The court ruled that taxation exemption notifications must be interpreted strictly according to their wording, and extra conditions cannot be imposed unilaterally by circulars without legislative authority.

JUDGMENT : 

BHARGAV D. KARIA, J.

1. Heard learned Senior Advocate Mr. Mihir Joshi with learned advocate Mr. Kunal Nanavati with learned advocate Mr.Kaustabh Shrivastava with learned advocate Mr. Vishal Agrawal for Nanavati Associates for the petitioner and learned advocate Mr. Utkarsh Sharma for learned advocate Mr. Ankit Shah for the respondents.

2. By this petition under Article 226 of the Constitution of India, the petitioners have challenged the legality and validity of the show cause notice dated 27.06.2013 issued by respondent no.2 – Additional Director General, Directorate of Revenue Intelligence, Ahmedabad.

3. The show cause notice is issued calling upon the petitioners to show cause as to why the claim of concessional rate of duty in terms of Serial No.57 of the Customs Notification No.12/2012 dated 17.03.2012 which is equivalent to Serial No.33A of the erstwhile Customs Notification No.21/2002 dated 01.03.2002 on the import of goods namely Crude Palm Kernel Oil edible grade covered under the Bills of Entry as per Annexure-C and Annexure-D to the show cause notice should not be rejected. The petitioners were also called upon to show cause as to why the Bills of Entry should not be assessed on the tariff rate of 100% Customs duty corresponding to respective entry being CTH 15132110 along with additional duty of customs leviable under sub-section (5) of section 3 of the Customs Tariff Act,1985 (SAD) which was claimed as exempt vide Notification No. 20/2006-CUS dated 01.03.2006 and Notification No.12/2012- CUS dated 17.03.2012 in respect of the import of the goods covered under the Bills of Entry.

4. This Court [Coram: Hon’ble Ms. Justice Harsha Devani (As Her Ladyship was then) and Hon’ble Ms. Justice Sonia Gokani (As Her Ladyship was then)] by order dated 18.09.2014 has admitted this petition while deciding the issue of jurisdiction to entertain this petition, wherein it is observed as under:

“6. Having regard to the fact that the very maintainability of the petition has been called in question on behalf of the respondents, at the outset it would be necessary to deal with the said issue. For this purpose it would be necessary to peruse the show cause notice issued by the respondents, which prima facie reveals that the same is based upon the Circular No. 40/2001Cus., dated 13th July 2001, inasmuch as, the record of the case indicates that it is only the said circular which provides for giving the benefit of concessional rate of duty on edible oil so long as the oil is imported for edible purpose. The learned counsel for the respondent is not in a position to point out any other provision in law or any notification of the Central Government, which provides that the benefit of the exemption notification in question would be based upon the end use of the goods imported.

7. A perusal of the Chapter 15 of the Tariff Act reveals that the Palm Kernel Oil falls under Tariff Item No. 1513 21 10. The first supplementary note to Chapter 15 of the Tariff Act, reads thus: “In this Chapter, “edible grade”, in respect of a goods (ie., edible oil) specified in Appendix B to the Prevention of Food Adulteration Rules, 1955, means the standard of quality specified for such goods in that Appendix”. Thus, for qualifying for the purpose of being considered to be of edible grade, the goods specified in Appendix B of the Prevention of Food Adulteration Rules, have to meet with the standard of quality specified for such goods in the Appendix. Palm Kernel Oil finds place at A.17.21 of Appendix B to the said rules. The Prevention of Food Adulteration A