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PETITIONER: INDIAN FARMERS FERTILIZERS CO-OPERATIVE LTD.  AHMEDABAD

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT:       14/12/1999

BENCH: R.C.Lahoti, S.P.Bharucha

JUDGMENT:

     Santosh Hegde,J.

     The   appellant,  who  is   a  registered   multi-unit cooperative  society under the Bombay Cooperative  Societies Act,  filed  writ petitions under Special Civil  Application Nos.94  and 472 of 1977 before the High Court of Gujarat  at Ahmedabad  seeking issuance of a writ of certiorari to quash and  set aside the order made by the Appellate Collector  of Customs,  Bombay, dated 25.2.1976 confirming the order  made by the Collector of Customs at Kandla dated 26.2.1975.

     It  was  contended  before  the High  Court  that  the appellant  manufactures chemical fertilizer and other allied products  in its factory at Kalol and new Kandla Port in the State of Gujarat.  It is also stated that for the purpose of manufacture  of chemical fertilizers, the appellant  imports phosphoric  acid  for use in the manufacture  of  Nitrogen phosphorous   potash,   and  by   the  impugned  order   the respondents had levied auxiliary duty of customs at the rate of 15 per cent purporting to levy the same under Clause 1 of Notification  No.14  dated  1.3.1974 issued by  the  Central Government  in exercise of its power under Section 25(1)  of the  Customs Act, 1962 read with Clause 19(4) of the Finance Bill,  1974.  The appellant contended before the High  Court that,  as a matter of fact, the phosphoric acid imported  by the  appellant  was subjected to a levy of 5%  of  auxiliary duty  of  customs under the above Notification  because  the goods imported by the appellant would fall under Clause 2 of the  said  Notification.   Since the appellant  was  wrongly levied  higher auxiliary duty at 15 per cent, it had  prayed for refund of the excess amount collected from it.

     It  is  not in dispute that at the relevant  time  the rates  at  which  the customs duty was to be  recovered  was specified in the First and the Second Schedule of the Indian Tariff  Act,  1934  which had provided for levy of  duty  at standard  rate,  preferential  rate and protective  rate  as specified  in  the First Schedule.  The import made  by  the appellant was referable to Item No.28(16) which prescribed a standard  rate and preferential rate of duty for  phosphoric acid.

     Section  19  of  the  Finance Act,  1974  has  made  a

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provision for levy of auxiliary duty on goods covered by the First  Schedule  to the Tariff Act, as amended from time  to time,  at  20%  of  the  value of  goods  as  determined  in accordance  with  the provisions of the Customs  Act,  1962. The  auxiliary duty is in addition to the duties  chargeable under  the  Act.   Therefore,  in   exercise  of  the  power conferred upon Section 25(1) of the Act and Section 19(4) of the   Finance   Act,  1974,   the  Central   Government   by Notification  dated 1.3.1974 exempted the goods specified in column  2  of the Table being goods mentioned in  the  First Schedule  to the Act, from so much of the auxiliary duty  as is  in excess of the rate specified in column 3 of the  said Table.  The relevant part of the Notification is as under :-

     .   Sl.No.   Description of  Goods  Rate  of auxiliary Duty of Customs  (1)  (2)  (3) .   1.  Goods in respect of which the rate Fifteen percent of the of duty of customs specified in  the goods as determined in said First schedule read with any  accordance  with the pro- relevant notification of  the Govern-  visions  of Section 14 ment of India for  the  time being in of the Customs Act, force is 60 per cent ad valoram or  1962  (52 of 1962).  more but less than 100 per cent  ad valoram.

     2.   Goods in respect of which the rate Five per  cent of  the  of  duty of customs specified in the value  of  the goods  as  said  First schedule read with of  determined  in accor- the Govt.  of India for the time being dance with the pro-  in  force,  is less than 60% ad or  nil.   visions  of Section 14 of the Customs Act, 1962 (52 of 1962) 3.  xx xx

     4.  xx xx

     Explanation:   For the purposes of Serial Nos.1 and  2 in  the  above  table, the expression the rate of  duty  of customs  specified in the said First Schedule read with  any relevant  notification  of  the  Government  of  India,  in relation to any article liable to two or more different rate of  duty,  means that rate of duty which is the  highest  of those rates.

     Before  the High Court, it was contended on behalf  of the  appellant  that  the phosphoric acid  imported  by  the appellant  for  the manufacture of fertilizer is  liable  to auxiliary  duty  @ 5% under clause 2 of the aforesaid  Table and  not  @  15%  under Clause 1.  Section  12  of  the  Act provides  that except as otherwise provided or any other law for  the  time  being in force, duties of customs  shall  be levied  at  such rates as may be specified under the  Indian Tariff Act, 1934 (presently known as the Customs Tariff Act, 1985) or any other law for the time being in force, on goods imported  into  or exported from India.  Therefore,  on  the import  of  the  goods  into  India  duties  of  customs  as specified  in  the First and Second Schedules of the  Indian Tariff  Act,  1934  are  required to  be  levied.   This  is provided  in  Section 2 of the Indian Tariff Act.  The  said Act empowers the Central Government for levy of preferential rates  of  duties and protective rates of duties.   For  the import  of  phosphoric  acid, Tariff Item  is  28(16)  which provides  the  standard rate of duty if it is imported  from

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Burma at 10% ad valorem.  Pursuant to the power vested in it under  Section  26  of the Act, the  Central  Government  by Notification  dated  28.4.1969 has exempted phosphoric  acid falling  under Item 28(16) when imported for the manufacture of fertilizer so much of that portion of the duty of customs leviable  thereon  which  is in excess of  30%  ad  valorem. Therefore,  for phosphoric acid , the standard rate of  duty is  60% ad valorem, preferential rate of duty is 10 per cent ad  valorem if it is imported from Burma and 30 per cent  ad valorem  if  imported  from  a  country  other  than  Burma. Therefore,  it  is apparent that for phosphoric acid,  three different   rates  of  duty   are  fixed.   For  determining auxiliary  duty, Explanation to the Table provides that  for the  purpose of serial Nos.1 and 2, the expression rate  of duty  of  customs specified in the First Schedule read  with any  relevant  notification  of the Government of  India  in relation  to  any  article liable to two or  more  different rates  of duty, means that rate of duty which is the highest of  those  rates.  In the instant case, it is seen that  the highest rate of duty specified in the First Schedule for the phosphoric  acid as per Item 28(16) is 60 per cent.   Hence, in  the  instant  case,  the  highest  rate  for  import  of phosphoric  acid  would  have been 60 per cent but  for  the Notification referred to above, since the import in question was  from Burma, the duty payable is 30 per cent ad valorem. Hence,  from  a  perusal  of the First  Schedule  read  with Notification  dated 28.4.1969 it is clear that so far as the import  of phosphoric acid by the appellant is concerned, it falls  at serial No.1 of the aforesaid Table and 15 per cent auxiliary duty is required to be paid.  We also find support to  the  above reasoning of ours from the judgment  of  this Court  in the case of Collector of Customs v.  Western India Plywood Manufacturing Co.  Ltd.  (1989 (44) ELT 595) wherein while  considering the levy of auxiliary duty on the  import of timber from Burma, this Court held thus :-

     When different rates slab of the auxiliary duty under an   Exemption  Notification  are   provided  based  on  the effective  rate  of Basic customs duty and  the  Explanation thereto  provides in case of two or more rates of Basic duty in  relation  to  an Article because of the reasons  of  the country of origin, the rate of auxiliary duty is to be fixed as  per the highest rate of Basic duty, the reference to the two  or  more  rates of Basic duty does not confine  to  two effective  rates under two Exemption Notifications but would also include one effective rate under Exemption Notification and  the  other  rate under the Schedule.   Accordingly  the timber  which  was  subject to 60% rate of  duty  under  the Tariff  Schedule and totally exempted from Basic duty by  an Exemption Notification would amount to two rates of duty for the purposes of Notification No.126/84-Cus.  and accordingly the Auxiliary duty at the rate of 40% is applicable.

     The Notification which was considered by this Court in the  said case and the Notification applicable in this  case are  similar,  hence, the said pronouncement of  this  Court would  apply  on all fours to the present case.  We find  no reason  to  differ from the view taken by this Court in  the said case.  For the reasons stated above, these appeals fail and are dismissed.  No costs.