Case Law Details

Case Name : Amin Merchant V/S Chairman, Central Board Of Excise & Revenue & Ors. ( Supreme Court of India)
Appeal Number : Civil Appeal Nos.4676-4677 OF 2013
Date of Judgement/Order : 22/07/2016
Related Assessment Year :
Courts : Supreme Court of India (344)
CA Urvashi Porwal
Urvashi PorwalBrief of the Case

In the case of AMIN MERCHANT V/s CHAIRMAN, CENTRAL BOARD OF EXCISE & REVENUE & ORS., it was held that the Finance Minister’s speech only highlights the more important proposals of the budget. Those are not the enactments by the Parliament. After it is legislated upon by the Parliament and a rate of duty that is prescribed in relation to a particular Tariff Head that constitutes the authoritative expression of the legislative will of Parliament. Even assuming that the amount of tax is excessive, in the matters of taxation laws, the Court permits greater latitude to the discretion of the legislature and it is not amenable to judicial review.

Brief facts

The appellant imported eight consignments of goods falling under Tariff Sub-Heading 2208.10 of the Customs Tariff, namely, “Compound alcoholic preparations of a kind used for the manufacture of beverages” during the financial years 1993-94 and 1994-95. The customs authorities assessed the goods imported provisionally and subjected them to a prescribed rate of duty of Rs.300/- per liter or 400% whichever is higher specified in respect of Sub-Heading 2208.10 of the Customs Tariff for 1993-94 and 1994-95. The appellant claims to have deposited the amount of duty provisionally assessed on the assessable value declared in the eight bills of entry. According to the appellant, he cleared the goods for home consumption during financial years 1993-94 and 1994-95. Between the years 1994 and 2001, the appellant addressed several communications, inter alia, to the Central Board of Excise and Customs and to the Tariff Research Unit (TRU) of the Union Ministry of Finance. The grievance of the appellant is that the rate which has been prescribed for goods falling under Tariff Sub-Heading 2208.10 is higher than that was authorized in the Budget Proposals during financial years 1993-94 and 1994-95. The appellant took recourse to the provisions of the Right to Information Act in order to procure relevant information from the concerned authorities. According to the appellant, the authorities have not furnished the relevant information.

Not satisfied with the attitude of the authorities, the appellant preferred a Writ Petition before the High Court seeking the following reliefs: (a) a writ of Mandamus directing the first and second respondents herein to issue a notification u/s.25(1) of the Customs Act, 1962 (for short ‘the Act’) in order to exempt goods falling under Tariff Sub-Heading 2208.10 so as to give effect to the Budget proposal announced by the Finance Minister (FM) in Parliament for financial years 1993-94 and 1994-95; (b) a direction to the Chief Commissioner of Customs to finalize assessment of the eight bills of entry after a notification issued by the first and second respondents u/s.25(1) of the Act; (c) a writ of Mandamus directing the second respondent to issue a notification u/s.25(2) of the Act for granting exemption from customs duty for goods falling under Tariff Sub-Heading 2208.10 for financial years 1993-94 and 1994-95; (d) an order for refund after assessments are finalized and (e) an order for the payment of interest at the rate of 12% p.a. on the refund that is ordered.

The High Court has dismissed the Writ Petition by the impugned judgment and order dated 2.9.2011. Being dissatisfied with the dismissal of his writ petition, the appellant preferred a Review Petition, which was also dismissed by the High Court by the impugned judgment and order dated 24.11.2011.

Contentions of the assessee

The appellant submits that the budget proposals for 1993-94 stipulated, inter alia, a reduction in effective rate of import duty on items which had then attracted a rate of duty higher than 85%, to 85% ad valorem, except on dried grapes, almonds, alcoholic beverages, ball and roller bearings and passenger baggage; the Budget proposals for 1994-95 similarly contemplated a reduction in effective rates of customs duty on items which until then attracted a duty higher than 65%, to 65% except, inter alia, on alcoholic beverages. ‘CAP of a kind used in the manufacture of beverages’ falling under sub-heading 2208.10 of the Act are not covered by the said exceptions ‘dried grapes, almonds, alcoholic beverages, ball and roller bearings and passenger baggage’ as mentioned in the Budget proposal. Hence the import duty on ‘CAP of a kind used in the manufacture of beverages’ falling under sub-heading 2208.10 should have been read as “85%” for the financial year 1993-1994 in keeping with the Budget Proposal duly passed by the Parliament for the financial year 1993-94 so also for the financial year 1994-95, it should have been “65%”.

The appellant would further submit that all the notifications contained in the Explanatory Memorandum 1993-94 and 1994-95 were to give effect to the Budget Proposals duly passed and legislated by the Parliament and rectify the erroneous tariff rates prescribed by the TRU department in the Customs Tariff Act, Finance Bill and Finance Act for 1993-94 and 1994-95; Budget proposals announced by the FM in the Parliament are duly passed and/or approved by the Parliament, no person, executive, bureaucrat or any authority or Court of Law has the authority and/or power to alter or amend the same. If the executives are allowed to prescribe any tariff rates contrary to the Budget Proposals duly authorized by the Parliament, then the Budget Proposals duly passed by the Parliament will have no meaning and will be rendered nugatory and thus opening the flood gates for ‘corrupt practice’.

The assessee also placed reliance on a Judgment of the Bombay High Court in Bussa Overseas and Properties (Pvt.) Ltd. Vs. Union of India, reported in 1991 (53) ELT 65 (Bom.), wherein the Bombay High Court, while dealing with classification has held that goods falling under sub-heading 2208.10, namely, ‘CAP of a kind used in the manufacture of beverages’ are not consumable as such, have to be sold to the distilleries where they undergo a process and cannot be treated as Whisky, Gin or Brandy as known in the trade. Against the said decision, Union of India has preferred S.L.P.(C) Nos.13194-210/1991 in this Court wherein this Court has dismissed the aforesaid SLPs upholding the decision of the Bombay High Court.

The assessee also placed reliance on a judgment of the High Court of Delhi in Seagram Manufacturing Ltd. Vs. Commissioner of Customs, New Delhi, reported in 2003(154) ELT 610 (Tri.Del.), which is affirmed by this Court reported in 2004 (163) ELT A 205 (SC) wherein this Court, confirming the views of the Tribunal regarding classification, held that ‘goods’ falling under sub-heading 2208.10 are not intended for immediate consumption and are not ‘alcoholic beverages and are classifiable under sub-heading 2208.10 of Customs Tariff’.

Contentions of the Revenue

The respondents submit that the speech of the Finance Minister while presenting the Budgetary Proposals only highlights the more important proposals of the Budget; Budgetary changes are, in fact, enacted by the Parliament as contained in the Finance Bill or ratified by Parliament or implemented through notifications. The legal force for charging a particular rate of customs duty on import of goods, is derived from the First Schedule of the Customs Tariff Act, 1975 read with notifications issued u/s.25(1) of the Act. If any changes in the rates were intended by Parliament it would have been reflected in the respective Finance Bills. It was further submitted that there was no error or discrepancy between the budget proposals announced by the Finance Minister and the Finance Bill. According to him, the High Court has rightly held that the appellant did not dispute the fact that the goods imported by him fell within Tariff Heading 2208.10 and the position under the Finance Act of 1993 was that the rate of duty prescribed for Tariff sub-heading 2208.10 was Rs.300/- per liter or 400% whichever is higher and the High Court thus rightly held that budget proposals and the speech of the Finance Minister in Parliament may or may not accept the proposal as held in B.K. Industries V. Union of India reported in (1993) 65 ELT 465 (SC) and once Parliament has duly legislated, and a rate of duty is prescribed in relation to a particular tariff heading that constitutes the authorities’ expression of the legislative will of Parliament; the speech of the Finance Minister and the financial/budget proposals duly passed by Parliament are two separate and distinct documents; the law was enacted is what is contained in the Finance act after it is legislated upon by the Parliament.

The rates of tax are those which are prescribed by legislation, once it is enacted by Parliament. It is the law as enacted, which gives expression to legislative will and it is the law as enacted which prescribes the rate of tax which Parliament has duly imposed. Consequently, as a matter of first principle, it would be impermissible for the Court to undertake the exercise of entering upon a scrutiny of the correctness of the collective expression of legislative will which finds expression in the legislation as adopted by the Parliament.

Held by Hon’ble Supreme Court of India

The Hon’ble Supreme Court stated that the High Court of Bombay, after giving a thorough consideration, dismissed the writ petition on the ground that once a particular Tariff Heading is prescribed, that constitutes the authoritative expression of the legislative will of Parliament and the High Court cannot exercise its power of judicial review and go beyond the law enacted by the Parliament and it is not permissible for the Court to undertake a scrutiny of whether there was an error on the part of the Parliament in legislating a particular rate of duty. Further, the High Court observed that there is no discriminatory conduct which would compel the interference of the court. The appellant, unsatisfied with the order, has preferred a revision before the High Court which ended up in dismissal as no error apparent on record has been made out.

The whole thrust of the appellant is that the proposals of the Finance Minister were duly approved by the Parliament. No doubt, the appellant has placed before this Court the proposals of the Finance Minister which discloses the intention of the Government but there is no material placed before this court to demonstrate that the budget proposals are duly accepted by the Parliament. It is an admitted fact that pursuant to the proposals, the Finance Act was passed by the Parliament wherein for the goods specified under Tariff Sub-Heading 2208.10, particular tariff was specified. The court was unable to agree with the argument advanced by the appellant for the reason that he is unable to make note of the difference between a proposal moved before the Parliament and a statutory provision enacted by the Parliament, because the process of Taxation involves various considerations and criteria. Every legislation is done with the object of public good as said by Jeremy Bentham. Taxation is an unilateral decision of the Parliament and it is the exercise of the sovereign power. The financial proposals put forth by the Finance Minister reflects the governmental view for raising revenue to meet the expenditure for the financial year and it is the financial policy of the Central Government. The Finance Minster’s speech only highlights the more important proposals of the budget. Those are not the enactments by the Parliament. The law as enacted is what is contained in the Finance Act. After it is legislated upon by the Parliament and a rate of duty that is prescribed in relation to a particular Tariff Head that constitutes the authoritative expression of the legislative will of Parliament. Now in the present facts of the case, as per the finance bill, the legislative will of the Parliament is that for the commodities falling under Tariff Head 2208.10, the tariff is Rs.300/- per litre or 400% whichever is higher.

Even assuming that the amount of tax is excessive, in the matters of taxation laws, the Court permits greater latitude to the discretion of the legislature and it is not amenable to judicial review.

In view of the foregoing discussion, the court is unable to concur with the submission of the appellant that the budget proposals are duly passed and approved by the Parliament and moreover, if the appellant is aggrieved by the particular tariff prescribed under the Finance Act and the same is contrary to the approved budget proposals, he ought to have questioned the same if permissible. Hence, this issue is answered against the appellant.

Further, the Hon’ble Court stated that a thorough look at the relevant provisions reveals that the source of power to issue notification by the Central Government relates to Section 25 of the Customs Act, 1962. Further, as per Section 159 of the Act, any notification issued under Section 25 shall be placed before the Parliament and the Parliament may amend or reject the same. This clearly demonstrates that the ultimate law making power is vested with the Legislature. Hence, the allegation of the appellant that the notifications are issued basing on the whims and fancies of the respondent is misconceived. Whereas, notifications are issued generally in the larger public interest, the Legislature has given the power to exempt duty to the respondent subject to the amending power.

In these circumstances, it is not appropriate on our part to issue any orders directing them to issue a notification under Section 25 (2) of the Act except on the grounds of discrimination. In the matter of taxation, the Court gives greater latitude to the legislative discretion. Accordingly, the issue is answered.

In view of the aforesaid elaborate discussion, we reach to an irresistible conclusion that the appeals, being devoid of any merit, deserve to be dismissed and are dismissed accordingly. No costs.

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