Goods Exempted from BCD Can Still Attract Additional Duty Unless Specifically Exempted: Madras HC [Read Order]

In a recent ruling, the Madras High Court has held that goods exempted from Basic Customs Duty ( BCD ) can still be subjected to additional duty under the Customs Tariff Act unless there is a specific exemption granted under the relevant statutory provisions.

The Court dismissed the writ petitions filed by Transasia Bio-Medicals Ltd., which challenged the levy of 4% additional duty on the import of certain medical equipment despite being exempted from BCD.

Chief Justice K R Shriram and Justice Mohammed Shaffiq observed that “the goods imported, even though exempted from basic customs duty, may still be subject to levy of additional duty under the respective enactments and they would be so subject unless and until they are specifically exempted by the competent authority in exercise of the powers vested under those respective enactments from such additional duty.”

The petitioner, Transasia Bio-Medicals Ltd. had imported Hemato Analyser devices falling under Tariff Item 9027 80, which carried a nil rate of basic duty under the Customs Tariff Act and was covered by Notification No. 24/2005-Cus, exempting the goods from customs duty.

However, Customs authorities levied 4% additional duty in terms of Notification No. 19/2005-Cus issued under Section 3(5) of the Customs Tariff Act, which imposed additional duty on goods covered under Notification No. 24/2005.

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The petitioner contended that since the goods were already free from duty under the tariff and exempted by Notification No. 24/2005, the levy of additional duty was illegal. The Court, however, rejected this argument, holding that the Customs Act and the Customs Tariff Act operate independently, and exemption from BCD does not automatically extend to additional duty unless clearly provided by law.

The court observed that the charging provision for additional duty lies under Section 3 of the Customs Tariff Act, and the government retains the power to impose such duties on specified goods through independent notifications.

‘Both the Acts, i.e., the Customs Act as well as the Customs Tariff Act, are independent to each other and one duty can be levied without the other. We find support for this view in Colgate Palmolive (India) Limited v. Commissioner of Customs, Patna’, the bench noted.

It further noted that unless a specific exemption from additional duty is granted under Section 3(5), the mere fact that BCD is nil or exempt does not preclude such levy. Accordingly the petition was dismissed.

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