INDIAN DRUGS PHARMACEUTICALS LTD Vs. GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE AND INSURANCE NEW DELHI

JUDGEMENT

(1.) The dispute raised in this writ petition for resolution is vividly P. vexed one. The question is whether Sodium is a "Non-ferrous Virgin metal" or a 'chemical' for the purpose of assessment to duty under the Indian Customs and Central Excise Tariff (hereinafterreferred to as ICT).

(2.) The facts are not in dispute and lie in a short compass. Tne petitioner, M/s. Indian Drugs Pharmaceuticals Ltd., is a public sector undertaking. It manufactures pharmaceutical goods arid surgical instruments. It imparts various raw materials for use in its business. One of the items imported is sodium.

(3.) The petitioner imported r36 drums of sodium metal under cover of Sill of Entry No. D. 189 dated 4th January, 1971. The Customs Authorities demanded payment of 60% of its value as duty under item 28 ICT. The petitioner paid the duty and later claimed refund of the excess duty collected on the ground that sodium is assessable to duty at 271/2% under item 70 (7) IGT and not at 60% under item 28 ICT. The Assistant Collector of Customs for Appmisements, Madras, rejected the the claim for refund made by the petitioner by Ms order dated 9th September, 1971 holding that Sodium although a metal, it was being used by the petitioner as a chemical raw material and assessment under Item 28 ICT was, therefore, in order. The petitioner preferred an appeal to the Appellate Collector of Customs, Madras. The Appellate Collector called for a report from the Chemical Examiner as the matter involved was a technical one. After obtaining the report, the Appellate Collector by his order dated 19th April, 1973 held that sodium imported by the petitioner fell under item 70 (7) ICT and not under item 28 ICT and directed refund of the excess duty paid by the petitioner. The Government of India, Ministry of Finance, topkup thematterfor review suo motu in exercise of its powers conferred under section i3i (3) of the Customs Act, 1962. A show cause notice was issued to the petitioner calling upon to show cause why the order of the Appellate Collector of Customs should not be annulled and the original order of the Assistant Collector of Customs restored since it appeared to the Government that sodium merits classification as a chemical under item 28 ICT and not under Item 70 (7) ICT as decided and assessed by the Appellate Collector. The petitioner in its reply contended that Sodium being a non-ferrous virgin metal, the classification under Item 70 (7) ICT would be justified and that the end-use cannot be a criterion for classification on a consideration of the explanation, the Joint-Secretary to the Government of India, Ministry of Finance, annulled the order of the Appellate Collector by his order, dated 19th December, 1973 holding that "although in Chemistry sodium is a metr.l, from the commercial point of view, sodium is a chemical ". Therefore, it was classified as a chemical under item 26 ICT instead of as a metal under item 70 (7) ICT. Aggrieved against the said order, the petitioner has preferred this writ petition.