Legal principle

Anti-dumping duty is a distinct levy, imposed and collected in a manner different from customs duty, and therefore does not enter the value for computing additional duty under Section 3(2) or special additional duty under Section 3A(2) of the Customs Tariff Act; and no penalty is imposable where duty-free imports against advance licences are used captively without diversion to the domestic tariff area.

Court decision

The Supreme Court allowed the appellant's appeal and set aside CESTAT's judgment. It held that anti-dumping duty, being a separate levy imposed and collected in a completely different manner from customs duty, is not to be included in computing CVD under Section 3(2) or SAD under Section 3A(2) of the Customs Tariff Act, and it set aside the penalty of Rs 20 lakhs as the goods were used captively without diversion to the domestic tariff area.

Facts

M/s Jaswal Neco Ltd, a pig iron manufacturer, imported Low Ash Metallurgical (LAM) Coke under seven bills of entry against four advance licences during June–August 1998 without payment of BCD, SCD, SAD and anti-dumping duty under exemption notifications (30/97, 12/97, 34/98 and 41/97-Cus), furnishing a bond to pay duty if the export obligation was not fulfilled. It admittedly failed to fulfil its export obligation and used the entire imported coke captively in its factory. A demand of Rs 7.21 crores (BCD, ADD, SCD, SAD and cess) was raised; the Commissioner confirmed Rs 3.37 crores with 24% interest and a penalty of Rs 20 lakhs. On appeal, CESTAT reduced interest to 15% but increased the anti-dumping duty by applying the higher rates of final Notification No. 69 of 2000.

Key provisions

• Section 14, Customs Act, 1962 — Valuation of goods
• Section 12, Customs Act, 1962 — Dutiable goods
• Section 3, Customs Act, 1962 — Classes of officers of customs
• Section 3A, Customs Tariff Act, 1975 — Omitted [****]
• Section 3, Customs Tariff Act, 1975 — Levy of additional duty equal to excise duty, sales tax, local taxes and other charges
• Section 18(3), Customs Act, 1962 — Provisional assessment of duty
• Section 25(1), Customs Act, 1962 — Power to grant exemption from duty
• Rule 13, Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 — Levy of provisional duty
• Section 9A, Customs Tariff Act, 1975 — Anti- dumping duty on dumped articles
• Rule 20(2)(a), Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 — Commencement of duty
• Section 46, Customs Act, 1962 — Entry of goods on importation
• Rule 18, Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 — Levy of duty