CESTAT Chennai Dismisses MRF’s Appeal, Upholds Additional Customs Duty Equivalent to Rubber Cess on Imported Natural Rubber
CESTAT Chennai Dismisses MRF’s Appeal, Upholds Additional Customs Duty Equivalent to Rubber Cess on Imported Natural Rubber
Introduction
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the levy of Additional Duty of Customs equivalent to Rubber Cess on imported natural rubber is legally sustainable. Following binding coordinate and Larger Bench precedents, the Tribunal dismissed the appeal filed by MRF Limited, observing that the issue already stands settled against the assessee.
Factual Background
MRF Limited imported natural rubber under various Bills of Entry. The customs department took the view that the imported goods attracted Additional Duty of Customs equivalent to Rubber Cess, leviable under Section 3(1) of the Customs Tariff Act, 1975, read with the cess framework under the Rubber Act, 1947. Based on this position, the adjudicating authority confirmed a demand of ₹46,94,700 along with interest. The Commissioner (Appeals) upheld the demand, leading to the present appeal before the Tribunal.
Procedural Background
Aggrieved by the appellate order, MRF Limited approached the CESTAT Chennai Bench. The matter was heard by a Bench comprising Judicial Member P. Dinesha Technical Member Vasa Seshagiri Rao. The central controversy concerned whether imported natural rubber could validly be subjected to additional customs duty equivalent to the Rubber Cess otherwise levied on domestic production.
Issues
1. Whether imported natural rubber is liable to Additional Duty of Customs equivalent to Rubber Cess.
2. Whether Rubber Cess under the Rubber Act, 1947 is confined only to domestically produced rubber.
3. Whether pending appeals before the Supreme Court warranted deviation from settled Tribunal precedent.
Contentions of Parties
The appellant, MRF Limited, contended that Rubber Cess under Section 12 of the Rubber Act applies only to domestically produced rubber and cannot be extended to imports.
It also relied upon earlier Tribunal decisions that had taken a favourable view for assessees and pointed out that certain matters were pending before the Supreme Court.
The Revenue, on the other hand, argued that the controversy is no longer res integra, relying on the Larger Bench ruling in TTK-LIG Ltd. and subsequent decisions, including rulings in MRF’s own case, all of which upheld the levy.
Reasoning and Analysis
The Tribunal noted that binding coordinate Bench rulings and the Larger Bench decision squarely cover the issue against the appellant.
The Bench observed that although appeals against some of these decisions are pending before the Supreme Court, there is no stay order, interim protection, or contrary ruling from the Apex Court. In such circumstances, judicial discipline required the Tribunal to follow the existing precedent.
The Bench expressly recorded that the Bangalore Bench in MRF’s own case had already decided the identical issue against the company, and no distinguishing facts had been shown in the present matter. The Tribunal therefore held that the levy of additional customs duty equivalent to Rubber Cess remains legally enforceable on imported natural rubber.
Decision
The CESTAT Chennai Bench dismissed the appeal filed by MRF Limited, upholding the levy of Additional Duty of Customs equivalent to Rubber Cess on imported natural rubber, along with the confirmed demand of interest.
In this case the appellant was represented by Shri Karthick Sundaram, Advocate. Meanwhile the defendant was represented by Smt. Anandalakshmi Ganeshram, Authorized Representative.
