Case: Collector of Customs, Bangalore Vs. M/s. Western India Plywood Mfg. Co. Ltd. and another

2. The assessee imported logs of timber from Burma. Underthe Customs Tariff Act,timber is chargeable to customs duty at 60 per cent. (This we shall call the basic customs duty.) The relevant entry in the Schedule to the Customs Tariff Act is under heading No. 44.01 which includes "wood andThe government had, however, issued a notification under Section 25(1) of the Customs Act exempting timber imported from certain countries of which Burma is one. The result was that the basic customs duty payable by the assessee in respect of its imports - we shall call this the effective basic duty - was nil. The assessee, however, was liable to pay an additional duty of customs in respect of its imports. This additional duty may be referred to as the auxiliary duty of customs. The levy of this duty is governed by the terms of Notification No. 265 dated December 8, 1982 and its successor Notification No. 59 of 1983 and No. 126 of 1984. The last of these reads ason ofs in respect of40 per centf duty of customs specified in thed First Schedule, read with anyant notifications oft of India for the time beingn forceis 60 per cents in respect of30 per centf duty of customs specified in thed First Schedule, read with anyant notifications oft of India for the time beinge is nilor less than 60 peron : For the purpose of Sl. Nos. 1 and 2 in the above Table, the expression "the rateduty of customs specified in theFirst Schedule, read with anyn of theof India for the time being, in relation to any article liable to two or more differenton ofthe country of origin of that article, means that rate of duty which is the highest of those30 per centand 20 per cent in the82 and 35 per cent and 25 per cent in the3. Thehe notifications are otherwiseThe assessee cleared the goods by paying an auxiliary duty atly, however, the assessee seems to have felt that its case falls under Sl. No. 2 of the above notification and that it should have paid an auxiliary duty of only30 per cent40 perIt, therefore, applied to the respondent for a refund of the excess duty allegedly paid by it. This claim was rejected by the Assistant Collector. However, on appeal, the Collector of Customs (Appeals) held that the assessee was entitled to the refund claimed and this order has also been confirmed by the Central Excise and Gold Control (Appellate) Tribunal (CEGAT). The Collector of Customs has preferred theseThe order of the Tribunal in the appeals preferred by the present respondent was a very short order in which the Tribunal followed its earlier decision in the case of M/s. Indian Plywood Company Limited, Bombay. We have been taken through theof the Tribunal in thesaid case which is reported in Indian Plywood Mfg. Co. Ltd. v. Collector of Customs ((1987) 29 ELT 559 : (1987) 12 ECC 209 (Tribunal ND)). We have, therefore, had the benefit of the full reasoning of the Tribunal for reaching its conclusion

Court's reasoning:
6. We are of opinion that the Tribunal has erred in itsof the notificationset out above and that the assessees case is clearly covered by the explanation in the notification. It is true that the main partof the notificationprovides for an auxiliary duty atper cent incases where the effective rate of basic duty (i.e. the rates set out in the First Schedule read with anyis 60 per centor above and an auxiliary duty at30 per centin cases where such effective basic rates is nilor less than 60 percent. If the notification had stopped here, the assessee would have been perfectly within its right to claim that the auxiliary duty payable by it would only be30 per centbecause the effective basic rate in its7. However, the explanation has made in inroad into this simple rule. It has provided that where there are two (or more) effective basic rates applicable in respect of any article and the differentiation in rates is attributable to the country ofds imported, then the auxiliary duty payable will be the higher of the two (or the highest of the) rates. In the present case, when timber is imported from Burma and the other countries specified in the notification or notifications under Section 25(1), the rate of basic duty is nil but if the goods are imported from other countries, the notification does not apply and a basic duty of 60 per cent would be leviable under the entry in the First Schedule. The result, therefore, is that when we read the rates specified in the First Schedule along with thes in respect ofa particular article, namely, timber, we find that the effective basic duty is leviable on it at two rates and this differentiation in rates is attributable to the country of origin in regard to the import. Hence the explanation squarely comes into operation and the assessee will have to pay auxiliary duty by reference to the higher of the twoof the effectivebasic duty, namely, 60 perdo not, however, see any significance in the use of this word which has any relevance to the point at issue. The word article is used because though a number of articles may be included in one item in the First Schedule, theay not govern all of them and it may be restricted only to some out of the many articles mentioned in the Schedule. The notification and the explanation, therefore, make it clear that the auxiliary duty has to be calculated with reference to each article based on the effective basicty applicable to such article inhe First Schedule read with anynotification under Section 25