V. Ramaswami, J.
1. These are petitions for the issue of Writs of mandamus directing the respondents--Collector of Customs and the Union of India to refund the countervailing duty collected from the different petitioners in respect of import of art silk yarn from various countries under the licences issued to them. The petitioners in these writ petitions had imported various quantities of art silk yarn during the period from 1st April, 1961 to 31st December, 1964. In respect of these imports they were called upon to pay customs duty and also countervailing duty and the same were paid by them as demanded. It is not necessary to set out the particular amounts paid by each of the petitioners on accounts of countervailing duty. In these petitions a common question has been raised as to the validity of the levy of countervailing duty, though the amounts involved in each one of those cases are different.
2. The import itself was, as already stated, prior to 31st December, 1964. The countervailing duty also was paid as and when the imports were made prior to 31st December, 1964 itself in all these cases. But W.P. No. 3116 of 1969 was filed in July, 1969 and the other petitions Were filed in the year 1970. The immediate provocation for filing those writ petitions, as stated in the affidavits in support of the writ petitions, was that in a batch of Writ petitions decided on 14th March, 1968 this Court held that the countervailing duty is not customs duty and the two were kept separately and distinctly and the surcharge which could be levied on the customs duty could not be levied on countervailing duty. Though this batch of writ petitions related to the question of surcharge, it is interpreted and relied on by the petitioners for contending that the authorities should levy only customs duty on imports and having regard to the nature of the countervailing duty, the respondents had no authority to levy the same on imports. Accordingly they applied to the Collector of Customs for refund of the countervailing duty paid by them in the first half of the year 1969. Having got a rejection of their applications for refund, the petitioners have filed these writ petitions.
3. Countervailing duly was levied in these cases under Section 2-A of the Indian Tariff Act, 1934, which was introduced by the Indian Tariff (Amendment) Act, 1962 (III of 1963), read with Section 22 of the Finance Act, 1963. Section 2-A reads as follows:
2-A. (1) Any article which is imported into India shall be liable to customs duty equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the customs duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article.
Explanation.--In this sub-section and Sub-section (1-A) the expression 'the excise duty for the time being leviable on a like article if produced or manufactured in India' means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs and where such duty is leviable at different rates, the highest duty.
(1-A) For the purpose of calculating under this section the customs duty on any imported article equal to the excise duty for the time being leviable on a like article, if produced or manufactured in India, where such excise duty is leviable at any percentage of its value, the value of the imported article shall, notwithstanding anything contained in Section 14 of the Customs Act, 1962 be the aggregate of--
(i) the value of the imported article determined under Sub-section (1) of the said Section 14 of the tariff value of such article fixed under Sub-section (2) of that section, as the case may be;
(ii) any duty of customs chargeable on that article under Section 12 of the Customs Act, 1962, other than the duty referred to in Sub-section (1); and
(iii) any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as a duty of customs.
(2) The customs duty referred to in Sub-section (1) shall be in addition to any duty imposed under this Act or under any other law for the time being in force.
It is seen from this section that any article which is imported into India shall be liable to what is called countervailing duty equal to the excise duty for the time being leviable on like articles if produced or manufactured in India and if such excise duty on like articles is leviable at any percentage of its value, the countervailing duty to which the imported articles shall be so leviable, shall be calculated at that percentage of the value of the imported articles. Prior to 1963, an additional duty was imposed under item 60 (9) of the Indian Tariff Act, 1934 in the case of imported goods which are similar to goods manufactured or likely to be manufactured in India or which goods are exactly of the description of articles manufactured or produced in India to which the imported articles belonged. This provision was deleted and a substantive section was introduced by the amendment Act III of 1963 as extracted above. The purpose of the levy is stated to be that the manufacturers of the same category of goods in India ought not to suffer unfair competition from outsiders. In order to balance economy and trade the countervailing duty has been introduced so that if the manufacturers in India are obliged to pay excise duty then persons importing similar or same articles from abroad are also compelled to suffer a countervailing duty so that both can be placed on a par. Under Section 2-A it is not necessary that similar articles as these imported should be manufactured in India. It is enough if they are likely to be manufactured.
4. The contention of the petitioners in all these cases is that Parliament is competent under Entry 84, List I of the Seventh Schedule to the Constitution to pass a law imposing excise duty only in respect of goods manufactured or produced in India and the goods that are not manufactured or produced in India cannot be subject to any excise duty. The effect of Section 2-A read with the Explanation extracted above, is to treat the goods not manufactured in India as goods manufactured in India and levy duty thereon. In other words, a legal fiction is created that the imported art silk yarn must be deemed to have been manufactured or produced in India. It amounts to a colourable exercise of legislative power. Countervailing duty is also not a customs duty falling under Entry 83, List I of the Seventh Schedule to the Constitution and therefore there is a complete lack of legislative power in Parliament for imposing this countervailing duty. In support of that contention they relied on the decisions of the Supreme Court in K.L. Johar v. Deputy Commercial Tax Officer : AIR1965SC1082 and Madras State v. G. Dunkerley & Co. : [1959]1SCR379 , wherein the Supreme Court held that the word 'sale' under Entry 54, List II of the Seventh Schedule should be interpreted and given the same meaning as in the Sale of Goods Act and that therefore a hire-purchase agreement and words contract are not sales. On the ratio of these decisions, the learned Counsel submitted that excise duty should also be interpreted as a duty leviable only in respect of goods manufactured or produced in India. The argument, in our opinion, is misconceived and wholly unacceptable. The decisions of the Supreme Court relied on by the learned Counsel were concerned with the legislative competency of the State Legislatures. In this case, we are concerned with the legislative competency of Parliament. A complete answer is found in Article 248 and Entry 97, List I of the Seventh Schedule to the Constitution. In J. R.G. Manufacturing Association v. Union of India : [1970]2SCR68 , the Supreme Court had occasion to consider a similar question. Under the Rubber Act, 1947 prior to its amendment duty was payable by the owners of the estate on which the rubber was produced. By the amendment Act, the duty could be collected either from the owners of the estate or from the manufacturers by whom the rubber is used. It was contended by the appellants before the Supreme Court, who were rubber goods manufacturers' Association that the duty sought to be imposed on the manufacturers by whom the rubber was used was outside the ambit of Entry 84, List I of the Seventh Schedule to the Constitution and therefore beyond the legislative competence of Parliament. The Supreme Court held that 'if the provisions of Entry 97 in List I in the Seventh Schedule as also the provision of Article 248 of the Constitution are kept in view Parliament would have legislative competence even with regard to the imposition of a tax which does not fall within Entry 84. It will be a kind of nondescript tax which has been given the nomenclature of a duty of excise.'
5. More recently, the Supreme Court again considered a similar argument in respect of farm wealth-tax under Entry 86, List I in Union of India v. Harbhajan Singh Dhillon : [1972]83ITR582(SC) . In this decision the Supreme Court has laid down a more simple and decisive test for determining the question of legislative competency of Parliament in respect of any particular subject-matter. It was laid down therein that the question to be asked is : Is the matter sought to be legislated by the Parliament included in List II or List III or is the tax sought to be levied mentioned in List II No question has to be asked about List I. If the answer is in the negative then it follows that Parliament has power to make law with reference to that matter of tax. This is the result of Article 248 and Entry 97, List I. In the present case, it is not the case of the petitioners that the countervailing duty imposed on them is a tax falling under any of the Entries in List II. It follows that there is no substance in the contention of the petitioners that the Parliament lacks legislative competence to legislate Section 2-A of the Indian Tariff Act, 1934. No other point has been urged in these writ petitions.
6. In the result, the writ petitions fail and they are dismissed. But there will be no order as to costs.