1. These four appeals arise out of a common order-in-appeal and involve a common issue for determination. Hence they were heard together and are disposed of by this common order.
2. The facts of the cases may be briefly stated. The appellants imported four consignments of timber from Burma. These were assessed by the customs authorities to auxiliary duty of customs (leviable in terms of the annual Finance Acts) at the rate of 30% ad valorem in terms of Customs Notification No. 126/84 dated 11-5-1984. The appellants cleared the goods on payment of the auxiliary duty so assessed. Later, the appellants were served with notices calling upon them to show cause why an amount of Rs. 3,09,113.30 should not be demanded from them on the ground that auxiliary duty of customs should have been charged at 40% ad valorem and not 30% ad valorem as charged at the time the goods were assessed to duty and allowed clearance. In due course, the Assistant Collector of Customs, Bombay confirmed the demands by four separate orders. Against these orders, the importers went in appeal to the Collector of Customs, (Appeals), Bombay who, by a consolidated order, dismissed the appeals. It is against this order that the appellants are now before us.
3. Another factual aspect of the matter also needs to be noted before we discuss the merits of the dispute. Timber falls for classification under heading No. 44.01/28(1) of the First Schedule to the Customs Tariff Act, 1975. The schedule prescribes under the column "standard rate of duty" against the said heading a rate of 60% ad valorem (for brevity's sake, we shall call the duty under the First Schedule to the Customs Tariff Act as basic duty of customs). By virtue of notifications issued by the Central Government Under Section 25(1) of the Customs Act, 1962, the basic duty of customs leviable on timber imported from Burma, Bhutan, Bangladesh and Nepal have been reduced to "nil". In other words, when timber is imported from any of these four countries, it is exempted from levy of basic customs duty. In respect of imports of timber from any other country, the standard rate of duty, viz. 60% ad valorem would apply.
4. Notification No. 126/84-Cus., dated 11-5-1984 issued Under Section 25(1) of the Customs Act, 1962 read with Sub-section (4) of Section 36 of the Finance Act, 1984, exempted the goods specified in column 2 of the Table annexed to the Notification when imported into India from so much of the auxiliary duty of customs leviable thereon under Sub-section (1) of the Section 36 of the Finance Act as was in excess of the amount calculated at the rate specified in the corresponding entry in Column 3 of the said Table. For the purpose of the present dispute S.Nos. 1 and 2 of the Table, along with the "Explanation" appended to the Table are relevant and are reproduced below:-S.No. Description of goods Rate(1) (2) (3)1.
Goods in respect of which the rate of Forty per cent of the duty of customs specified in the said value of the goods as First Schedule, read with any relevant determined in accordance notification of the Government of India with the provisions of for the time being in force is 60 per Section 14 of the Customs cent ad valorem or more.
Act, 1962 (52 of 1962).2.
Goods in respect of which the rate of Thirty per cent of the duty of customs specified in the said value of the goods as First Schedule, read with any relevant determined in accordance notification of the Government of India with the provisions of for the time being in force is nil for Section 14 of the Customs less than 60 per cent ad valorem.
Act, 1962 (52 of 1962).
Explanation ; For the purpose of Sl. Nos. 1 and 2 in the above Table, the expression "the rate of duty of customs specified in the said First Schedule, read with any relevant notification of the Government of India for the time being in force", in relation to any article liable to two or more different rates of duty by reason of the country of origin of that article, means that rate of duty which is the highest of those rates." 5. As already noted, the consignments of timber imported from Burma in the present cases were exempt from the levy of basic customs duty. The lower authorities have taken the view that the different rates of basic customs duty applicable to timber by reason of its country of origin are (a) nil in the case of imports from Burma, Bhutan, Bangladesh and Nepal and (b) 60% for imports from all other countries. Thus, there are two different rates applicable to timber depending upon its country of origin. The higher of the rates is 60% ad valorem and therefore, S.No.1 of the Table to the aforesaid notification would apply. In the result the rate of auxiliary duty of customs applicable to the present imports of timber from Burma would be 40% ad valorem.
6. The contention for the appellants, on the other hand, is that there is, in actuality, only one rate of basic customs duty leviable on timber by reason of the country of its origin, namely "nil" for imports from Burma, Bhutan, Bangladesh and Nepal. There is no reduced rate of basic customs duty applicable to imports from any other country. The rate of 60% ad valorem specified in the First Schedule is the standard rate of duty applicable to imports of timber from all countries except in the case of imports from Burma, Bhutan, Bangladesh and Nepal in respect of which the rate of basic customs duty has been specifically and in terms, reduced to nil by virtue of their country of origin. In this view of the matter, there is only one rate of duty in so far as timber is concerned by reason of its country of origin and that is the nil rate in respect of imports from the four specified countries.
Therefore, the present imports would attract S.No. 2 of the aforesaid table to notification 126/84 and the applicable rate of auxiliary duty of customs would be 30% ad valorem.
7. We have heard Shri J.J. Bhatt, Advocate for the appellants and Smt.
Doily Saxena, Senior Departmental Representative for the respondent.
8. As already noted, the First Schedule prescribes against heading No.44.01/28(1) of the First Schedule to the Customs Tariff Act, 1975, under which timber falls, 60% ad valorem as the standard rate of duty leviable on it. It is by virtue of notifications issued by the Central Government in exercise of its powers Under Section 25(1) of the Customs Act, that imports of timber from Burma, along with imports from three other countries, have been exempt from the levy of basic customs duty.
In other words, this nil rate of duty is truly a rate fixed by reason of the country of origin of timber. No other reduced rate of duty, at a level less than 60% ad valorem but higher than nil, appears to have been fixed in respect of imports of timber from any country other than Burma, Bhutan, Bangladesh and Nepal. No notification in this regard has been brought to our notice. Therefore, there is in effect and reality only one rate of duty fixed in respect of imports of timber by reason of the country of origin. The standard rate of 60% ad valorem is applicable to imports of timber from any country in the world. This rate has no relation or nexus to the country of origin of timber. It cannot therefore, be said that the standard rate of duty is also a rate of duty fixed by reason of the country of origin. In this view of the matter, we are of the opinion that there is only one rate fixed by reason of the country of origin and, therefore, it is with reference to that rate (which is nil) that we must determine the applicable serial number of the table to notification No. 126/84. It could straightaway be seen that S.No. 2 would be attracted inasmuch as "the rate of duty of customs specified in the said First Schedule, read with any relevant notification of the Government of India for the time being in force" (as spelt out in S.No. 2), as interpreted in terms of the explanation to the notification, namely "in relation to any article liable to two or more different rates of duty, by reason of the country of origin of that article, means that rate of duty which is the highest of those rates" would yield result that, for the purpose of column 2 of the Table, the relevant entry is "nil or less than 60% ad valorem", i.e.
Sl.No. 2 of the Table. Consequently, the applicable rate of auxiliary duty of customs is 30% ad valorem.
9. In the result, we set aside the orders of the lower authorities and allow these appeals with consequential relief to the appellants.