A writ petition more than 2 decades old finally got disposed off last Friday by the Bombay High Court ending confusion among steel manufacturers and exporters.
The matter in concern was whether the “Stainless Steel Bright Bars of Austenitic Variety” is classifiable as “Bright Steel Bars” for the purpose of drawback schedule under the Customs and Central Excise Duties Drawback Rules, 1972.
The writ petition was filled by India Steel Industries and one of its partner. Repeated efforts from the Customs department to classify the petitioner’s goods under sub-serial No. 3606 of schedule ‘F’ of the Central Excise Duties Drawback Rules, 1972 aggrieved them to file a writ petition before the High Court of Bombay.
Sub-serial no. 3606 of schedule ‘F’ of the Central Excise Duties Drawback Rules, 1972 classifies goods under the heading “Iron and steel except ingots and other primary forms (including blanks for tubes and pipes) of iron and steel”. This, according to the aforementioned rule, will attract a drawback value of Rs. 395 per M.T. Whereas, sub-serial no. 3803 of the schedule ‘F’ classifies goods under the heading “manufacture of metals not elsewhere specific” which accordingly attracts a drawback value of Rs. 8.90 per kg.
The claim of the petitioners was initially accepted by the department and compensated accordingly, but later a new assistant collector demanded the compensated amount back on the grounds of erroneous payment. Furthermore, a fresh application for drawbacks of similar characteristic by the party was rejected and he insisted that they file as advised by the department.
While quashing the order of the Justice Riyas I. Chagla and Justice A.S. Oka were quoted, “We inclined to concur with view taken by the Collector (Appeals) that “Stainless Steel Bright Bars of Austenitic Variety” could classify only for inclusion in sub- serial No. 3803 at the relevant time. It is a settled law that where there are two views possible, the one favourable to the assesse in the matter of taxation has to be preferred. We are of the view that the impugned order of the first Respondent has incorrectly arrived at a finding that the scheme of drawback schedule at the relevant time was such that the word “steel” mentioned in sub-serial No. 3606 would include stainless steel also. We are of the view that the first Respondent has erroneously held in the impugned order that the goods exported are bright stainless-steel bars and are appropriately classifiable under sub-serial No. 3606. We are not going into issue as to whether the first Respondent has validly exercised power under Section 129DD of the Customs Act 1962 in reviewing an order of the Commissioner (Appeals) pursuant to an application made by the Collector Customs (Judicial) as we find on merits itself that the impugned order is unsustainable and is required to be quashed and set aside.”
Read the Full Text of the Judgment Below
