COLLECTOR OF CUSTOMS versus M/S PRESTO INDUSTRIES

Citation: [2001] 1 S.C.R. 1050 · Decided: 15-02-2001 · Supreme Court of India · Bench: B.N. KIRPAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
COLLECTOR OF CUSTOMS 
v. 
"'( -
MIS PRESTO INDUSTRIES 
FEBRUARY 15, 2001 
B 
[B.N. KIRPAL AND BRIJESH KUMAR, JJ.] 
Customs Tariff Act, 1975-Section 3 (/)-Industrial Unit located in a 
_.. 
Free Trade Zone-Clearance of waste and scrap ()f imported raw material for 
c 
home consumption-Notification granting exemption from excise duty on 
payment of all duties of customs-Customs duty paid but not additional 
duty-Held, benefit on notification is not available since Additional duty 
under the Customs Tariff Act was not paid-Customs Duty Act, 1962-Section 
28-,--Central Excise Rules, 1944-Notification No. 16183-CE dt. I l.2.1983. 
D 
Respondent is an industrial unit located in a Free Trade Zone 
manufacturing combs and brushes from imported raw material Cellulose 
Acetate sheets. Payment of excise duty is exempted on fulfilling certain 
conditions stated in a Notification dated 11.2.1983 issued by the Central 
Government under the Central Excise Rules, 1944. Customs duty and 
additional duty under section 3(1) of the Customs Tariff Act, 1975 are payable 
E on scrap if they are cleared for home consumption outside the Free Trade 
Zone. On clearances of raw material waste and scrap, respondent paid the 
customs duty. Additional duty, however, was not paid by the respondent claiming 
benefit of the Notification. The Revenue wrongly allowed the benefit of 
exemption under the notification. During the routine audit in the Revenue, it 
F was discovered that the respondent was wrongly given the benefit of the 
notification since the additional duty was not levied. Demand notices, which 
were confirmed by the Assistant Collector (Customs), were issued to the 
respondent under Section 28 of the Customs Act, 1962 for payment of the 
excise and additional duties. The respondent filed an appeal before the Collector 
of Customs (Appeals). He allowed the appeal of the respondent holding that 
G the benefit of the notification was admissible to the respondent. The Revenue 
unsuccessfully challenged the order of collector (Appeals) before CEGAT. 
"'< 
. 
In this appeal, <he Revenue contended that the exemption from excise 
duty is available to the respondent only unsatisfying the conditions stated in 
H the Notification; and that since the second condition of the Notification is not 
1050 
j-
-y 
COLL EC. OF CUSTOMS i·. PRESTO INDUS. 
1051 
, fulfilled by not paying the additional duty, the respondent is not entitled to the· A 
benefit of the notification. 
The respondent contended that since no excise duty is payable under 
the Notification, no additional duty under the Customs Tariff Act, 1975 can 
be levied since the additional duty is equal to the Excise duty leviable. 
Allowing the appeals, the Court 
HELD : I. I. The Notification requires payment of duties of customs 
under any law for the time being in force. The additional duty leviable under 
sub-section (I) of Section 3 of the Customs Tariff act, 1975 is not described 
B 
or called as counter-vailing duty. Clause (b) to the proviso to the Notification C 
provides for clearance of all duties of customs leviable under any law for the 
time being in force. It does not confine to payment of customs duty leviable 
under the Customs Act, 1962 alone. Therefore, additional duty levied under 
Section 3(1) of Customs Tariff Act shall also have to be cleared before claiming 
benefit under the Notification. 11056-G-H; 1057-BI 
D 
1.2. Since the respondent did not pay the additional duty as leviable 
under Sub-section (I) of Section 3 of the Customs Tariff Act, 1975, it failed 
to comply with the condition as contained in clause (b) of the proviso to the 
Notification dated I 1.2. I 983. The onus of proof of fulfilment of condition 
subject to which an exemption may be admissible lies on the assessee or E 
upon a party claiming benefit under the Notification. Due to non-payment of 
additional duty as prescribed under Section 3(1) of Customs Tariff Act, the 
respondent would not be entitled for the benefit of exemption from excise duty 
under the Notification.11057-H; 1058-A-BI 
Motiram Tolaram & Anr. v. Union of India, 119991 6 sec 375, relied F 
on. 
2. An exemption Notification should be strictly construed. Where a 
condition precedent is not fulfilled before claiming any exemption, such 
benefit would not be admissible.11058-AI 
Khandelwal Metal & Engineering Works v. Union of India & Ors., AIR 
G 
)oio 
(1985) SC 1211; Hyderabad Industries v. Union of India & Ors., 119991 5 
SCC I 5 

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