Case Note & Summary
The petitioner, a public limited company manufacturing pneumatic tyres, regularly imported Carbon Black from the People’s Republic of China. Carbon Black imported from China was subject to Transitional Product Specific Safeguard Duty under Section 8C of the Customs Tariff Act, 1975. The petitioner availed the benefit of Notification No.96/2009-Cus. dated 11 September 2009, which exempted goods imported under Advance Authorization from whole of customs duty, additional duty under Section 3, anti-dumping duty under Section 9A, and safeguard duty under Section 8B of the Act. However, the notification did not expressly exempt safeguard duty under Section 8C. Initially, the customs authorities allowed clearance of the imported Carbon Black without payment of any safeguard duty, including that under Section 8C. Later, the revenue took the stand that the notification did not cover Section 8C duty and issued a show cause notice dated 3 October 2013 proposing to deny the exemption benefit in respect of past imports. Aggrieved, the petitioner filed the present writ petition under Article 226 of the Constitution seeking a declaration that Section 8C duty is also exempted under the notification, or in the alternative, striking down the phrase 'under section 8B' in the notification, and quashing the show cause notice. The petitioner contended that safeguard duty under both Sections 8B and 8C are trade protection measures, not revenue measures, and have the same object of protecting domestic industry from serious injury. It was argued that Section 8B is a general provision for safeguard duty, while Section 8C was inserted after China’s WTO accession specifically for imports from China, but the nature of the duty remained the same. The Foreign Trade Policy consistently provided that imports used in the manufacture of export goods should be exempt from all duties, including safeguard duty, to make exports competitive. The petitioner submitted that the exemption notification was issued to implement this policy and that the omission of Section 8C was a mistake or oversight. It was urged that there was no intelligible differentia for exempting Section 8B duty while denying exemption for Section 8C duty, rendering the notification arbitrary. The revenue’s stand was that the notification was clear in exempting only specified duties and that Section 8C was a separate levy not covered. The court heard the parties and reserved judgment on 1 December 2015, with judgment pronounced on 23 December 2015. The matter involved interpretation of exemption notification in light of foreign trade policy and challenge to its validity on grounds of discrimination.
Headnote
A) Customs Tariff – Exemption from Safeguard Duty – Notification No.96/2009-Cus. – Whether Transitional Product Specific Safeguard Duty under Section 8C of the Customs Tariff Act, 1975 is exempted – Petitioner argued that Safeguard Duty under Section 8B and 8C are analogous, that the notification intended to exempt all such duties for imports under Advance Authorization, and that the omission of Section 8C was a mistake; Court heard arguments and reserved judgment. (Paras 1-13)
Issue of Consideration
Whether the exemption under Notification No.96/2009-Cus. dated 11.09.2009 extends to Transitional Product Specific Safeguard Duty leviable under Section 8C of the Customs Tariff Act, 1975 and whether the phrase 'under section 8B' in the opening portion of the notification is discriminatory and liable to be struck down.
Law Points
- Safeguard Duty is a trade protection measure and not a revenue measure
- duties under Section 8B and 8C of the Customs Tariff Act
- 1975 are analogous in nature and object
- exemption under Notification No.96/2009-Cus. should be interpreted in line with the Foreign Trade Policy to exempt all safeguard duties on imports used for exports
- omission of Section 8C from the notification was a mistake or oversight
- denial of exemption for Section 8C duty while granting exemption for Section 8B duty lacks intelligible differentia and violates Article 14
