COLLECTOR OF CUSTOMS, BANGALORE versus WESTERN INDIA PLYWOOD MFG. CO. LTD. AND ANR.

Citation: [1989] SUPP. 1 S.C.R. 779 · Decided: 26-10-1989 · Supreme Court of India · Bench: S. RANGANATHAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

COLLECTOR OF CUSTOMS, BANGALORE 
v. 
WESTERN INDIA PLYWOOD MFG. CO. LTD. AND ANR. 
OCTOBER 26, 1989 
A 
[S. RANGANATHAN AND KULDIP SINGH, JJ.] 
B 
Customs Tariff Act, 1975: Schedule Heading No. 44.01 and 
Notification No. 126 of 1984-Timber imported from country specified 
in Notifications under Section 25 of Customs Act, 1962 exempted from 
effective basic duty-Rate of auxiliary duty-Determination of. 
Under Heading No. 44.01 of Schedule to the Customs Tariff Act, 
1975, timber was chargeable to customs duty (basic effective duty) at 
60%. However, under a Notification issued by the Government under 
Section 25(1) of the Customs Act, 1962, timber imported from certain 
countries was exempted, but an additional duty (auxiliary duty) was 
payable on such imports in terms of Notification No. 265 dated 
1.12.1982 and its successor Notifications No. 53 of 1983 and 126 of 
1984. 
The assessee imported logs of timber from an exempted country, 
c 
D 
and as it was not liable to pay the basic duty, it cleared the goods by 
paying the auxiliary duty at 40%, with reference to the effective basic 
E 
duty at 60%, as prescribed under Notification No. 126 of 1984. Subse-
quently, however, the assessee felt that it should have paid an auxiliary 
duty of only 30%, and not 40% since no basic effective duty was payable 
on the goods imported. It, therefore, applied to the respondent for 
refund of the excess duty paid by it. This claim was rejected by the 
' Assistant Collector. On appeal, the Collector of Customs (Appeals) held 
F 
that the assessee was entitled to the refund claimed. This order was 
confirmed by the Customs Excise and Gold (Control) Appellate Tri-
bunal (CEGAT), on the view that the explanation would come into 
operation only if there was more than one notification granting conces-
sion or exemption, in respect of basic duty, providing for different rates 
in respect of articles imported from different countries. Hence, the· G 
appeals hy the Department. 
' 
Allowing the appeals, this Court, 
HELD: I. The Tribunal has erred in its interpretation of the 
Notification No.· 126 of 1984. The assessee's case is clearly covered by 
H 
779 
A 
B 
c 
D 
780 
SUPREME COURT REPORTS 
[1989] Supp. 1 S.C.R. 
the explanation in the notification. The auxiliary duty paid by the 
assssee was perfectly in order and its refund applications are not 
maintainable. l 7830; 785E] 
2.1 The notification and the explanation make it clear that the 
auxiliary duty has to be paid with reference to each article based on the 
effective basic duty applicable to such article in terms of the First 
Schedule read with any relevant notification under Section 25. 17850] 
2.2 No doubt, the main part of Notification No. 126 of 1984 pro-
vides for auxiliary duty at 40o/c where rate of effective basic duty is 60% 
or above i.e. rates set out in First Schedule read with any relevant 
notification and at 30% where such effectiv~ rate is nil or less than 60%. 
However, the explanation to the notification has made an inroad into 
this simple rule by providing that where two or more effective basic 
rates are applicable in respect of any article, and the differentiation in 
rates is referable to the country of origin, then the auxiliary duty _pay-
able will be the higher of the two, or higl)est of the rates. [W3E-G I 
2.3 In the instant case, when timber is imported from the 
countries specified in the notification or notifications under Section 
25(1), the rate of basic duty is nil, but if the goods are imported from 
other countries, the notification does not apply and a basic duty of 60% 
would be Ieviable under the entry in the First Schedule. Thus, when the 
E' rates specified in the First Schedule are read along with the relevant 
notifications, it is found that the effective basic duty is leviable on it at 
two rates and this differentiation in rates is attributable to the country 
of origin in regard to the import. Hence, the explanation squarely 
comes into operation and the auxiliary duty will have to be paid by 
reference to the higher of the two rates of the effective basic duty, 
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namely,60%.1783G-H; 784A] 
2.4 The differentiation referred to in the explanation need not 
arise on account of the existence of more than one notification, altering 
the basic duty set out in the Schednle. It does not matter whether the 
difference in the rates is because the First Schednle applies in certain 
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cases and a concession notification in other cases. If 

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