied on raw-materials, components and

ingredients under Section 3(3) of the Tariff Act. It was

elucidated that the two Acts are independent statutes and

merely because instance of tax under Section 3 of the Tariff

Act arises on import of articles in India, it does not mean

that the Tariff Act cannot provide for charging of duty which

was/is independent of customs duty leviable under the

Customs Act. The Patna High Court has appropriately

referred and relied on the view taken by the Bombay High

Court in Apas Private Limited v. Union of India

6

.

31.At this stage, we would also deal with the judgments

relied by the respondents and the circular

No.112/2003.COS.31/12/2003 dated 31.03.2003. This

circular was issued pursuant to tariff conference of the

Chief Commissioners of Customs and the discussions held.

Divergence of practice on implementation of exemption

under Central Excise Notification No. 6/2002-CE dated

01.03.2002 was noticed. Pertinently, the exemption was

granted to a manufacturer of copper goods from

6

1985 (22) ELT 644 Bombay

Page 26 26

raw-material, other than the copper-ore or copper

concentrate. The exemption was restricted and applicable

upon verification that the manufacture was from

raw-material, other than the copper-ore or copper

concentrate. The doubt had arisen whether exemption

should be granted when the manufacturer was located in

Nepal. In the said context the Board had accepted the

recommendations of the conference that in the light of the

Indo-Nepal Treaty, verification could be undertaken by the

Indian customs in Nepal and accordingly there was no

reason not to extend the benefit in case of imports made

from Nepal under Notification No.6/2002 dated 1

st

March,

2002.

32.Decisions in the case of W.P.I.L. Limited v.

Commissioner, Central Excise

7

and Ralson India

Limited v. Commissioner of Central Excise,

Chandigarh

8

do not assist the appellant. In the said

authorities, the contention of the assessee was accepted on

the ground that both power driven pumps as well as parts

of power driven pump had for long remained exempt.

7

2005 (181) ELT 259 SC

8

2015 (319) ELT 234 SC

Page 27 27

However, when earlier notifications were rescinded in order

to consolidate and reduce the number of notifications and

then the new notification was issued on 1

st

March, 1994

then by mistake and erroneously parts of power driven

pump were not included, whereas manufacture of power

driven pumps was included. In this context, it was held

that the subsequent notification including parts of power

driven pump was merely clarificatory and when clarificatory

notifications are issued, they have retrospective effect. The

instant case is not suggestive of any mistake or error or

even inadvertence. The plea that there was delay in issue of

notification, exempting special additional duty is not

acceptable. It is because, what was earlier exempted under

the protocol was basic customs duty and also additional

customs duty equal to the duty of excise in some cases and

on satisfying the conditions stipulated and it did not deal

and relate to special additional duty chargeable under

Section 3A of the Tariff Act, which had introduced a new

duty altogether. Therefore, we repel the submission that the

exemption notification issued on 29

th

September, 2000 is

clarificatory. It was intended to be applied prospectively.

Page 28 28

That apart, it cannot be also said the issue of notification

was a formal ministerial act which got delayed for

administrative reasons. It was a conscious act and a

deliberate decision which came into existence after due

deliberation when it was decided to grant exemption under

Section 3A of the Tariff Act.

33.In view of our foregoing analysis, we find no merit in

the appeals preferred by the assessee and accordingly

dismiss them without any order as to costs.

…………………………..J.

[Dipak Misra]

……………………….…J.

[Prafulla C. Pant]

New Delhi

August 24, 2016.