COMMISSIONER OF CUSTOMS Vs. DCW LTD.

JUDGEMENT

(1.) The respondent -importer had imported Vinyl Chloride Monomer and cleared the same on payment of Special Additional Duty (SAD) at the rate of 8% before 13.6.1998 in terms of the proviso to Sub -section (1) of Section 3A of the Customs Tariff Act, 1975. Notification No. 35/98 -Cus. dated 13.6.1998 was issued by Central Government specifying the rate of SAD in respect of the above goods as 4%. The respondents took the view that the Notification had retrospective effect and accordingly filed a claim for refund of the duty paid by them in excess of 4%. The Assistant Commissioner of Customs rejected the said view and dismissed the refund claim. He also observed that the importers had not produced any documentary evidence to prove that the burden of duty had not been passed on to their buyers. Aggrieved by the decision of the Assistant Commissioner, the party preferred appeal to the Commissioner (Appeals) and the latter allowed the refund claim subject to the test of unjust enrichment. In the present appeal, the Revenue is challenging the decision of the Commissioner (Appeals).

(2.) Heard both sides. Ld. JCDR, supported by Ld. SDR, referred to the relevant provisions of law and submitted that the respondents were liable to pay SAD at the rate of 8% in terms of the proviso to Sub -Section (1) of Section 3A of the Customs Tariff Act/1975 in respect of the goods imported and cleared before 13.6.1998 as Notification No. 35/98 -Cus. dated 13.6.1998 specifying the rate of duty as 4% had no retrospective effect. It was argued that Section 5 of the Provisional Collection of Taxes Act, 1931 was not applicable to the facts of this case. Section 3A of the Customs Tariff Act, 1975 was a "declared provision" of law as contemplated under Sections 3 and 4 of the Provisional Collection of Taxes Act, 1931 and it was not amended under the Finance Act, 1998. The declared provision came into force on expiry of the day on which the Finance Bill, 1998 containing it was introduced in Parliament, by virtue of Section 4 of the Provisional Collection of Taxes Act, 1931. Even the respondents had no case that the said provision ceased to have force of law at any point of time before issuance of Notification No. 35/98 -Cus. The Notification was issued in terms of the declared provision, i.e., Section 3A(1) of the Customs Tariff Act, 1975. In the result, it was argued, while the declared provision continued to be in force, the rate of SAD stood reduced from 8% to 4% with effect from the date of issue of the Notification. According to Ld. JCDR, retrospective operation of the Notification was barred by the proviso to Section 3A(1) of the Customs Tariff Act. It was further pointed out that the Notification itself did not purport to have retrospective effect. Hence, it was argued, the decision of the Ld. Commissioner (Appeals) was erroneous. Reliance was placed on the Supreme Court's decision in CCE v. Prakash Pipes and Industries Ltd., 1997 (94) ELT 18 (SC), wherein it was held the provisions of the Provisional Collection of Taxes Act, 1931 had no application to a case in which goods manufactured during exemption period were cleared from factory after withdrawal of the exemption. The apex court held that such goods were liable to duty at the rate in force at the time of clearance. On the other hand, Ld. Counsel for the respondents relied on a decision of the Tribunal in Hyderabad Industries Ltd. v. CCE, 2003 (162) ELT 258. Counsel's focus was on a part of the order of the Tribunal, which is extracted below: "Notification No. 35/98 -Cus., dated 13.6.1998 came to be issued subsequently, in terms of the above Section 3A of the Customs Tariff Act, limiting the Special Additional Duty on all goods falling within the first schedule of the Customs Tariff Act, to 4% ad valorem. Undisputedly, the imported raw material of the appellant attracted this notification which had retrospective effect by virtue of case law and Sections 3 and 5 of the Provisional Collection of Taxes Act, 1931, and, accordingly, the party claimed refund of the excess 4% Special Additional Duty they had paid at the time of the clearance of the goods."

(3.) We have considered the submissions. The short question before us is whether Notification No. 35/98 -Cus. dated 13.6.1998 had retrospective effect. That was a Notification which was issued by the Central Government sped fying the rate of SAD on the subject goods as 4%. The Notification was issued under Sub -section (1) of Section 3A of the Customs Tariff Act, 1975, which reads as under: