Back
1983 Supreme(Mad) 264
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE PADMANABHAN
Indian Leaf Tobacco Development Company Limited and I.T.C. Limited - Appellant
Versus
U.O.I. and Others - Respondent
Case No : W.P. Nos. 3025 and 3026 of 1978
Decided On : 30 April 1983
The Central Government has the power to grant exemption from customs duty under Section 25(2) of the Customs Act, 1962, even after the levy of duty and the dismissal of the assessee's appeal and revision petition, and such exemption order cannot be reviewed by the Customs authorities.
Headnote:
CUSTOMS ACT, 1962 - SECTION 25(2) - EXEMPTION FROM CUSTOMS DUTY - CENTRAL GOVERNMENT'S POWER TO GRANT EXEMPTION - SCOPE AND LIMITATIONS - REVIEW OF EXEMPTION ORDER - JURISDICTION OF CUSTOMS AUTHORITIES - INTERPRETATION OF SECTION 20 OF THE CUSTOMS ACT, 1962.
Fact of the Case:
The petitioners, Indian Leaf Tobacco Development Co. Ltd., re-imported 1210 cases of unmanufactured tobacco, which was earlier shipped under the Central Excise Bond to the U.K., as the overseas buyers had rejected the cases. On re-import, the goods were passed free of duty under Section 20 of the Customs Act, 1962. Subsequently, the petitioners were issued a show cause notice demanding duty on the re-imported tobacco, claiming that customs duty equivalent to Central Excise duty had not been collected. The petitioners challenged the show cause notice, arguing that the Government of India had granted them exemption from duty under Section 25(2) of the Customs Act, 1962.
Finding of the Court:
The court held that the Government of India had the power to grant exemption from customs duty under Section 25(2) of the Customs Act, 1962, even after the levy of duty and the dismissal of the petitioners' appeal and revision petition. The court found that the order of exemption was passed by the Government of India after taking into account all the relevant facts and circumstances, and that it was just and equitable in the circumstances of the case. The court also held that the Customs authorities had no jurisdiction to review the exemption order passed by the Government of India.
Issues: 1. Whether the Government of India had the power to grant exemption from customs duty under Section 25(2) of the Customs Act, 1962, after the levy of duty and the dismissal of the petitioners' appeal and revision petition. 2. Whether the order of exemption was passed by the Government of India after taking into account all the relevant facts and circumstances. 3. Whether the order of exemption was just and equitable in the circumstances of the case. 4. Whether the Customs authorities had jurisdiction to review the exemption order passed by the Government of India.
Ratio Decidendi: 1. Section 25(2) of the Customs Act, 1962, does not put any restriction on the Central Government as to the time at which it should grant exemption. Exemption could be granted under circumstances of an exceptional nature even before levy is made or after the levy, but before the recovery of the amount. 2. The order of exemption was passed by the Government of India after taking into account all the relevant facts and circumstances, including the fact that the petitioners had paid excise duty on the tobacco and that the entire quantity of tobacco was used for the manufacture of cigarettes. 3. The order of exemption was just and equitable in the circumstances of the case, as it would have caused great hardship to the petitioners if they had been asked to pay customs duty at the rate of Rs. 40 per kg. 4. The Customs authorities had no jurisdiction to review the exemption order passed by the Government of India, as the Act or the Rules made thereunder did not confer any power upon the first respondent to review the order passed under Section 25(2).
Final Decision: The court allowed the petitioners' writ petitions and quashed the show cause notice issued by the Customs authorities.
The petitioners in W.P. Nos. 3025 and 3026 of 1978, are Indian Leaf Tobacco Development Co. Ltd. The prayer in W.P. No. 3026 of 1978 is for the issue of awrit of certiorarito quash the show cause notice dated nil issued by the second respondent, Collector of Customs, Madras, and the prayer in W.P. 3025 of 1978 is for the issue of awrit of prohibitionrestraining the respondents from taking any steps pursuant to the said show cause notice.
2.The facts leading to the filing of W.P. 3025 and 3026 of 1978 may be briefly set out as follows : The petitioners are engaged, among others, in the manufacture and/or curing of tobacco in India. On 31st August, 1970, the petitioners exported to the Imperial Tobacco Group Ltd., Bristol, J.K. 3677 cases of Flue Cured Virginia Tobacco from Kakinada Port per 's.s. Clan Graham'. The export was made in bond under Chapter IX of the Central Excise Rules, 1944. Consequently, no excise duty was payable on the same. However, the consignee rejected in all 1210 cases as being unsuitable for the manufacture of cigarettes in the United Kingdom. Therefore, they were re-shipped to India, by 's.s. Jala Vishnu'. On 6th July, 1972, the petitioners addressed the Collector of Customs, Madras, explaining the circumstances under which the 1210 cases of the said tobacco were being re-imported. It was further stated that on clearance through Customs the 1210 cases of the said tobacco would be placed in Excise Bond in the petitioner's Excise Bonded Warehouse at Madras harbour. Thereafter, they were despatched to Bangalore by road under a bond issued under Chapter VII of the Central Excise Rules, 1944, to be warehoused at Bangalore in the Excise Warehouse of I.T.C. The tobacco arrived in Madras Port on 31st July, 1972. On 11th August, 1972, the petitioners requested the Assistant Collector of Customs to release the 1210 cases. On 18th August, 1972, competent officer allowed the cases to be cleared from the transit shed to the Excise Bonded Warehouse on payment of Rs. 2239.10, as the amount of drawback of Central Excise duty on the packing materials. Thereafter, the 1210 cases of tobacco were transported to Bangalore and rewarehoused there at the excise Bonded Warehouse of I.T.C. From time to time, the petitioners cleared the said tobacco and used it in the manufacture of cigarettes only. At the time of clearance, the petitioners paid the excise duty at the rate of Rs. 5 per kilogram under Item No 4 of the First Schedule to the Excise Act, which was the proper duty payable thereon. The petitioners paid in all a sam of Rs. 11, 40, 000, towards the Central Excise duty. ON 1-10-1972, the Assistant Collector of Customs demanded a sum of Rs. 1, 03, 24, 723.50 as duty allegedly short-levied on the 1210 cases of tobacco. This was on the basis that on re-importation, customs duty equivalent to Central Excise duty had not been collected. On 18th October, 1972, the petitioners informed the authorities that the 1210 cases of tobacco were warehoused at Bangalore and the appropriate excise duty payable on the said tobacco would be collected by the Excise authorities as and when the same was consumed. For nearly 2-1/2 years thereafter, nothing happened. On 7th May, 1975 the Assistant Collector of Customs, Madras, determined that a sum of Rs. 90, 76, 680 was payable by the petitioners as the duty equivalent to Central Excise duty which ought to have been collected at the time of re-importation. The petitioners preferred an appeal on 4-8-1975. The appeal was dismissed. Against the Appellate Collector's order, the petitioners preferred a revision petition before the revisional authority. The revision was also dismissed. It may be mentioned that the demand of Rs. 90, 76, 680 was calculated at the rate of Rs. 40 per kilogram as being the duty leviable on the tobacco as equivalent to the excise duty payable on the same. Subsequently, the petitioners made a representation to the first respondent, Union of India, seeking exemption
