Anti-dumping duty could not be added for computing customs duty, SCD & SAD: SC

Brief of the Case

In the case of M/S. Jaswal Neco Ltd. Vs. Commissioner Of Customs , it was held by Supreme Court that anti-dumping duty could not be added for computing  customs  duty,  Special Customs Duty and Special Additional Duty by referring to the judgment in the case of Commissioner of Customs (Preventive) v. Goyal Traders, (2014) 302 ELT 529 and J.K.  Synthetics Ltd.  v. Commercial Taxes Officer, (1994) 4 SCC 276.

Brief facts

The appellant is engaged in the manufacture of pig iron.   The appellant imported Low Ash Metallurgical (LAM) Coke under seven  Bills of Entry, against four  advance  licenses  without  payment  of  basic customs duty (BCD) levied under Section 12 of the Customs  Act,  1962, special customs duty (SCD) levied under Section 68 of the Finance Act, 1996, special additional duty (SAD) levied under Section 3A of Customs Tariff Act, 1975 and Anti-dumping duty (ADD) levied under  Section  9A of the Customs Tariff Act, 1975 during the period June 1998 to August 1998, which were exempt from duty vide (i) Notifications No. 30/97 Cus dated 1.4.1997, (ii) Sr.  No.4 of Notification No.12/97 Cus dated 1.3.97, (iii) Sr.  No.3 of the Notification No.34/98-Cus   dated 13.6.1998, and   (IV)   Notification   No.41/97-Cus   dated   30.4.97 respectively.

At the time of import, the appellant furnished a bond containing an undertaking to pay duty on imported   goods   cleared   under Notification No.30/97 and 41/97 in the event of failure to fulfil its export obligation.

It is an admitted position that the appellant failed to fulfil its export obligation in the terms of the exemption notifications. The entire LAM so imported has instead been used by the appellant in its factory for the manufacture of pig iron.

Pending final adjudication of the show cause notice by the Commissioner, the appellant duly paid the entire duty payable towards BCD, SAD and SCD after considering partial exports already made.   The appellant did not make any payment towards ADD.

The Commissioner of Customs confirmed the duty demand. The appellant appealed to CESTAT.  Vide  the  impugned  judgment dated 18.8.2005, CESTAT partly allowed the  appeal  by  remanding  the matter to the original authority  to  calculate  duty,  interest,  and penalty in accordance with the findings  contained  in  its  judgment.

The basic difference  between   CESTAT’s  judgment  and  that  of  the Commissioner is that interest was reduced from 24%  to  15%,  but  the Anti-dumping duty was increased by applying the higher rates specified by the final Notification No.69 of 2000.

Contentions of the Assessee

The assessee contended that Anti-dumping duty was not payable at all stating that the appellant   was   exempt   under Notification No.69 of 2000.  The assessee further contended that  no  interest  is chargeable on any of the four duties inasmuch as  the  bond  that  was furnished under Notification No.30 of 1997 did not stipulate  that  in the  event  of  default,  interest  would  become  payable.   Further, it is clear that the assessment in the present  case is only provisional and that being the case, even if the provisions of the Customs Act are made applicable insofar as  Anti-dumping  duty  is concerned, under the Customs Act itself there  was  no  provision  for collection of interest for the period in dispute  as  Section  18  was amended to include such a provision  only  prospectively  with  effect from 2006. Anti-dumping  duty could not be added for purposes of  computing  customs  duty,  special customs  duty  and  special  additional  duty.   Also  no  penalty  is imposable inasmuch as nothing contumacious was done by  the  appellant and the export obligation could  not  be  fulfilled  only  because  of bonafide commercial impossibility.

Contentions of the Revenue

The Revenue contended that the exemption contained in the Anti-dumping duty Notification 69 of 2000 was only prospective and, hence Anti-dumping duty had to be paid for the relevant period. The Revenue further submitted that interest in any case was payable as Notification No.30 of 1997 independently levied a charge of interest.

Held by Hon’ble Supreme Court of India

The Hon’ble Supreme Court stated that it is clear that under  Rule  20(2)(a)  of  the  Customs  Tariff (Identification, Assessment And  Collection  of  Antidumping  Duty  on Dumped Articles and For Determination of Injury) Rules, 1995, where  a provisional duty has been levied and where  the  designated  authority has recorded a final finding of injury or threat  of  injury  and  the further  finding  that  the  effect  of  imports  in  the  absence  of provisional duty would have led to injury, the Anti-dumping  duty  may be levied from the date of imposition of  provisional  duty.   In the present case, therefore, it will be noticed   that   the   final Notification dated 27.10.1998 is said to come into force from the date of the first Notification dated 6.5.1998 imposing provisional duty in the present case.  It is clear that as the  final  Notification  dated 27.10.1998 has been superseded by the  Notification  dated  19.5.2000,  the appellant would have had to pay Anti-dumping duty at the  rate  of US$ 24.95 per metric tonne as indisputably it falls within  Item  No.7 of the said Notification.

The Hon’ble court referred to the judgment in the case of Commissioner of Customs (Preventive) v. Goyal Traders, (2014) 302 ELT 529, the Gujarat High Court has held as under:-

“17. In the present case, we find that prior to introduction of sub-section (3) of Section 18 of the Act in  the  present  form,  there was no liability to pay  interest  on  difference  between finally assessed  duty  and  provisionally  assessed  duty  upon payment of which the assessee may have cleared  the  goods. It was only with effect from 13.7.2006 that such charging provision was introduced in the statute.  Upon introduction therefore such provision created interest liability for the first time w.e.f. 13.7.2006.  In absence of any indication in the  statute  itself either  specifically  or   by   necessary   implication   giving retrospective effect to such a statutory provision,  we  are  of  the opinion  that  the  same  cannot  be  applied  to  cases  of provisional assessment which took place prior to the said  date.  Any such application would in our view amount to retrospective operation of the law.”

In addition, it is clear that this Court has held that the levying of interest can only be by a substantive provision (See:  J.K.  Synthetics Ltd.  v. Commercial Taxes Officer, (1994) 4 SCC 276 at paragraph 16), thereby making it clear that such levy can only be prospective.

Given the aforesaid, it is clear that no interest is chargeable on any of the customs duties that are payable on the facts of the present case.

It will be noticed that the very words “as an addition  to,  and in the same manner as” used in Section 3(2) and 3A(2) of  the  Customs Tariff Act have been used in Section 23 of the  Finance  Act  of  1963 when what was sought to be levied was only a  surcharge.   By way of contrast, Section 24(3) when it levies a different duty – a regulatory duty of customs – uses the expression “in addition”.  It is clear, therefore, that what is referred to in Section 3(2) and 3A (2) is only a surcharge or an additional duty of customs.  The words “in the same manner” also point to the same conclusion.  It is clear on  a  reading of the Customs Tariff (Identification, Assessment  And  Collection  of Antidumping Duty on Dumped Articles and For Determination  of  Injury) Rules, 1995, that Anti-dumping duty apart from being a  separate  levy from a levy of customs duty is also levied in a  completely  different manner from that of customs duty.

Though it is stated that the object of the amendment is to clarify and set at rest doubts, it is not necessary to decide whether this amendment is clarificatory and, therefore, retrospective in view of what has already been held as above.

In view of the above, the appeal is allowed.