Union of India (UOI) and Others vs Maddi Venkataratnam and Company Private Ltd. and Indian Leaf Tobacco Development Company Ltd.

All these four writ appeals can be dealt with under a common judgment. The facts in Writ Appeal Nos. 3 and 4 of 1984 will be sufficient for our

purpose which are set out below: We will throughout refer to the parties as appellant and respondent as arrayed in the writ appeals. The

respondent exported 3677 cases of Flue Cured Virginia tobacco to U.K. on 31.8.1970. However, what happened was that the foreign importer

rejected 1210 cases, and they had to be reimported by the respondent into India on 31.7.1972. On re-import of the cases, customs duty

equivalent to excise duty is payable u/s 20 of the Customs Act, hereinafter referred to as the Act. On 18.8.72 Customs authorities permitted

clearance of the 1210 cases from Transit shed to the respondent''s excise bonded warehouse. Thereafter, the tobacco forming the consignment of

1210 cases was used for manufacture of cigarettes by the respondent-company itself. On the basis of the manufacture excise duty was paid at the

rate of Rs. 5/- per kilogram as provided for in item 4-1(1) of the Excise Tariff which was the relevant rule applicable to cigarettes. The Inspector

of Central Excise who had the necessary jurisdiction certified that the said tobacco was used in the cigarettes only and it is on that basis the said

excise duty was paid.

While the matter stood thus, on 1.10.1972 a show cause notice was issued to the respondent by the Assistant Collector of Customs demanding

a sum of Rs. 1,03,24,723.50 as duty short-levied on the tobacco on the basis of Tariff Item 4-1(2) as though it was for the manufacture of

smoking mixtures. The respondent furnished his reply to the show cause notice on 18.10.1972 and contended that the proper excise duty had

been paid on the quantity of tobacco in question, whereupon by order dated 7.5.1975 the Assistant Collector determined the duty payable at Rs.

90,76,680/-. Against this order unsuccessfully an appeal was preferred by the respondent. Since the appeal was dismissed on 29.4.1976, a further

revision was preferred to the Government of India. That was also dismissed. Having exhausted all these sources, an application was preferred for

grant of exemption of customs duty in terms of Section 25(2) of the Customs Act. The Government of India granted the necessary exemption by

an order dated 19.3.1977. Therefore, that order came to be given effect to by the Assistant Collector on 12.4.1977, who by the said order

withdrew the demand made on 7.5.1975 which was raised against the respondent for a sum of Rs. 90,76,680/- as we stated above. Thus the

claim for exemption had become final,

Strangely, after more than a year, on 29.6.1978 the respondent received a show cause notice (undated) from the Collector of Customs making

the same demand for Rs. 90,76,680/- on the ground that the withdrawal of the demand of the Assistant Collector dated 7.5.1975 was not in order

and, therefore, he proposed to exercise his power u/s 130(1) of the Act as delegated to him by Notification No. 101 dated 1.7.1964 and review

the case. It was this show cause notice which came up for challenge in writ petition Nos. 3025 and 3026 of 1978. Our learned brother,

Padmanabhan, J. heard the matter in great length and he was of the view that (i) the order of exemption was just and equitable on the facts and

circumstances of this case, (ii) it was not open to the authorities to attack the order of exemption, (iii) Customs authorities were bound by the order

of the Government of India and (iv) the Collector cannot review the order dated 12.4.1977 since it is merely consequential to the exemption order

dated 19.3.1977.

In these writ appeals the question that is raised before us by the learned Advocate-General is that though exemption had been granted, that does

not mean that the Collector will have no powers to review the matter. This is the only point urged before us. On a careful consideration of the

entire matter, we are of the view that no exception could be taken to the order of the learned Single Judge. Here is a case where the Government

of India by virtue of its power conferred u/s 25(2) of the Act chose to grant exemption. What the Assistant Collector did was only to give effect to

the order of the Government of India and, therefore, there is no question of the order of the Government of India being reviewed by the Collector.

So on the short ground in addition to what the learned single Judge has held, we dismiss the writ appeals. However, there will be no order as to

costs.