IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23.12.2011 CORAM THE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN W.P.Nos.25922 to 25924 of 2011 and M.P.No.1 of 2011 M/s.MRF Limited 124, Greams Road Chennai-600 006 Represented by Mr.V.Deivasigamani General Manager Indirect Taxes ..Petitioner in all WPs. Vs 1. Union of India Ministry of Finance Through Secretary Department of Revenue North Block New Delhi-110 001 2. The Additional Commissioner of Customs (Group 2) Office of the Commissioner of Customs Custom House 60, Rajaji Salai Chennai-600 001 ..Respondents in all WPs. Prayer in W.P.No.25922/2011:- Writ Petition filed under Article 226 of the Constitution of India praying to issue a writ of Certiorari to call for the records of the Second respondent and quash the impugned show cause cum Demand Notice dated 23.09.2011 issued under Section 28(1)(a) of the Customs Act, 1962 in File No.S.Misc.1714/2011/GR-2 by the respondent No.2. Prayer in W.P.No.25923/2011:- Writ Petition filed under Article 226 of the Constitution of India praying to issue writ of Prohibition prohibiting the respondent No.2 from usurping a jurisdiction not vested in it and levying cess in the nature of Additional Duty of Customs under Section 3(1) of the Customs Tariff Act, 1975 on the future imports which are continuous in nature and are required for the petitioner's manufacturing activities. https://hcservices.ecourts.gov.in/hcservices/ Prayer in W.P.No.25924/2011:- Writ Petition filed under Article 226 of the Constitution of India praying to issue writ of Mandamus forbearing the respondent No.2 from imposing/levying any duty in the nature of Additional Duties of Customs under Section 3(1) of the Customs Tariff Act, 1975 on the future imports which are continuous in nature and are required for the petitioner's manufacturing activities. For petitioner : Mr.Arvind Datar, Senior Counsel for Raju K.Lukose For respondents : Mr.K.Ravi Anandapadmanabhan Standing Counsel (Customs) O R D E R The petitioner seeks a Writ of Certiorari to quash the show cause notice-cum-demand notice dated 23.09.2011, issued under Section 28(1) (a) of the Customs Act, 1962, by the second respondent. The petitioner also seeks a Writ of Mandamus to forbear the second respondent from levying Additional Duties of Customs under Section 3 (1) of the Customs Tariff Act, 1975 on the future imports which are continuous in nature and are required for the petitioner's manufacturing activities. The petitioner further seeks a Writ of Prohibition, prohibiting respondent No.2 from usurping a jurisdiction not vested in it and levying cess in the nature of Additional Duty of Customs under Section 3(1) of the Customs Tariff Act, 1975 on the future imports which are continuous in nature and are required for the petitioner's manufacturing activities. 2. The petitioner herein is the manufacturer of Automotive Tyres, Tubes and other rubber products. For manufacturing these rubber products, they purchase indigenously grown natural rubber, apart from importing natural rubber on a regular basis. Rubber, under the Rubber Act, 1947, attracts a duty of excise on all rubber produced in India at such rate, as fixed by the Central Government. Section 12 (1) of the Rubber Act, 1947 is the charging provision under which excise duty as cess is levied on rubber produced in India at such rate fixed by the Central Government as not exceeding two rupees per kilogram of rubber so produced in India. As per the Ministry of Commerce, a duty of excise at Rs.1.50 per Kg is leviable as cess on all rubber produced in India. The excise duty shall be collected by the Rubber Board, levied under Section 12(1). As far as the excise duty leviable under the Central Excise and Salt Act, 1944 is concerned, natural rubber falling under Entry 40.01.00 is exempted from the whole of excise duty leviable. Thus exemption from excise duty under the excise law has nothing to do with the levy under the Rubber Act. Under Section 3(1) of the Customs Tariff Act, 1975, any article which is imported into India attracts additional duty equal https://hcservices.ecourts.gov.in/hcservices/ to excise duty for the time being, leviable on like articles, produced or manufactured in India. 3. It is seen from the documents placed before this Court that in respect of imports made by the assessee during the period January, 1995 to August, 1995, the petitioner imported 31 consignments of natural rubber covered under three categories of licence, which enabled the petitioner to enjoy exemption from payment of customs duty. In particular, the petitioner states that as regards the imports under DEEC scheme covered by Customs Notification Nos.203/92 and 204/92, apart from customs duty exemption, whole of the additional duty leviable under Section 3 of the Customs Tariff Act is also exempted. It is stated that although the Customs Department did not levy additional duty of customs on the import made prior to 19.6.1995, in respect of Bill of Entry No.2919 dated 19.6.1995, for import of 24.92 MTs of natural rubber, the Customs Department levied rubber cess at the rate of Rs.50 per Kg. Aggrieved by the demand made, the petitioner preferred appeals before the Customs, Excise and Service Tax Appellate Tribunal (hereinafter called as the "CESTAT"). By order dated 11.9.1997, in the decision reported in 1997 (96) ELT 198 (Tribunal) (MRF Limited Vs. C.C.), the Tribunal allowed the appeal, quoting the clarification by the Ministry of Finance dated 22.7.1997 in Letter No.F572/97-C, based on the clarification by the Ministry of Commerce dated 30.6.1997 in Letter No.14(3)/97, that under Section 12 of the Rubber Act, cess is levied on rubber produced in India and not on rubber imported. Thus applying the clarification, the Tribunal allowed the appeal preferred by the petitioner. So too, in the case of TTK-LIG Ltd Vs. CC, Chennai reported in 1999 (111) ELT 52, as well as the decision in the case of Vikrant Tyres Vs Commissioner of Madras in Final Order No.1761/2001 dated 29.11.2001, the CESTAT, Bangalore Bench, held that the cess levied on the imported rubber was bad in law. 4. The decision in Vikrant Tyres Vs Commissioner of Madras in Final Order No.1761/2001 dated 29.11.2001 was taken on appeal before the Apex Court by the Revenue. By order dated 17.2.2003, in the decision reported in 2003 (157) ELT A134 (Commissioner of Customs, Chennai Vs. Vikrant Tyres, Mysore), the Apex Court dismissed the Revenue's appeal as "not pressed". Subsequently, in I.A.No.31-45 in Civil Appeal Nos.1460-1474/2003, under order dated 11.10.2003, the Apex Court dismissed the Review petition filed by the Revenue, by observing "We see no reason to modify / clarify our order dated 17th February, 2003. I.A.Nos.31-45 stands dismissed." 5. It is a matter of record that considering the conflicting views of the various Benches of CESTAT as to the levy of additional duty of customs on the imported rubber to the extent equal to the duty of excise levied as cess under Section 12 of the Rubber Act, the Principal Bench, New Delhi, referred the question as to whether the additional duty of customs was leviable on the imported rubber, to a https://hcservices.ecourts.gov.in/hcservices/ Larger Bench, vide the decision reported in 2005 (190) ELT 47 in the case of TIK-LIG Ltd, Vs Commissioner of Customs, Chennai. In the decision reported in 2006 (193) ELT 169 (TTK-LIG Ltd. Vs. Commissioner of Customs, Chennai & Delhi), by order dated 16.12.2005, the Tribunal, New Delhi, held that additional duty of customs was leviable under Section 3 of the Customs Tariff Act, 1975 on the imported rubber as on the date of importation to the extent equal to the duty of excise levied as cess under Section 12 of the Rubber Act on the rubber produced/manufactured in India as on the said date. In so holding, the Tribunal pointed out that neither the communication of the Finance Ministry dated 22.7.1997 nor the communication of the Commerce Ministry dated 30.6.1997 dealt with the additional duty of customs leviable under Section 3(1) of the Customs Tariff Act. It pointed out to the communication from the Ministry of Finance on 02.09.1997, informing all the Commissioners of Customs that as cess is collected as duty of excise, additional duty of customs is leviable under Section 3 of the Customs Tariff Act equivalent to the cess on the imported goods. Noting the misinterpretation of this communication, Ministry of Finance informed the Commissioners of Customs on 02.09.1997, to ensure collection of additional duty of customs on imported goods equal to cess wherever leviable as duty of excise on goods produced/manufactured in India. On 29.9.1997, it clarified that though Rubber Act, 1947 may not provide collection of cess on imports, additional duty of customs is payable on the import of rubber by virtue of Section 3 of the Customs Tariff Act, 1975. By Circular No.75/98 Customs dated 8.10.1998, Government of India, Ministry of Finance, withdrew the circular dated 22.7.1997, by which, Ministry of Commerce letter dated 30.6.1997 was circulated with immediate effect. Thus, the CESTAT pointed out that when cess is levied on goods as duty of excise, then as per Section 3 of the Customs Tariff Act, 1975, additional duty of customs equivalent to such cess is leviable on similar imported goods. 6. Leaving this development aside, it may be noted that consequent on the orders passed in the appeals preferred by the assessee, resulting in relief to the assessee holding that on the imported rubber, there could be no levy of cess under Section 12 of the Rubber Act, the petitioner herein sought for refund of the cess collected and filed a refund application to that effect before the Assistant Commissioner of customs. By proceedings dated 02.12.1998, the Assistant Commissioner of Customs rejected the claim for refund. The Assistant Commissioner pointed out that in terms of Section 3 of the Customs Tariff Act, additional duty of customs was leviable; that the clarification dated 29.9.1997 had clearly held that cess on imported rubber is leviable under Section 3 of the Customs Tariff Act; hence, the refund claim was liable to be rejected. Although there is some confusion in the order passed by the said authority on 02.12.1998 with reference to the Ministry of Commerce letter dated 29.09.1997, the fact remains that as far as imported rubber is concerned, Ministry of Commerce made it clear that imported rubber https://hcservices.ecourts.gov.in/hcservices/ did not attract cess levy under the Rubber Act. Aggrieved by the orders passed in 79 claims, the petitioner preferred appeals before the Commissioner of Customs (Appeals). Placing reliance on the CESTAT order in the assessee's case dated 11.9.1997, the petitioner contended that refund of the cess paid was to be ordered. 7. The First Appellate Authority, however, dismissed the appeals and held that the order of the lower authority holding that cess is leviable as additional duty of customs on natural imported rubber could not be held as bad and that the instruction given on 02.09.1997 clearly pointed out that Additional Duty of Customs under Section 3 of the Customs and Tariff Act, 1975 equal to excise duty leviable as per the Rubber Act, 1947 on the locally produced or manufactured goods was leviable. Thus the appeals were dismissed in toto. 8. It may be of relevance to point out that in the orders passed therein dated 19.11.1999, the Commissioner of Customs made a specific reference to Final Order Nos.2242 to 2272 of 1997 dated 11.09.1997 of CEGAT, South Regional Branch, Chennai, passed in the petitioner's case, following the decision in the case of M/s.M.M.Rubber Company Limited Vs. Commissioner of Customs, Chennai dated 08.12.1998, wherein, in paragraph 5 of the order, the Tribunal stated that the claim of the present petitioner therein before the Tribunal was with reference to the levy of cess and not with reference to the Countervailing Duty (CVD). The Tribunal had observed therein that had the question been a countervailing duty, the order of the Commissioner might have been different. 9. Thus, ultimately, the batch of claims of the petitioner got dismissed and all of them went on appeal before the CESTAT. By a common order passed by the Tribunal dated 28.10.2003 in Appeal Nos.C/726 to 730/1996, which included not only the assessee's case but two other assessees case viz., London Rubber Co. India Ltd and Elgi Tyre and Tread Ltd., towards the end of paragraph 7, the Tribunal pointed out to the factual issue therein that cess on imported rubber was not leviable and hence allowed the appeals, holding that the appellants are entitled to the refund of the cess levied and collected by the Customs Department on the imported rubber. In the circumstances, the Tribunal further held that as the question of unjust enrichment for the purpose of Section 11B had to be seen, the authorities were directed to verify the said aspect and grant the refund to the petitioner. Thus, the Tribunal set aside the orders with a consequential direction to the authorities to consider the claim in terms of Section 11B and pass orders. 10. It is seen from the documents placed before this Court that the Revenue preferred a Special Leave Petition before the Apex Court as against this order of the CESTAT, raising the following questions of law: (a)Whether cess is leviable on imported rubber under Section 12 of https://hcservices.ecourts.gov.in/hcservices/ the Rubber Act, 1947, read with Section 3 of the Customs Tariff Act, 1975? (b) Whether the claim of the respondent for refund of duty is barred by the doctrine of unjust enrichment? 11. The appeals filed by the Revenue were however dismissed under orders dated 05.07.2004 and the Apex Court remanded the matter back to the CESTAT to decide on the question of unjust enrichment. The appeals preferred in the case of Vikrant Tyres Ltd. and MM Rubber Company Ltd. were also remanded by the Apex Court under orders dated 14.07.2008 and 08.03.2007 respectively. The CESTAT accordingly set aside the orders in the respective assessee's case and remanded the case to the original authority to decide on the issue of unjust enrichment on the refund claim made by the assessees therein. 12. While matters stood thus, by Show cause-cum-Demand Notice dated 23.09.2011, the second respondent herein initiated proceedings under Section 28(1)(a) of the Customs Act, 1962, demanding levy of Additional Duty under Section 3 of Customs Tariff Act, 1975 and called upon the petitioner-MRF Limited to show cause: (i) As to why Additional Duty of Customs amounting to Rs.46,47,500/- as detailed in Annexure I for the period 24.09.2010 to 23.10.2010 under Section 3(1) of the Customs Tariff Act, 1975 should not be recovered from them under Section 28(1) of the Customs Act, 1962. (ii) As to why interest at appropriate rate on the amount mentioned above should not be recovered from them under Section 28 AB of the Customs Act, 1962. (iii) As to why penalty should not be imposed on them under Section 114 A of the Customs Act, 1962. 13. Aggrieved by this, the petitioner has filed the present writ petition before this Court, challenging the same on the following grounds: (a) that the respondent has no authority or jurisdiction to reopen the issue, which is already concluded in favour of the assessee. (b) that once the appeal preferred by the Revenue on the aspect of levy of cess on imported goods is rejected by the CESTAT as confirmed by the Apex Court and again on the refund claim on further appeal before the Tribunal, it is no longer open to the Revenue to reopen that concluded issue to press into service, Section 12(1) of Rubber Act, 1947 and Section 3(1) of the Customs Tariff Act, 1975. (c) that when the Tribunal's order on the petitioner's refund claim appeal had also attained finality, the demand notice issued by the Revenue on the pretext of show cause notice with premeditation to forestall the refund claim is totally illegal and without jurisdiction. When there are no jurisdictional facts to issue notice under Section 28(1)(a) of the Customs Act, 1962 in the light of the decision of the Supreme Court in Siemens Ltd., Vs. State of Maharashtra reported in 2007 (207) ELT 168 (S.C.), the impugned https://hcservices.ecourts.gov.in/hcservices/ demand notice merits to be quashed. The petitioner also submits that the demand now made by the Revenue is no different from the amount collected by the Revenue originally. When the issue on levy of cess had already been decided and stands concluded by the decision of the Tribunal and on appeal, the Revenue itself had withdrawn the appeal before the Apex Court in the case of Vikrant Tyres Ltd., thereby accepting the decision of the CESTAT, the question of assuming jurisdiction to levy additional duty does not arise and there could be no longer a levy of additional duty. 14. Learned senior counsel appearing for the petitioner pointed out that the levy of cess under the Rubber Act, 1947 is a levy for a specific purpose. Given the fact that the same is now like the excise duty to go for a MODVAT credit facility and considering the fact that no excise duty is leviable in the case of imported rubber and going by the decisions of the Tribunal accepted by the Revenue too, there could no longer be any demand in the form of levying additional duty. Thus when Section 3 of Customs Tariff Act, 1975 is clear as to the levy as one of additional duty and not as cess and the present notice is no different from what was originally given by the Revenue, the order passed by the CESTAT on the refund claim should have been taken to a logical end. The present proceedings, in short, are aimed at the refund claims and there are no bona fides in the present proceedings. He pointed out that the confusion persisting in the minds of the authorities below as to the additional duty collected as cess is clear from the reading of the order of the Assistant Commissioner and later in the First Appeal order in considering the claim for refund. 15. Thus learned Senior Counsel pointed out that in substance, the demand now made in the notice is no different from what was originally levied. Going by the history of said levy, right from the decision of the CESTAT in the case of MRF Ltd Vs. CC, Madras reported in 1997 (96) ELT 198 (T-Mad) and the subsequent decisions thereon by the Tribunal in the petitioner's case and in similarly placed assessee's case, it is not open to the Revenue to reopen the settled issue once again as though it is purported to be a notice to levy additional duty. He further pointed out that considering the conflicting views that persisted therein and the long history of litigation on the levy of additional duty on the basis of cess levied under the Rubber Cess Act, 1947, the clarification issued by the Board on 22.07.1997 as well as on 30.06.1997 thus having been accepted by the respondents, a concluded issue cannot be reopened in the guise of proposal to levy additional duty. It is further stated by the learned senior counsel appearing for the petitioner that what was levied as per the original order was cess as additional duty on imported items. When the petitioner had made a refund claim based on the circular and the Tribunal had granted it so, the show cause notice issued is only a colourable exercise. https://hcservices.ecourts.gov.in/hcservices/ 16. Referring to the orders passed on the refund claim, he further pointed out that even assuming that the refund claim of the petitioner was not covered by the earlier order passed, holding it as an additional duty, the stand of the Revenue is evident from the rejection order passed by the Assistant Commissioner, that what was sought to be considered under the refund claim was nothing but a levy collected as additional duty with the cess shown for rate purposes only. Referring to the provisions of the Rubber Act, 1947, learned senior counsel placed reliance on the decision of the Delhi High Court reported in 2004 (165) ELT 35 (Del), in the case of Pasupati Fabrics Ltd., Vs. Union of India, that the levy under the Rubber Cess Act does not partake the character of tax or duty to be considered for the purpose of Section 3 of the Customs Tariff Act, 1975. It must be pointed out herein that learned senior counsel was fair enough to place before this Court, a decision of the Gujarat High Court in the case of Vareli Textile Industries Ltd. Vs. Union of India reported in 1997 (91) ELT 279 (Guj), taking a contra view on this aspect. Thus, the sum and substance of the argument of the learned senior counsel appearing for the petitioner is that, given the round of litigation at the first instance, which ultimately resulted in favour of the petitioner and considering the pith and substance of the levy, the present notice has to be quashed as without jurisdiction. 17. On notice, the respondents have filed the counter affidavit before this Court. The stand of the Revenue is that levy under Section 12 of the Rubber Act, 1947 is not cess as such, but duty of excise levied as cess for the purpose of the Act. Thus, what is levied under the Rubber Act is no different from what is levied as excise duty under the Central Excise Act. Referring to Section 3(1) of the Customs Tariff Act, 1975, the counter states that the question before the Tribunal on the earlier round of litigation was as to whether the Customs Department could levy cess as per the Rubber Act, 1947. It is no doubt true that the Board, in its circular, pointed out that on imported rubber, there is no question of the Customs Department levying cess and the Tribunal also held in favour of the assessee that under Section 3(1) of the Customs Tariff Act, 1975, the Revenue cannot impose cess as leviable under Section 12(1) of the Rubber Act, 1947. Referring to the decision of the Tribunal, particularly to the Larger Bench of the Delhi Tribunal in the case of TTLK-LIG Ltd Vs. Commissioner of Customs, Chennai/New Delhi reported in 2006 (193) ELT 169 (Tri-LB), the respondent submitted that the decisions rendered by the Tribunal earlier were all on the aspect of the Customs Department collecting cess under the Rubber Act, 1947 on the imported rubber and not as an additional duty under Section 3(1) of the Customs Tariff Act, 1975. 18. Thus the issue before the Tribunal and in the appeal before the Supreme Court was as to whether the respondent could levy cess on the imported rubber and the question considered and decided was not https://hcservices.ecourts.gov.in/hcservices/ in relation to the levy of additional duty of customs under the Customs Tariff Act, 1975. 19. The Supplementary counter filed by the Revenue further pointed out to the circular issued dated 29.09.1997 as clearly giving guidelines to the Field Officers, directing them to collect additional duty of customs only by virtue of Section 3 of the Customs Tariff Act on the imported rubber. The counter further states that all the prior circulars issued were with reference to the jurisdiction of the Customs Department to levy cess under the Rubber Act, 1947 on imported items. Thus the present proceedings is concerned about the levy of additional duty of customs under Section 3 of the Customs Tariff Act and the measure for that levy as per Section 3 (1) is adapted from the Rubber Act,1947. 20. Learned Standing counsel appearing for the Revenue, making his submissions on this aspect, pointed out to Section 3(1) of the Customs Tariff Act, 1975 and submitted that the levy sought to be made under Section 3(1) of the Customs Tariff Act, 1975 is based on the prevalent rate of excise duty payable on the similar goods manufactured within the country. In other words, for the purpose of fixing the rate of additional duty levied under Section 3 of the Customs Tariff Act, 1975, the Act borrows the rate of the dxcise duty levied on the indigenously manufactured goods. Thus what the petitioner paid originally as evident from the Bill of Entry was cess only and the petitioner was fully