JINDAL VIJAYANAGAR STEEL LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) PETITIONERS are challenging Annexure-A a notification dated 1-3-2001 as unconstitutional in terms of Articles 14 and 19 of he Constitution of India. They are also seeking for a writ of certiorari to quash the order dated 6-1-2003 issued by the Deputy Secretary, Department of Revenue. They are also seeking for refund of Rs. 13,07,07,730/- together with interest in terms of Annexure-K.

(2.) BRIEF facts of the case are as under; the first petitioner is a company engaged in the business of manufacture of Hot Rolled Coils and Plates. Second Petitioner is the General Manager and shareholder of the Company. Respondents 1 and 2 are the Union of India and Department of Revenue. Respondents 3 and 4 are the Customs Officials. Respondents issued a notification dated 26-4-2001 in terms of Sub-section (1) of Section 25 of the Customs Act 1962 which amended the notification dated 1-3-2001 by inserting sl. No. 64-A in the matter of customs duty payable on Metallurgical Coke when imported by manufacturers of pig iron or steel. This notification seeks to exclude from the ambit of he notification manufacturers of pig iron or steel using Corex Furnace and the exclusion in terms of the notification according to the petitioner is arbitrary and not based on any intelligible differentia and is discriminatory and is in violation of Articles 14 and 19 (1) (g) of the Constitution of India. 2. 1 Petitioner-company has set up an integrated steel plant of capacity 1. 57 MTP at Toranagallu in Bellary District. It is not disputed that the petitioners adopted the Corex Basic Oxygen Furnace Continuous Casting Process Hot Strip Mills Route. Apart from this, the petitioners have also set up a Pellet Plant of Capacity 3 MTPA in the premises for manufacturing iron oxide pellets which is an essential input for pig iron making in the Corex Furnace. Petitioners are adopting a state-of-the-art technology for iron making i. e. , Corex Furnace which is imported. Such a plant has been set up for the first time in India keeping in view the imports and benefits for production of pig iron. It has several advantages like, it is possible to use non-cooking coal, energy efficient, better and faster control over melt quality, environment friendly, lower cost of production etc. , Department of Metallurgy, Institute of Science, Bangalore, has opined that blast furnace and Corex Furnace involve and same processes. A certificate issued by the Department of Metallurgy, Institute of Science, Bangalore, is at Annexure-B. Petitioner made a representation to the Indian Institute of Science for their comments on the similarity of the two processes. The Institute by its letter dated 21-1-2003 further certified that the technology fall in the same class. Annexure-B1 is the certificate. Mecon Ltd,. , a Government of India enterprise also has issued a certificate opining that there is no basic difference between Corex Furnace and the blast furnace technology. Annexure-C is the certificate. Petitioner again made a representation to Mecon Ltd. , for their comments on the similarity of the two process. Mecon Ltd. , clarified that both the technologies fall in the same class. Annexure-C1 is the said clarification dated. 23-2-2003. Metallurgical Coke is an essential input used in he manufacturers of pig iron or steel which in turn is used in manufacture of Hot Rolled Coils and Plates. Metallurgical Coke is regularly imported by the Company and at present the company has pending orders for import of about 60,000mt. Respondent No. 1 issued a notification Annexure-A in relation to the basic customs duty payable on the import of Metcoke into India whereby the Company was compelled to pay the basic customs duty at 15% ad valorem on the said goods under heading 27. 04 of CTA in respect of consignments cleared between the period 26-4-2001 to 28-02-2002 and it was denied the benefit of the notification. Petitioner made several representation to the concerned authorities, requesting them to consider making recommendations to the Ministry of Finance for extending of the benefit of the concessional rate of customs duty under the said notification. Petitioners state that while announcing the changes vide circular bearing No. B-9/4/2001-TRU dated 25-4-2001 the Government of India stated that some of the changes made by the said notification provided for exemption on an end use basis. Petitioner as filed Annexure-E, a circular along with extract of the speech of the Honble Union Finance Minister made on 25-4-2001 wherein the Honble Minister has stated that the customs duty on Metcoke is proposed to be reduced to 5% on actual user basis to steel plants to help improve their viability. According to petitioner, the actual user, steel plant, includes blast furnace as well as Corex Furnace. Notification dated 19-5-2000 was issued by the first respondent for Anti Dumping Duty was sought to be levied on the goods imported from China. The notification however, granted exemption only to manufacturers of pig iron or steel using blast furnace. Petitioner is challenging the discrimination in the matter of exemption. The matter is now pending in Supreme Court. The Government of India amended the notification on 19-5-2000 and exempted Metcoke from Anti Dumping Duty if imported by manufactures of pig iron or steel using blast furnace. Writ petition was filed in this Court. This court granted interim reliefs to the petitioners permitting the company to clear the said goods on the payment of admitted duty and on the payment of 50% of disputed duty in case and furnishing a Bank Guarantee for the remaining amount. The goods were imported in terms of the interim orders of this Court. Annexure-K is the interim order. Respondents thereafter issued a notification dated 1-3-2002 whereby the basic Customs Duty payable by the petitioner was restricted to 5% advalorem instead of existing 15% advalorem thus bringing uniformity in the basic customs duty to all manufacturers of pig iron or steel including the petitioner. Petitioner imported eleven consignments between 26-4-2001 and 1-3-2002 of metcoke. Petitioner paid the additional amount of customs duty in terms of the interim order of this Court. This Court thereafter remanded the matter by its final order and asked the petitioner to make representation to consider the plea of the petitioner and this Court further directed the respondents to find out as to whether the petitioners technology is same or similar to that of manufacture of pig iron and steel using blast furnace. Order of this Court is filed at Annexure-L. Thereafter a detailed representation was filed in terms of Annexure-N. The same has been rejected in terms of the endorsement dated 6-1-2003 Annexure-P. Petitioner aggrieved by Annexure-P is before me in this petition.

(3.) NOTICE was issued and respondents have entered appearance. The customs department justify their action. They deny the averments made by the petitioner. They say that the Central Government by way of conscious policy decision made a reasonable distinction based on an explicit criterion, between the different manufacturers of pig iron on steel using different technologies for the purpose of exemption. There is no discrimination in the notification. They justify their notification. They also say that the certificates are not disputed. They say that there cannot be any opinion on tax policy. They also say that in terms of the orders of this Court, the matter was considered and they further say that blast furnace technology and corex technology are not similar. The first and second respondent did not file any separate objection statement. They have filed a memo on 4-9-2003 and in the memo it is stated that the objection statement filed by the third respondent is with the co-ordination of the first and second respondents and as such the first and second respondents also adapt the objection statement filed by the third respondent. The matter is heard at great length.