Holding

Countervailing duty is chargeable at the rate prevailing on the date of actual import of the consignment into the State.

Summary

Aristocrat Agencies, holders of distributor licences, obtained import permits for liquor and paid countervailing duty at the rate of Rs.45 per litre prevailing at the time of permit issuance. A notification dated 8 February 1991 raised the duty to Rs.70 per litre. The agencies imported liquor after the notification but within the permit validity and were asked to pay the differential amount. They challenged the demand in the High Court, which dismissed their writ petition. The Supreme Court held that countervailing duty becomes payable on the date of actual import and must be levied at the rate in force on that date, irrespective of the rate paid at the time of obtaining the permit. Consequently, the demand for the differential duty was justified and the appeal was dismissed.

Issues considered

Whether countervailing duty on imported liquor is chargeable at the rate prevailing on the date of issue of the import permit or at the rate prevailing on the date of actual import into the State.

Subjects

countervailing dutyexcise dutyimport permitrate of dutytax incidencelevy and collectionAndhra Pradesh Excise Actliquor import

Judgment

ARISTOCRAT AGENCIES, HYDERABAD ETC. A
v.
EXCISE SUPERINTENDENT, HYDERABAD AND ORS. ETC.

.. DECEMBER 7, 2000

[DR. A.S. ANAND CJ., R.C. LAHOTI AND SHIVARAJ V. PATIL, JJ.] B

...
Excise Laws :

Countervailing duty-Rate of the duty chargeable-Held, duty is
chargeable at the rate prevailing on the date of import and not at the rate C
on the date of issue of permit-Section 21 of the Andhra Pradesh Excise Act,
1966.

Appellants, holders of distributor licence under State Rules, were
granted import permits for liquor on payment of countervailing duty at the D
rate prevailing on dote of grant of permits. State, by a notificntion on 8.2.1991
issued under the provisions of the Andhra Pradesh Excise Act, 1966,
enhanced the rate of countervailing duty from Rs. 45 to Rs. 70 per litre. The
appellants imported liquor after the issue of the notification during tile validity
of the permits. Excise Superintendent issued notices requiring the appellants
to p:iy differential amount of the countervailing duty. Tile appellants fi!ed Writ E
Petitions before High Court questioning the validity of the demand. The High
Court dismissed the petitions. Hence these appeals.

The appellnnts contended that since the countervailing duty had already
been paid at the time of grant of the permits at the rate then in force,
enhancement effected subsequently by a later notification could have no F
application on the imports of liquor made by the appellant.

Dismissing the appeals, the Court

HELD: 1.1. Sub-section (2) of Section 21 of the Andhra Prodesh Excise
Act, 1966 empowers the State Government, by notification, to levy G
countervailing duty on any excisable article manufactured or produced
elsewhere in India and imported into the State at such rate as may be specified
in the notification and different rates may be specified for different kinds of
excisable articles. Both excise duty and countervailing duty are required to
be assessed and collected as soon as the taxable event arises. Excise duty being H
469
470 SUPREME COURT REPORTS [2000) St:PP. 5 S.C.R.

A essentially a duty on production or manufacture of excisable goods, the event
attracting tax is the manufacture or production of the excisable goods.
Countervailing duty, on the other hand, is required to be levied, assessed and

B
collected when excisable articles are imported into the State. The object of
levy and collection of countervailing duty is to counter-balance excise duty,
which is leviable on similar goods, if manufactured within the State. By its
-
very nature and concept countervailing duty becomes leviable on the date of
the import itself and is governed by rate of duty as in force on the date of
import. It is irrelevant that at the time of obtaining a permit, the assessee
....
also pays countervailing duty. In case the rate of duty continues to be the same
as on the date of import, i.e., entry into the State of excisable goods, no extra
C countervailing duty is payable but if the rate of duty is enhanced, it is the
enhanced duty which becomes payable. (472-E, F, G, H; 473-AI

1.2. The demand of differential amount of countervailing duty from the
appellants was perfectly justified since the demand was made on the basis of
the duty as in force on the date of import of the consignment into the State.
D The duty was to be assessed and collected as in force at the time of import.
(473-G)

S.K. Pattanaik (Dead) through Lrs. v. State of Orissa & Ors., (2000) 1
sec 413, referred to.
E CIVIL APPELLATE JURISDICTION : Civil Appeal No. 486 of 1998.

From the Judgment and Order dated 8.11.91 of the Andhra Pradesh High
Court in W.P. No. 7917 of 1991.
WITH
F Civil Appeal Nos. 482-483 of 1998.

Ms. K. Amreshwari Devi, Sr. Adv., Ashwini Kumar Chopra, B. Kan~
Rao, Ms. Sudha Gupta, T. Anil Kumar, G. Prabhakar, K. Ram Kumar, Asha G.
Nair and G. Balasubramaniam for the appearing parties.

G The Judgment of the Court was delivered

Civil Appeal No. 486 of 1998.

The short question which requires our consideration is whether
countervailing duty is chargeable at the rate prevailing on the date of issue
H of permit or on the date of actual import of liquor into the State?
ARISTOCRAT AGENCIES v. EXCISE SUPERINTENDENT 471

Brief facts necessary to answer the question may be noticed: A

The appellants are holders of distributor licence in Form F.L. 47 issued
under Andhra Pradesh Foreign Liquor and Indian Liquor Rules, l 970
(hereinafter 'the Rules'). They held four permits and acquired them under the
Rules on payment of countervailing duty, as was prevailing on the date when B
the permits were granted. First import permit was granted to the appellant on
31st January, 1991and2nd, 3rd and 4th permits were granted on 6th February
1991. However, before consignment of liquor was actually imported on the
strength of those permits, notification (G.O.Ms. 96) dated 8th February, 1991
was issued. The notification was published in the Official Gazette on 9th
February, 199 l. By this notification, issued in exercise of the powers conferred C
by Section 21 of the Andhra Pradesh Excise Act, 1968 (hereinafter 'the Act'),
the Governor of Andhra Pradesh amended an earlier notification dated 30th
September, 1968 and enhanced the rate of countervailing duty from Rs. 45 per
litre of the strength of proof spirit to Rs. 70 per litre of the strength of proof
spirit.
D
The appellants imported consignments of liquor under the first permit
on 27th February, 1991 and on the basis of the second permit on 28th
February, 1991. Consignment of liquor was imported on the basis of the 3rd
and the 4th permit on I 8th February, 1991. All these imports were effected
during the validity of the permit, i.e., within 30 days from the date of issue E
of permit. The Office of the Excise Superintendent, Hyderabad informed the
appellant that since there had been enhancement of countervailing duty, by
notification dated 8.2.1991 (published on 9.2.1991) from Rs. 45 to Rs. 70, the
appellants were required to pay differential of the countervailing duty between
the duty already paid by them and the enhanced countervailing duty, within
a period of seven days from the date of receipt of the notice. The appellant F
questioned the validity of the demand by filing a writ petition in the Andhra
Pradesh High Court. A Bench of the High Court, by a common judgment and
order dated 8th November, 1991 dismissed the batch of cases including the
writ petition filed by the appellant. Aggrieved, the appellant is before us.

G
The argument raised in the High Court on behali' of the appellant was
that since countervailing duty had already been paid at the time of grant of
the import permit on the basis of the rate of the duty in force at that time,
enhancement effected through notification dated 8.2.1991 could have no
application to the imports of liquor made by the appellant within the period
of validity of the period of permit [of 30 days], even if imports were made after H
472 SUPREME COURT REPORTS [2000) SUPP. 5 S.C.R.

A enhanced duty came into effect by virtue of the impugned notification. The
argument did not find favour with the High Court and in our opinion, rightly.

Section 21 of the Act is the charging section relating to excise duty or
countervailing duty on excisable articles. It provides as under :

B "21. Excise duty or countervailing duty on excisable articles: (I)
The Government may, by notification, levy an excise duty on any
excisable articles manufactured or produced in the State[ ................] at
such rates not exceeding the rates mentioned in the Schedule, as may
be specified in the notification.

c (2) The Government may, by notification, levy a countervailing
duty on any excisable article manufactured or produced elsewhere in
India and imported into the State ~-·····'·······I at such rate as may be
specified in the notification, which may not exceed the rates of excise
duty on similar excisable articles levied under sub-section (I).
D (3) Different rates may be specified in sub-sections (1) and (2) for
different kinds of excisable articles and different modes of levying
duties under section 22."

The Schedule referred to in sub-section (I) of Section 21 of the Act
E (supra) provides for maximum rates of excise duty on different intoxicants.
Sub-section (2) of Section 21 of the Act unmistakably empowers the State
Government, by notification, to levy countervailing duty on any excisable
article manufacture or produced elsewhere in India and imported into the State
at such rate as may be specified in the notification and different rates may
be specified for different kinds of excisable articles. Both excise duty and
F countervailing duty are required to be assessed and collected as soon as the
taxable event arises. Excise duty being essentially a duty on production or
manufacture of excisable goods, the event attracting tax is the manufacture
or production of the excisable goods. Countervailing duty, on the other hand,
is required to be levied, assessed and collected when excisable articles are
G imported into the State. The object of levy and collection of countervailing
duty is to counter-balance excise duty, which is leviable on similar goods, if
manufactured within the State. By its very nature and concept countervailing
duty becomes !eviable on the date of the import itself and is governed by
rate of duty as in force on the date of import. It is irrelevant that at the time
of obtaining a permit, the assessee also pays countervailing duty. In case the
H rate of duty continues to be the same as on the date of import, i.e., entry into
ARISTOCRAT AGENCIES v. EXCISE.SUPERINTENDENT 473
the State of the excisable goods, no extra countervailing duty is payable but A
if the rate of duty is enhanced, it is the enhanced duty which becomes
payable. Of course, under Rule 10 (6) of the Rules, countervailing duty and
the import fee once paid 'shall not be refunded in any case'.

In S.K. Pattanaik (Dead) Through L.Rs. v. State of Orissa and Ors.,
[2000] l sec 413, a three-judge Bench of the Court noticed difference between B
concept of excise duty and countervailing duty in the following terms :

"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 excisable goods. "Countervailing duty", on the C
other hand, is imposed when excisable articles are imported into the
State, in order to counterbalance 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 articles, i.e., at the time of entry into the State. " D
The Court, then went on to consider the meaning of the expression
"levy" and "collection" and opined:

"While the expression "levy" may include both the process of
taxation as well as the determination of the amount of tax or duty, the E
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 F
framed thereunder, can in no way affect the incidence of duty on the
imported goods. "
(Emphasis supplied)

In our opinion, the demand of differential amount of countervailing duty G
from the appellant, under the circumstances, was perfectly justified since
demand was made on the basis of the duty as in force on the date of import
of the consignment into the State. The duty was to be assessed and collected
as in force at the time of import.

Thus, our answer to the question, posed in earlier part of the judgment, H
474 St:i'REME COURT REPORTS [2000] SUPP. 5 S.C.R.

A is that the countervailing duty is chargeable at the rate prevailing on the date
of actual import of the consignment into the State irrespective of the duty as
in force at the time of obtaining the permit.

The High Court, under the circumstances, rightly dismissed the writ
petition, filed by the appellant.
B
We find no merit in this appeal which, accordingly, fails and is dismissed.
There will, however, be no order as to costs.

Civil Appeal Nos. 482-483 of 1998.

C Learned counsel for the parties agree that the judgment rendered by us
in Civi I Appeal No. 486 of 1998, decided above, applies to this case also as
these appeals also arise out of common judgment dealt by us in that case.

For the reasons stated in C.A. No. 486 of 1998, these appeals also fail
and are dismissed but with no order as to costs.
D
B.S. Appeals dismissed.