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Judgment
In these four writ petitions, the petitioner is one and the same. In three writ petitions, namely, W.P. 2054, 3257 and 3258 of 1983, the
petitioner prays for writs of Mandamus directing the respondents to permit the petitioner to clear the imported items of machinery without payment
of auxiliary duty under the Customs Law. In the fourth writ petition, namely, W.P. 2055 of 1983, the petitioner prays for a writ of mandamus to
direct the Union of India to grant exemption to the petitioner u/s 25 of the Customs Act, 1962 with regard to payment of auxiliary duty on items of
machinery imported by it. The petitioner has no grievance with regard to the payment of basic Customs duty on the items of machinery imported
by it.
The petitioner has imported the concerned items of machinery pursuant to specific contracts registered under Heading 84.66 to the First
Schedule to the Customs Tariff Act, 51 of 1975. The petitioner has enjoyed the concessions annexed to the imports made pursuant to such
contracts with regard to basic Customs duty and additional duty. The problem presented to the petitioner and equally so, to the Revenue is with
reference to the auxiliary duty on the items of machinery imported by the petitioner. According to the petitioner, specific items ''paper making
machinery and component parts thereof'' falling under Heading 84.31 imported by it have been totally exempted from auxiliary duty as per
Notification 62/83-Customs, dated 1-3-1983. According to the Revenue, since the above items are also those imported pursuant to the specific
contracts registered under Heading 84.66, they have to bear the auxiliary duty to the extent of 20% of the value as per the Notification 61/83-
Customs, dated 1-3-1983. The body of the Notification 62/83-Customs, dated 1-3-1983 and the relevant items of the Table relatable to Heading
84.31 are extracted as follows :-
In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), read with sub-clause (4) of Clause
45 of the Finance Bill, 1983, which clause has by virtue of the declaration made in the Bill under the provisional collection of Taxes Act, 1931 (16
of 1931), the force of law, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods
specified in Column (3) of the Table annexed hereto and falling under Heading No. or sub-heading No. of Heading No. of the First Schedule to
the Customs Tariff Act, 1975 (51 of 1975), specified in the corresponding entry in the Column (2) of the said Table, when imported into India,
from the whole of the auxiliary duty of Customs leviable thereon under sub-clause (1) of Clause 45 of the said Finance Bill.
TABLE
------------------------------------------------------------------------
Sl. No. Heading No. or sub-heading No. of Heading
No. of the First Schedule to the Customs Description
Tariff Act, 1975 of goods
------------------------------------------------------------------------
(1) (2) (3)
------------------------------------------------------------------------
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
84-31 Paper making machinery
and component parts
thereof
.. ..
.. ..
.. ..
.. ..
------------------------------------------------------------------------
The body of the Notification 61/83-Customs, dated 1-3-1983 and the relevant item of the Table relatable to Heading 84.66 read as follows :
In exercise of the powers conferred by sub-section (1) of the Section 25 of the Customs Act, 1962 (52 of 1962) read with sub-clause (4) of
Clause 45 of the Finance Bill, 1983, which clause, has, by virtue of the declaration made in the said Bill under the Provisional Collection of Taxes
Act, 1931 (16 of 1931), the force of law, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby
exempts the goods specified in Column (3) of the Table annexed hereto and falling within the Chapter of the First Schedule to the Customs Tariff
Act, 1975 (51 of 1975) specified in the corresponding entry in Column (2) of the said Table, when imported into India, from so much of the
auxiliary duty of Customs leviable thereon under sub-clause (1) of Clause 45 of the said Finance Bill, as is in excess of the amount calculated at the
rate of twenty percent of the value of such goods as determined in accordance with the provisions of Section 14 of the First mentioned Act.
TABLE
------------------------------------------------------------------------
Sl. No. Chapter No. in the First Schedule Description of
to the Customs Tariff Act, 1975 the goods
------------------------------------------------------------------------
(1) (2) (3)
------------------------------------------------------------------------
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
.. ..
84 Goods falling under
Heading No. 84.66
.. ..
.. ..
.. ..
.. ..
.. ..
------------------------------------------------------------------------
Two salutary principles come to the aid of the petitioner to sustain its prayers with regard to total exemption from auxiliary duty. Mr. B. R.
Dolia, learned counsel for the petitioner, has pressed forth only these principles to bring conviction to the mind of this Court with regard to the
tenability of the claim of the petitioner. The first principle is generalia specialibus non derogant its plain meaning being ''General words do not
derogate from special provisions or special provisions will control general provisions''. In other words, where there is a conflict between a Special
Act, and a General Act, the provisions of the Special Act prevail. The maxim was also applied while considering the operation of two statutes or
law or rules, enacted simultaneously. The maxim has been frequently applied to resolve apparent conflicts between provisions of the same statute
or of different statutes of the same date. In this behalf, learned counsel for the petitioner placed reliance on the following pronouncements in
support of the above principle :-
The J.K. Cotton Spinning and Weaving Mills Co. Ltd. Vs. The State of Uttar Pradesh and Others, ;
U.P. State Electricity Board v. Hari Shankar Jain 1978 2 LLJ 399 ;
Superintendent of Central Excise, Surat and Others Vs. Vac Met Corpn. (P) Ltd., etc. etc., ;
Atul Glass Industries (Pvt.) Ltd. Vs. Collector of Central Excise, .
The second principle which helps the case of the petitioner is the rule of construction of fiscal law. Whenever there is an ambiguity on the
question of construction of fiscal law, it is well-settled that it has got to be resolved in favour of the taxpayer rather in favour of the Revenue. If the
case could be brought within either of the two on provisions, it is the right of the tax payer to claim and equally so, the duty of the Court to accord
him, the benefit of the provision which leaves him with a lighter burden. Even if there is a doubt as to which of the provisions should be applied, the
Court should apply only that provision, which is favourable to the tax payer and even if the result would be to confer a double advantage on him. In
this behalf, I feel obliged to refer to the following pronouncements cited by Mr. B. R. Dolia, learned for the petitioner :-
G. SCAMMELL AND NEPHEW, LTD. Vs. ROWLES (H. M. INSPECTOR OF TAXES)., ;
(1946) 14 ITR 479;
Commissioner of Income Tax, Punjab Vs. Kulu Valley Transport Co. P. Ltd., ;
Commissioner of Income Tax Vs. Balapur Sugar and Allied Industries Ltd., .
Here, we find on the same day, two Notifications have come to be issued. Notification No. 61/83, imposes levy of auxiliary duty to the tune of
20% of the value of goods falling under Heading 84.66. Notification No. 62/83 took away specified items ''paper making machinery and
component parts thereof'' falling under Heading 84.31 from the burden of the whole of the auxiliary duty. Paper making machinery and component
parts thereof could also come under Heading 84.66. But the special Notification 62/83 has called out those specified items to come within its
ambit. There is nothing to indicate that Notification No. 62/83 excluded those specified items from its benefit on the ground that those items could
also fall under the general Heading 84.66 covered by Notification No. 61/83. In the absence of such express exclusion, there is no warrant to deny
the petitioner the benefit of the special Notification No. 62/83.
In this connection, learned counsel for the petitioner, also laid stress on the Rules for Interpretation of the First Schedule to the Act and in
particular Clauses 3 thereof which reads as follows :-
When for any reason, goods are prima facie classifiable under two or more Headings, classification shall be effected as follows :
(a) The Heading which provides the most specific description shall be preferred to Headings providing a more general description.
Merely because ''paper making machinery and component parts thereof'', coming under Heading 84.31 and covered by Notification No. 62/83,
would also come within the general Heading 84.66 covered by Notification No. 61/83, it is not possible to deny the petitioner the benefit of the
exemption accorded in Notification No. 62/83. The principles discussed above amply and forcibly support the case of the petitioner that the rule
generalia specialibus non derogant should apply to the present case.
Even on the second principle urged by the learned counsel for the petitioner covering reliefs at the hands of this Court, I find that the case of the
petitioner stands on a strong footing. The Notification 62/83 is unambiguous and it specifically refers to ''paper making machinery and component
parts thereof'' coming within Heading 84.31 without any exclusion on the ground the said items namely ''paper making machinery and component
parts thereof'' could also come within the ambit of the general Heading 84.66. Even assuming that there is an ambiguity and conflict between the
two Notification, I am obliged to apply the principle that any ambiguity in the matter of construction of fiscal law should be resolved in favour of the
tax payer rather than the Revenue.
It is a well-settled rule that on the question of exemption in a fiscal law though a strict construction should be applied yet, what is expressly
granted shall not be denied to the tax payer by falling back upon some other provision found elsewhere. The exempting provisions must always be
regarded as paramount. At the risk of repetition, it must be stated that Notification No. 62/83, is specific and has clearly given the exemption with
reference to ''paper making machinery and component parts thereof'' falling under Heading 84.31, without any exclusion expressed on the ground
that it could also come within the general Heading 84.66. Maxwell on the Interpretation of Statutes, 12th Edition, page 256 quotes the
observations of Rowlatt J. that ''In a Taxing Act, one has to look merely at what is clearly said; there is no room for any intendment; there is no
equity about a tax; there is no presumption as to a tax; nothing is to be read in; nothing is to be implied; one can only look fairly at the language
used''.
The contention of Mr. P. Narasimhan, Senior Central Government Standing Counsel for the respondents, is that the petitioner had the benefit of
certain concessions in respect of the items of machinery, it imported, pursuant to the specific contracts under Heading 84.66 and therefore, the
petitioner could have only those concessions without in any manner having them enlarged even if there is a specific notification to that effect. This
submission ignores the principles discussed above. Applying the two principles, pressed forth by the learned counsel for the petitioner, I have to
countenance the prayers projected in W.P. Nos. 2054, 3257 and 3258 of 1983 and accordingly the said writ petitions are allowed.
Coming to W.P. 2055 of 1983, the petitioner''s purpose has been served by the other three writ petitions being allowed. It is true, learned
counsel for the petitioner stated, that the Notification 62/83 is the result of the General Agreement on Tariffs and Trade (GATT) and the Union
Government is bound by it and this must oblige the Union Government to grant exemption. There is no need to dwell upon the aspects urged in this
writ petition because I have sustained the case of the petitioner with regard to three writ petitions on the two principles discussed above. As a
result, W.P. 2055 of 1983 is dismissed. There will be no order as to costs in all the writ petitions.
I am told that pursuant to orders of this Court pending writ petitions the petitioner did pay auxiliary duty to a certain extent and furnished bank
guarantee for the rest with reference to the items of machinery imported by it. Now the petitioner has succeeded, the petitioner is entitled to refund
of the auxiliary duty paid and the bank guarantees furnished shall stand cancelled. Time for refund of the auxiliary duty paid by the petitioner is
three months from today.