Customs Act; Amin Merchant Vs. Chairman, Central Board of Excise & Revenue [Supreme Court of India, 22-07-2016]

Constitution of India – Article 14 – Customs Act, 1962 – Section 25 – Power to grant exemption from duty – budget proposals – Whether the budget proposals are duly passed and approved by the Parliament and whether the tariff rates fixed by the TRU are contrary to the legislative mandate – Whether Supreme Court can direct the Central Government to issue a notification under Section 25(1) of the Customs Act – Whether the compound alcoholic preparations of a kind used for the manufacturing of beverages fall under the category of alcoholic beverage – Whether there is any discrimination on the part of the Central Government in issuing a notification under Section 25(1) of the Customs Act in respect of other goods and contrary to Article 14 of the Constitution of India?

Held, 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 – it is not appropriate 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 a greater latitude to the legislative discretion – It is always open to the parties to settle the dispute before the appropriate forum if they choose to do so – A Taxing Statute can be held to contravene Article 14 of the Constitution if it purports to impose certain duty on the same class of people differently and leads to obvious inequality. Such a material is not placed to come to a just conclusion that the action of the respondents is discriminative.

Parliament

AIR 2016 SC 3920 : (2016) 9 SCC 191 : 2016 (7) Scale 336 : 2016 (4) RCR (Civil) 76 : 2016 (4) RAJ 702 : 2016 AIR (SCW) 3920 : 2016 (5) AIR Bom.R 715 : 2016 (338) ELT 164 : 2016 (4) JCR 18

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

(MADAN B. LOKUR) AND (N.V. RAMANA) JJ.

JULY 22, 2016

CIVIL APPEAL Nos.4676-4677 OF 2013

AMIN MERCHANT …. APPELLANT

VERSUS

CHAIRMAN, CENTRAL BOARD OF EXCISE & REVENUE & ORS. …. RESONDENTS

JUDGMENT

N.V. RAMANA, J.

1. These appeals, by special leave, have been filed against the impugned judgment and order dated 02.09.2011 in Writ Petition No.1761 of 2009 and order dated 24.11.2011 in Review Petition No.24 of 2011 in Writ Petition No.1761 of 2009 respectively, of the High Court of Judicature at Bombay, by which the High Court has dismissed the Writ Petition filed by the appellant herein and also dismissed the Review Petition by holding that no error apparent on record has been made out.

2. The facts leading to these appeals, in brief, are that 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.

3. 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 l993-94 and 1994-95;

(b) a direction to the Chief Commissioner of Customs to finalize assessment of the eight bills of entry after a notification is 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.

4. 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.

5. Heard the appellant, appearing in person, and learned Senior Counsel for the respondents.

6. The appellant, appearing in person, vehemently 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% advalorem, 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 Budge proposal appearing at Sl.No.B 1. 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 at Sl.No.B1 duly passed by the Parliament for the financial year 1993-94 so also for the financial year 1994-95, it should have been “65%”.

7. 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’.

8. He also submits that the goods falling under sub-heading 2208.10 of the Customs Tariff Act are not ‘alcoholic beverages’ but ‘Compound alcoholic preparations of a kind used for the manufacture of beverages’ falling under sub-heading 2208.10 in the Customs Tariff Act 1993-94 and 1994-95, not being ‘alcoholic beverages’ and not being covered by the exceptions mentioned in the said proposal at Sl.No. B1, the rate of duty duly passed and legislated by the Parliament should have been prescribed as 85% for the year 1993-94 and as 65% for the year 1994-95. The statutory term ‘Compound alcoholic preparations of a kind used for the manufacture of beverages’ clearly explains that it covers compound alcoholic preparations for the manufacture of beverages and that it is a product that precedes the consumable ‘alcoholic beverage’ and hence it cannot, by any stretch of imagination, be equated to and or termed as ‘alcoholic beverages’ in itself. If “Compound alcoholic preparations of a kind used for the manufacture of beverages’ are sought to be included in the term ‘spirits, liquors and other spirituous beverages’ and or sought to be treated as ‘Alcoholic Beverages’ then the statutory term ‘Compound alcoholic preparations of a kind used for the manufacture of beverages’ distinctly falling under sub-heading 2208.10 will be redundant and such a perverse interpretation is not permissible as it will alter the statutory heading 22.08 and sub-heading 2208.10 in the Customs Tariff Act, 1975. He would further submit that Harmonized System of Nomenclature (HSN), an International Regulation evolved in 1986 by the Customs Co-operation Council, Brussels, which is adopted by the Govt. of India, clearly recognizes that ‘CAP of a kind used in the manufacture of beverages’ are distinct and different products from ‘alcoholic beverage’ which are intended for immediate consumption and in the said HSN Explanatory Notes dealing with sub-heading 2208 it is expressly stated that “these preparations are not intended for immediate consumption and thus can be distinguished from the liquors and other spirituous beverages of this heading”.

9. In this connection, he places reliance on a Judgment of the Bombay High Court in