1999 JTR(SC) 1523
2000 AIR(SC) 612 ; 2000 AIR(SCW) 41 ; 2000 115 ELT 9 ; 1999 10 JT 48 ; 2000 1 RCR(Civ) 513 ; 1999 7 Scale 557 ; 2000 1 SCC 413 ; 2000 1 SCJ 232 ; 2000 KHC 895 ; 1999 10 Supreme 259
1999 (10) Supreme 259
SUPREME COURT OF INDIA
(From Orissa High Court)
Dr. A.S. Anand, CJI., M. Jagannadha Rao and V.N. Khare, JJ.
S.K. Pattanaik (Dead) through LRs. -Appellants
versus
State of Orissa & Ors. -Respondents
Civil Appeal No. 4160 of 1995
Decided on 14-12-1999
Counsel for the Parties :
For the Appearing Parties : Jayant Das, Sr. Advocates, A.N. Das, Udai Kumar, Rajiv Dutta, Raj Kumar Mehta, Advocates.
IMPORTANT POINT
So far as countervailing duty is concerned, the incidence of the impost is on the import of the excisable articles, i.e., at the time of entry into the State. Therefore, the fact that articles imported into the State was destroyed in bonded warehouse as being unfit for human consumption cannot wipe out liability of importer to pay countervailing duty.
Act
Referred
:BIHAR AND ORISSA FOREST ACT : S.27, S.28
CENTRAL EXCISE ACT : S.3
CUSTOMS TARIFF ACT : S.3
(A) Sections 27 and 28 of the Bihar and Orissa Forest Act, read with Sections 3 of the Customs Tariff Act and the Central Excise Act, govern the levy and collection of excise and countervailing duties. Section 27 serves as the charging provision for duties on manufacture and import, while Section 28 provides for the manner of levying such duties, including post-import storage in bonded warehouses and the deferral of collection upon sale from such warehouses. The liability for countervailing duty arises on import into the State, independent of the subsequent fitness or destruction of the imported goods.
(B) Key legal principles include: the incidence of countervailing duty attaches at the time of import; the destruction of excisable goods after import does not extinguish the duty liability; the facility for postponement of collection under Section 28 does not affect the incidence of duty; and the assessment of duty is justified even if the goods become unfit for consumption.
Facts of the case:
The appellant imported foreign liquor into Orissa and stored it in a licensed bonded warehouse. A portion of the stock became sedimented and was destroyed as unfit for consumption. A demand for countervailing duty on the destroyed stock was made, which the appellant challenged on the ground that the goods were destroyed. The challenge was rejected by the High Court.
Findings of Court:
The Full Bench held that the taxable event for countervailing duty occurs at import, and the destruction of the goods after import does not absolve the appellant from the duty. The demand for countervailing duty was justified, and the appeal lacked merit.
Issues:
Whether countervailing duty remains payable on excisable goods that are destroyed after import into a State.
Ratio Decidendi:
The incidence of countervailing duty arises at the time of import under Sections 27 and 28 of the Bihar and Orissa Forest Act, and the subsequent destruction of the goods does not extinguish the liability, thereby justifying the demand for duty.
Result:
The appeal is dismissed without costs.
(A) Sections 27 and 28 of the Bihar and Orissa Forest Act, read with Sections 3 of the Customs Tariff Act and the Central Excise Act, govern the levy and collection of excise and countervailing duties. Section 27 serves as the charging provision for duties on manufacture and import, while Section 28 provides for the manner of levying such duties, including post-import storage in bonded warehouses and the deferral of collection upon sale from such warehouses. The liability for countervailing duty arises on import into the State, independent of the subsequent fitness or destruction of the imported goods.
(B) Key legal principles include: the incidence of countervailing duty attaches at the time of import; the destruction of excisable goods after import does not extinguish the duty liability; the facility for postponement of collection under Section 28 does not affect the incidence of duty; and the assessment of duty is justified even if the goods become unfit for consumption.
Facts of the case:
The appellant imported foreign liquor into Orissa and stored it in a licensed bonded warehouse. A portion of the stock became sedimented and was destroyed as unfit for consumption. A demand for countervailing duty on the destroyed stock was made, which the appellant challenged on the ground that the goods were destroyed. The challenge was rejected by the High Court.
Findings of Court:
The Full Bench held that the taxable event for countervailing duty occurs at import, and the destruction of the goods after import does not absolve the appellant from the duty. The demand for countervailing duty was justified, and the appeal lacked merit.
Issues:
Whether countervailing duty remains payable on excisable goods that are destroyed after import into a State.
Ratio Decidendi:
The incidence of countervailing duty arises at the time of import under Sections 27 and 28 of the Bihar and Orissa Forest Act, and the subsequent destruction of the goods does not extinguish the liability, thereby justifying the demand for duty.
Result:
The appeal is dismissed without costs.
ORDER
This appeal by special leave is directed against the judgment and order of the Full Bench of the High Court of Orissa dated 2nd of December, 1994.
2. Brief facts giving rise to the present appeal are as follow.
The appellant imported into the State of Orissa Indian made foreign liquor and stored it in a licensed bonded warehouse from where the liqour was to be released for sale. While liquor was so stored in the warehouse, a portion of the imported stock became sedimented and was rendered unfit for human consumption. That stock was, therefore, destroyed. A notice was issued to the appellant for payment of countervailing duty on the stock to the tune of Rs. 10,02,183/-. The validity of the demand of countervailing duty was challenged by the appellant in a writ petition which was heard by a Division Bench of the High Court. It was asserted that since the stock of liquor had been "destroyed" in the warehouse countervailing duty could not be imposed. Before the Division Bench, reliance was placed on the judgment in the case of P.D. Jain v. State of Orissa1, which had been followed in the case of Mohan Meakins Ltd. v. State of Orissa2. The Division Bench felt that the two decisions noticed above needed re-consideration. A reference was accordingly made to the Full Bench and that is how the matter was decided by the Full Bench.
3. Heard learned counsel for the parties.
4. "Excise duty" and "countervailing duty" are well known concepts and are attracted in different situations. "Excise duty" is essentially a duty on manufacture of goods, and the taxable event is the manufacture of the exicable goods. "Countervailing duty", on the other hand, is imposed when excisable articles are imported into the State, in order to counter balance the excise duty, which is leviable on similar goods if manufactured within the State. So far as countervailing duty is concerned, the incidence of the impost is on the import of the excisable artices, i.e., at the time of entry into the State.
5. Section 27 of the Bihar and Orissa Excise Act, 1915 (hereinafter called the Act ) deals with the powers of the State to impose duty on import, export, transport and manufacture. This Section is the charging Section both for excise duty as well as countervailing duty. Section 28 of the Act on the other hand provides for the ways for levying the duty which can be imposed under Section 27. Section 28 deals with the manner of levying duty imposable under Section 27 of the Act in different manners. Though countervailing duty or excise duty are required to be assessed and collected as soon as the taxable event arises, a facility for postponement of collection of excise duty is envisaged under Section 28 in case of sale of the excisable article from the bonded warehouse after its import into the State.
6. While the expression levy may include both the process of taxation as well as the determination of the amount of tax or duty, the expression collection refers to actual collection of the payable duty or the tax, as the case may be. Since, the taxable event for attracting excise duty or countervailing duty is the manufacture or import of excisable goods into the State, the charge of incidence of duty stands attracted as soon as the taxable event takes place and the facility of postponement of collection of duty under the Act or the Rules framed thereunder, can in no way affect the incidence of duty on the imported goods.
7. In this view of the matter, the demand of countervailing duty from the appellant in the established facts and circumstances of the case was perfectly justified. The fact that the liquor was rendered unfit for human consumption and destroyed, after its import, which by itself attracted the levy of duty could not wipe of the liability of the appellant, for payment of duty on the excisable goods, after thier import, in the bonded warehouse. The Full Bench of the High Court was, therefore, perfectly justified in finding that the challenge to the demand made by the appellant had no merits. This appeal has no merits. It, accordingly, fails and is dismissed but with no order as to costs.
(C.R.) Appeal dismissed.
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Parallel Citations of other Journals :
S.K. Pattanaik (Dead) through LRs. v. State of Orissa & Ors., 1999(10) Supreme 259
00035