KIRLOSKAR CUMMINS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The question which arises for determination in this petition relates to the proper construction of the exemption Notification No. 82-Cus., dated August 6, 1960 and the answer to the question would depend upon the determination as to whether the "countervailing duty" forms part of the customs duty.

(2.) A few facts which have given rise to this litigation and which are not in dispute are as follows :- The petitioners carry on business as manufacturers of diesel engines and for the aforesaid business, the petitioners utilise certain imported components. The components imported by the petitioners were liable to customs duty and such components attracted the levy under the provisions of the Customs Act read with the Indian Tariff Act at the rate of 50% ad valorem. The duty for import of complete diesel engines under the provisions of the Customs Act read with Indian Tariff Act was at the rate of 27 1/2% ad valorem and duty under Section 2A of the Indian Tariff Act 5 1/2% of the ad valorem. The duty under Section 2A of the Indian Tariff Act is known as countervailing duty. The Government of India, in exercise of the powers conferred by Section 23 of the Sea Customs Act, 1878, issued the exemption Notification on August 6, 1960 whereby component parts of machinery when imported were exempted from so much of the Customs duty leviable thereon under the Indian Tariff Act as is in excess of the rate applicable under the Indian Tariff Act to the machinery when imported complete.

(3.) The petitioners have imported the components of the diesel engines between the period commencing from May, 1965 to December, 1965. The Customs authorities at Bombay granted advantage of the exemption Notification to the imports of the petitioners but took the view that expression "Customs Duty" used in the Notification meant not merely the customs duty referred to in Section 2 of the Indian Tariff Act but also the countervailing or additional duty referred to in Section 2A of the Indian Tariff Act. The petitioners were assessed accordingly at the rate of 33% ad valorem. The petitioners applied for refund of excess customs duty on diverse dates and the total refund claimed was Rs. 4,15,679.19. The claim for refund made by the petitioners was turned down by the Assistant Collector of Customs by various orders. The petitioners carried appeal but the same was dismissed by the Appellate Collector of Customs and the revisions preferred to the Central Government also met with the same fate. The petitioners are challenging the legality and validity of those orders in this petition filed under Article 226 of the Constitution of India.