COLLECTOR OF CUSTOMS, BANGALORE & ANR.versusHANSUR PLYWOOD WORKS AND ANR.

         COLLECTOR OF CUSTOMS, BANGALORE & ANR.
                                                                                   A.
                                         v.
                HANSUR PLYwOOD WORKS AND ANR.

                              OCTOBER 26, 1989

            [S. RANGANATHAN AND KULDIP SINGH, JJ.]                                 B

          Customs Tariff Act, 1975: Schedule Heading No. 44.01 and
    Notifications No. 265 of 1982, No. 59 of 1983 and No. 126 of 1984-
    Timber from Burma exempted from customs duty-Levy of auxiliary
    duty-Determination of.

           Import of timber is charged to effective basic customs duty at 60
                                                                                   c
    per cent under the Customs Tariff Act, 1975. The Government of India
    had, however, issued notification under s. 25 of the Customs Act, I962
    absolutely exempting timber imported from Burma. But the importers
    are liable to pay auxiliary duty in terms of Notification No. 265 dated
    December 8, 1982 and its successor Notification Nos. 59 of 1983 and 126        D
    of 1984, which prescribed two rates with reference to the rate of duty of
    customs. The explanation thereto provides that where there are two
    effective basic rates applicable in respect of any article and the
•   differentiation in rates is attributable to the country of origin of the
    goods imported, then the auxiliary duty payable will be .the higher of
    the two rates.                                                                 E

         The respondents had imported certain consignments of timber
    from Burma which were assessed to auxiliary duty at the higher rate as
    per notification. The Appellate Tribunal held in favour of the assessee-
    respondents.
                                                                                   F
           In these appeals by the Revenue under s. 130E(b) of the Customs
     Act, it was contended for the respondents that exemptions or com~es­
•   sions in respect of goods imported from certain countries were generally
     granted in pursuance of trade agreements entered into with those
    countries· under s. 5 of the Tariff Act, that the expression "country of
    origin" in the notification had a special meaning and its determination        G
    governed by special provisions, and that, therefore, the explanation to
    the notification in question had to be confined in its application only to a
    comparison of the rates applicable under notification of concession and
    .basic auxiliary duty determined accordingly.

          Allowing-the appeals,

                                       775
    776           SUPREME COURT REPORTS               (1989] Supp. 1 S.C.R.

A         HELD: The auxiliary duty, in a case where imports from diffe-
    rent countries attract different degrees of exemption under different
    notifications in pursuance of agreements under s. S of the Customs
    Tariff Act should be determinable separately by reference to the effec-
    tive basic duty notified in respect of each such country. But, if there are
    different rates of effective duty notified for goods imported from diffe-
B
    rent countries of origin, then, notwithstanding the agreem~nt with each
    of these countries, the auxiliary duty under such a notification will not
    be determined, in respect of the import from each of such countries, by
    reference to the effective basic duty leviable in respect thereof, but will
    be determined with reference to the highest of the effective rates of duty
    applicable to all the imports. [778A-C]
c
          In the instant case, there is no material to show that the notifica-
    tion was issued in pursuance of an agreement. It is a case where the
    imports come from two sets of countries the imports from which attract
    two different effective basic rates of duty. The differentiation arises
    because in respect of one set of countries there is no notification of
D
    concession while in relation to the other there is a complete exemption
    granted under a notification. There is nothing in the language of the
    explanation that excludes such a case from its purview. The auxiliary
                                                                                  •
                                                                                  I
    duty is, therefore, to he determined with reference to the higher of the
    two effective rates of duty. [777H, 778C-D, Fl
B        Collector of Customs v. Western India Plywood Manufacturing
    Co. Ltd., [1989] Supp. 1 SCR 779, applied.

         CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
    3820-24 of 1988.
p
         From the Order dated 2.6.1988 of the Customs, Excise and Gold
    (Control) Appellate Tribunal, New Delhi in Order No. 410-414/88-D,
    Appeal Nos. CD/SB./659/86-D; C/1526/84-D, CD/SB/1522/86-D; C/
    1565/84-D and C/422/86-D.
G          V.C. Mahajan, and P. Parmeshwaran for the Appellants.

        V. Sridharan, A.R. Madhav Rao and V. Balachandran for the
    Respondents.

           The Judgment of the Court was delivered by
H
    COLLCT. OF CUSTOMS v. HANSURPL YWOOD [RANGANATHAN, J.]              777

           RANGANATHAN, J. These are appeals under section 130E(b) A
    of the Customs Act from an order passed by the Customs, Excise and
    Gold Appellate Tribunal dismissing the appeals preferred by the Col-
    lector of Customs in the cases of M/s. Hunsur Plywood Pvt. Ltd. and
    M/s .. Veneer Mills. The question raised involves the interpretation of
    Notification Nos. 59/83 and 126/8<l. These notifications are identically
    worded in. all material respects with notification no. _265/Cus. dated B
    8.12.1982 and the question before us is directly governed by our judg-
    ment of even date in Civil Appeal Nos. 2644-48 of 1987 (Collector of
    Customs v. Western India Plywood Manufacturing Co. Ltd.; [1989]
    Supp. 1 S.C.R. 779. For the reasons set out in detail in the said judg-
    ment these appeals have to be allowed and the orders of the Assistant
    Collector rejecting the claims filed by the respondents have to be upheld.
                                                                              c
           When these matters were taken up, Shri V. Sridharan, appearing
    on behalf of the assessee-respondents, drew our attention to section 5
    of the Customs Tariff Act. He contended that exemptions or conces-
    sions in respect of goods imported from certain countries are generally
     granted in pursuance of agreements entered into with those countries, D
    that the expression "country of origin" has a special meaning and its
    de.termination governed by special provisions and that, in view of this,
     the explanation to the notification in question has to be confined in its
     application only to a comparison of the rates applicable under notifica-
     tons of concession to goods imported from certain_"countries of
    origin". In this case, though there are four different notifications, one E
    each in respect of Burma, Nepal, Bangladesh and Bhutan, they are all
     notifications of complete exemption and the rate of auxiliary duty by
     reference to any one of them will according to the assessee, be the smal-
    ler rate mentioned in the relevant notification under consideration.
    The.rate ofjbasic duty in respect of other countries is 60% as there is no
    notificatio11 of exemption or concession in relation thereto. The. argu- F
    ment is thai the last of these should be ignomed and the basic auxiliary
    duty determined only by reference to the rates prescribed in the four
    notifications of exemption. For the reasons set out in the judgment in
    the case of Western India Plywood Manufacturing Co. Ltd. we are
    unable to accept this contention.
                                                                               G
           We are unable to agree with the learned ·counsel that the
    interpretation given by us will be inconsistent with the agreement for
    concessional treatment that may have been entered into between the
    Government of India and the countries from which the goods in ques-
\   tion are imported. In the first place, there is. no material in the case.
    b~fore us to show that the notification under section 25 was)ssued in H
    778           SUPREME COURT REPORTS              [1989] Supp. 1 S.C.R.

A   pursuance of an agreement under section 5 of the Customs Tariff Act.
    That apart, if this argument were sound, the auxiliary duty, in a case
    where imports from different countries attract different degrees of
    exemption under different notifications, should be determinable sepa-
    rately by reference to the effective basic duty notified in respect of
    each such country. But admittedly, if there are different rates of effec-
B   tive duty notified for goods imported from different countries of ori-
    gin, then, notwithstanding the agreement with each of these countries,
    the auxiliary duty under the notificaion now under consideration will
    not be determined, in respect of the import from each of such
    countries, by reference to the effective basic duty leviable in respect
    thereof, but will be determined with reference to the highest of the
    effective rates of duty applicable to all the imports. If that be so, there
c   is no reason why the position cannot be the same in a case like the
    present where the imports come from two sets of countries the imports
    from which attract two different effective basic rates of duty, although
    the difference arises because in respect of one set of counties there is
    no notification of concession while in relation to the other there is a
0   complete exemption granted under a notification. As we have pointed
    out, there is nothing in the language of the explanation that excludes
    such a case from its purview.

          Considering the language of the notification before us, as we
    have explained in the case of Western India Plywood Manufacturing
E   Ca. Ltd. the result of reading the First Schedule along with the rele-
    vant notifications is that imports of timber into India from most
    countries is charged to effective basic customs duty as per the tariff in
    the Schedule whereas in respect of imports from Burma, Nepal,
    Bhutan and Bangladesh, the rate of effective basic duty is nil. The
    position, therefore, is that the article in question is liable to two or
F   more different rates of effective basic duty based on the country of
    origin for the import. It, therefore, follows that the auxiliary duty is to
    be determined with reference to the higher of the two effective rates of
    duty.

          We, therefore, see no reason to reach a different conclusion in
G   the present_ case from that arrived at by us in the case of Western India
    Plywood MaQufacturing Co. Ltd. We, therefore, allow the appeals and
    restore the otders of the Assistant Collector rejecting the claims of
    refund filed by the assessees. The appeals are allowed but there will be
    no order as to c.osts.

H    P.S.S.                                                  Appeals allowed.