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CASE NO.: Appeal (civil)  6529 of 2002

PETITIONER: Union of India & Others

RESPONDENT: Inter Continental (India)

DATE OF JUDGMENT: 23/04/2008

BENCH: ASHOK BHAN & DALVEER BHANDARI

JUDGMENT: JUDGMENT O R D E R CIVIL APPEAL NO. 6529 OF 2002

       The short question which arises for consideration in the present appeal filed by the  revenue  is "whether the end-use verification of the products is necessary for availing the benefit o f  concessional rate of duty".         Respondent-assessee (hereinafter referred to as the ’assessee’) is engaged in the bu siness of  trading in various commodities including Crude Palm Oil and Crude Palmolin  of Non-Edible  Grade which is imported in accordance with law.  On 28.3.2001, assessee imported  consignments of Crude Pal Oil and Crude Palmolin and it is alleged that the assessee got the m  cleared after paying concessional rate of duty at the rate of 35% as per entry 29 of the  Notification No.17/2001-Customs dated 1st March, 2001 instead of clearing the same after  paying duty at the rate of 75% as per entry 34 of the same notification.  The goods were  provisionally allowed to be cleared after taking Bank Guarantee of Rs.10 crores for the  differential duty due.  Provisional assessment was allowed directing the assessee to produce   End-use Certificate so as to avail concessional rate of duty as per Board’s Circular  No.40/2001-Cus. dated 13th July, 2001.         Assessee, instead of producing the End-use Certificate, filed a writ petition in the  High  Court questioning the direction to produce the End-use Certificate which was to be issued by   the Assistant/Deputy Commissioner of Central Excise having jurisdiction over last such  purchaser on the ground that a new condition could not be added to the notification by issui ng  a circular.  According to the assessee, the Board Circular seeking to impose a limitation on  the  exemption notification or whittling it down by adding a new condition was not binding on the   assessee as it travelled beyond the said notification.         It may be mentioned here that the samples taken from the imported crude oil were sen t for  testing to the Chemical Examiner, Customs House, Kandla and  Public Analyst, Food & Drug  Laboratory, Vadodara for their opinion to ascertain as to whether the oil is fit for human  consumption or not.  Both the laboratories opined that the imported oil was not fit for huma n  consumption.         The High Court by the impugned order has accepted the writ petition by holding that  the  Central Board of Excise and Customs could not, by issuing a circular subsequent to the  issuance of the notification, add a new condition thereby restricting the scope of the exemp tion  notification. It was held that the impugned circular

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No.40/2001-Cus. dated 13.7.2001 being contrary to the notification No.17/2001-Cus. dated 1st   March, 2001 could not be sustained as it cannot override the said notification.  In para 16,  the  High Court observed as under:

"In relation to entry at Sr.No.29 no condition is prescribed. Similarly  no condition is prescribed in relation to entry at Sr.No.34 or even in  entry No.28.  If the Notification No.17 has not provided for any  condition, in our opinion, subsequent circular cannot impose such a  condition as the same would tantamount to rewriting Notification  No.17 or in other words legislating by circular, which is not permissible  in law. As can be seen from the relevant provisions with special  reference to Section 25 read with Section 159 of the Act, a notification  under Section 25 of the Act requires publication in the official gazette  as well as requires tabling before both the Houses of Parliament and if  that exercise has been carried out without any condition being imposed  in the Notification No.17 it would not be permissible to permit revenue  to impose such condition by way of circular. If the revenue is allowed to  undertake such an exercise, the requirement of publication in official  gazette and laying a notification before each House of the Parliament  would become nugatory and such a course of action is not envisaged by  the Act.  It would give licence to the executive to bypass/override the   legislature and cannot be countenanced."

           We entirely agree with the view taken by the High Court that the department could no t, by  issuing a circular subsequent to the notification, add a new condition to the notification  thereby either restricting the scope of the exemption notification or whittle it down.          A three Judge Bench of this Court in the case of Tata Teleservices Ltd. v. Commissio ner of  Customs reported in (2006) 1 SCC 746 has taken a similar view.  In para 10, it was held as  under:

"We are of the view that the reasoning of the Bombay Bench of the  Tribunal as well as that of the Andhra Pradesh High Court must be  affirmed and the decision of the Delhi Tribunal set aside insofar as it  relates to the eligibility of LSP 340 to the benefit of the exemption  notification.  The Andhra Pradesh High Court was correct in coming  to the conclusion that the Board had, in the impugned circular,  predetermined the issue of common parlance that was a matter of  evidence and should have been left to the Department to establish  before the adjudicating authorities. The Bombay Bench was also  correct in its conclusion that the circular sought to impose a limitation  on the exemption notification which the exemption notification itself  did not provide.  It was not open to the Board to whittle down the  exemption notification in such a manner."

       Following the aforesaid decision of this Court in Tata Teleservices Ltd.(supra), we  do not  find any merit in this appeal and dismiss the same leaving the parties to bear their own cos ts.