Brief of the case:
- The Hon’ble Supreme Court in the case of M/s N.S. Rathnam & Sons held that when two methods are permissible under the statutory scheme itself to discharge duty liability then merely because with the adoption of one particular method the duty that becomes payable is lesser would not mean that two such persons belong to different categories so as to provide distinction that one enjoy full exemption under a notification and no exemption to other.
- Such distinction is discrimination which is also hit by the Article 14 of the Constitution and thus, liable to be set aside.
Facts of the case:
- The assessee is engaged in the business of ship breaking activities. It had imported a foreign vessel for the purpose of breaking it and selling it as scrap. The duties on import was paid as required by Customs Tariff Act, 1975.
- The iron and steel scrap so obtained from dismantling of vessel is chargeable to excise duty.
- As per Notification No. 102/87 dated 27.03.1987 the excise duty on such scrap in excess of Rs. 365 is exempt provided the customs duty paid on imported vessel @ Rs. 1035 per LDT.
- Another Notification No. 103/87 dated 27.03.1987 provided for exemption from whole of excise duty if the customs duty has been paid at the rate of Rs.1400/- per Light Displacement Tonnage (LDT).
- These two notifications are issued in suppression of earlier notifications. The assessee challenged the validity of the Notifications No.-102 & 103 dated 27.03.1987 by filling a writ petition before the Hon’ble Madras HC on the ground that total exemption was granted only to those persons who had paid customs duty at the rate of Rs.1400/- LDT and no exemption to those who have discharged lesser customs duty as per the Customs Tariff Act, 1975.
Contention of the Revenue:
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