By TIOL News Service

MUMBAI, DEC 26, 2015 : THE brief facts are that the Petitioner is engaged in manufacturing Pneumatic Tyres. Carbon Black is one of the essential inputs which goes into the manufacture of Automobile Tyres. This input (Carbon Black) is procured by the Petitioner either locally or is imported into India upon payment of duty or duty free, as the case may be. It is not in dispute that Carbon Black imported into India from the People's Republic of China is subjected to a Transitional Product Specific Safeguard Duty u/s 8C of the CTA, 1975.

It is the case of the Petitioner that vide Notification No.96/2009-Cus. dated 11th September 2009, goods imported into India against Advanced Authorization issued in terms of paragraph 4.1.3 of the Foreign Trade Policy, are exempted from (1) whole of the Customs Duty leviable thereon; (2) whole of the Additional Duty under section 3 of the CTA, 1975; (3) Anti- Dumping Duty under section 9A of the CTA, 1975; and (4) Safeguard Duty under section 8B of the CTA, 1975 subject to the terms and conditions set out in the said Notification. However, no exemption is granted from the Transitional Product Specific Safeguard Duty leviable under section 8C which is imposed on goods imported into India specifically from the People's Republic of China.

It is the case of the Petitioner that the nature of the Safeguard Duty imposed u/s 8B as well as u/s 8C is one and the same and there is no intelligible differentia for granting exemption from one and denying exemption from the other.

By this Petition, the Petitioner seeks a declaration that the China Specific Safeguard Duty imposed under section 8C of the Customs Tariff Act, 1975 are exempted under Notification No.96/2009-Cus as well as for a writ of mandamus or any other appropriate writ, order or direction striking down the phrase "under section 8B" appearing in the opening portion of the said Notification.

After considering the elaborate submissions made by both sides, the High Court observed -

++ On a plain reading of section 8B, it is clear that if the Central Government, after conducting such inquiry as it deems fit is satisfied that any article imported into India in such increased quantities so as to cause or threaten to cause serious injury to the domestic industry, then, it may, by Notification in the Official Gazette, impose a Safeguard Duty on that article. On a plain reading of section 8B, it is clear that Safeguard Duty can be imposed on any article imported from any country. In other words, the Safeguard Duty imposed under section 8B is article specific and not country specific.

++ When China decided to become a member of the WTO, an Accession Protocol was approved by the members of the WTO marking its entry into the Organisation. Section 16 of the Chinese Accession Protocol provided for the imposition of Transitional Product Specific Safeguard Duty on specified goods of Chinese origin imported from the People's Republic of China. It was pursuant to the said Accession of China into the WTO that India inserted section 8C in the CTA, 1975 in the year 2002.

++ Section 8C starts with a non-obstante clause and stipulates that notwithstanding anything contained in section 8B, if the Central Government, after conducting such inquiry as it deems fit, is satisfied that any article is imported from the People's' Republic of China in such increased quantities so as to cause or threaten to cause market disruption to the domestic industry, then, it may, by Notification in the Official Gazette, impose a Safeguard Duty on that article. The Safeguard Duty imposed under section 8C, therefore, is the Safeguard Duty imposed on any article that is imported specifically from the People's Republic of China. As the section itself suggests, the duty imposed under section 8C is a Transitional Product Specific Safeguard Duty on imports from the People's Republic of China. In other words, the Safeguard Duty imposed under section 8C is only with reference to articles that are imported into India from the People's Republic of China.

++ For imposing Safeguard Duty on any article imported from any other country, the same would have to be levied under section 8B of the CTA, 1975. The other distinctive feature between section 8B and 8C is that Safeguard Duty under section 8B is imposed when any article is imported into India in such increased quantities and under such conditions so as to cause or threatening to cause serious injury to domestic industry, whereas Safeguard Duty under section 8C is imposed when any article is imported from China in such increased quantities and under such conditions so as to cause or threatening to cause a market disruption to domestic industry. This would clearly show that different parameters are applied whilst imposing Safeguard Duty under the two sections.

++ In the Foreign Trade Policy 2015-2020, the Government for the first time in its Policy decided to also exempt the Transitional Product Specific Safeguard Duty (imposed under section 8C), in addition to Safeguard Duty (imposed under section 8B). This Transitional Product Specific Safeguard Duty is the duty imposed under section 8C of the CTA, 1975 for imports from the People's Republic of China. In other words, for the first time in the Foreign Trade Policy 2015-2020, the Government, as a policy decision, decided that imports under Advance Authorisation would be exempted from payment of Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping Duty under section 9A of the CTA 1975, Safeguard Duty under section 8B of the CTA, 1975 and Transitional Product Specific Safeguard Duty imposed under section 8C of the CTA, 1975 .

++ It is pertinent to note that section 8C was brought on the statute-book with effect from 11th May 2002, and yet all the Notifications issued by the Government thereafter only exempted Safeguard Duty under section 8B and not the Transitional Product Specific Safeguard Duty under section 8C. This is clear from Notification No.93/2004-Cus. dated 10.09.2004 and Notification No.96/2009-Cus. dated 11.09.2009. This clearly goes to show the intention of the Government not to exempt Transitional Product Specific Safeguard Duty imposed under section 8C of the CTA, 1975 and we do not think that there was any mistake or omission on the part of the Government in not granting exemption from payment of Safeguard Duty imposed under section 8C.

++ Even the Foreign Trade Policies upto and including the Foreign Trade Policy 2009-2014 did not contemplate exemption from payment of Transitional Product Specific Safeguard Duty under section 8C of the CTA, 1975. That exemption came for the first time in the Foreign Trade Policy 2015- 2020. In fact, keeping in line with this new Policy, the Government issued Notification No.21/2015-Cus. dated 01.04.2015 which now also exempts the Transitional Product Specific Safeguard Duty imposed under section 8C for imports from the People's Republic of China. In this view of the matter, we are unable to agree with the submissions (of petitioner) that it has been the consistent Policy of the Government of India to exempt all Safeguard Duties whether falling under section 8B or 8C of the CTA, 1975.

++ Until 2015, no exemption was ever granted from payment of Safeguard Duty levied under section 8C of the CTA, 1975. Notification No.96/2009-Cus. dated 11th September, 2009 only granted exemption from payment of Safeguard Duty imposed under section 8B. This being the case, we, in our jurisdiction under Article 226 of the Constitution of India, cannot direct the Government to grant an exemption that was never granted earlier. No person has a vested right in the grant of an exemption. An exemption by its very nature is a freedom from an obligation which the exemptee is otherwise liable to discharge. It is a privilege granting an advantage not available to others. An exemption under a statutory provision in a taxing statute is by its nature a concession granted by the Government so that the beneficiaries of such a concession are not required to pay tax or duty they were otherwise liable to pay under such statute. The recipient of the concession has no legally enforceable right against the Government to grant of such a concession, save and except to enjoy the benefits thereof during the period of its grant. In other words, this right to enjoy the concession is a defeasible one, in the sense that it may be taken away in exercise of the very power under which the exemption was granted. [ State of Rajasthan v/s J.K. Udaipur Udyog Ltd. = 2004-TIOL-96-SC-CT refers]

++ Show Cause Notice is yet to be adjudicated and thereafter the Petitioner has several other remedies under the Act to challenge the adjudication order, if it is aggrieved by it. We, therefore, do not think that this is a fit case where we ought to exercise our extraordinary, equitable and discretionary jurisdiction under Article 226 of the Constitution of India in favour of the Petitioner.

++ Even if the Petitioner is called upon to pay the Safeguard Duty levied under section 8C on Carbon Black imported by it from the People's Republic of China, no prejudice would be caused to the Petitioner because the Petitioner could always claim a drawback of the same on establishing that the very same product imported on payment of Safeguard Duty was ultimately used in the manufacture of final products that were exported out of India.

Each and every case law cited in support was dealt with and discussed by the High Court and held to be wholly inapplicable to the facts of the case.

Holding that there is no merit in the Writ Petition, the same was dismissed.

(See 2015-TIOL-2888-HC-MUM-CUS)