Source: Madras High Court 

Why in News? 

Recently, the bench of Chief Justice K.R. Shriram and Justice Mohammed Shaffiq held that exemption from basic customs duty does not automatically extend to additional duties unless specifically exempted under the respective enactments. 

• The Madras High Court held this in the matter of Transasia Bio-Medicals Ltd. v. Union of India (2025). 

What was the Background of Transasia Bio-Medicals Ltd. v. Union of India (2025) Case? 

• Transasia Bio-Medicals Ltd., represented by Ashok Suthar (General Manager-Taxations & Legal), imported a consignment of Hemato Analyser with standard accessories and filed bills of entry. 
• The Deputy Commissioner of Customs (Group-5B) assessed the bills of entry and demanded additional duty at 4% in terms of Notification No.19/2005-Cus dated 01.03.2005. 
• The additional duty was demanded on the grounds that as per Notification No.19/2005-Cus, the goods covered under exemption Notification No.24/2005-Cus are liable to pay additional duty at the rate of 4%. 
• The goods imported fell under Customs Tariff heading 9027 80, which is listed in the Customs Exemption Notification No.24/2005-Cus, and the tariff rate for this product was designated as "free" under the Customs Tariff Act, 1975. 
• Notification No.19/2005 was issued under Sub-section (5) of Section 3 of the Customs Tariff Act, 1975, while Notification No.24/2005 was issued under Sub-section (1) of Section 25 of the Customs Act, 1962. 
• The petitioner challenged the validity of Notification No.24/2005-Cus, contending that when the Customs Tariff designates imported goods as "free" of duty, there is no need for exemption under Section 25 of the Customs Act. 
• The petitioner further argued that if Notification No.24/2005 is invalid, then the reference to that notification in Notification No.19/2005 would also be ineffective, meaning the imported goods would not be liable for the 4% additional duty. 
• The petitioner filed writ petitions under Article 226 of the Constitution of India, 1950 (COI) seeking a declaration that Notification No.24/2005-Cus is ultra vires the provisions of Section 25 of the Customs Act, 1962. 
• The petitioner also sought a writ of Certiorari to quash the assessments made in the bills of entry Nos.896356 dated 21.10.2005 and 940189 dated 05.01.2006 that levied 4% additional duty under Notification No.19/2005-Cus.

What were the Court’s Observations?

• The Madras High Court observed that both the Customs Act and the Customs Tariff Act are independent of each other, and one duty can be levied without the other, as supported by the decision in Colgate Palmolive (India) Limited v. Commissioner of Customs, Patna. 
• The Court noted that Section 3(1) of the Customs Tariff Act provides for levy of additional duty, which is in addition to the customs duty leviable under Section 12 of the Customs Act and Section 2 of the Customs Tariff Act. 
• The Court held that even if the duty leviable under the Customs Act is stated to be "free," additional duty can still be levied under the Customs Tariff Act because the charging section for additional duty is Section 3 of the Customs Tariff Act and not Section 12 of the Customs Act. 
• The Court emphasized that the notification does not say 4% of the customs duty leviable on the goods imported (in which case 4% of "free" would have been "nil") but rather states that the identified goods when imported shall be liable to an additional duty at 4% ad valorem. 
• The Court observed that goods imported, even though exempted from basic customs duty, may still be subject to levy of additional duty under respective enactments unless specifically exempted by the competent authority exercising powers under those enactments. 
• The Court referenced the Century Floor Mills Ltd. v. Union of India case, noting that under Section 25 of the Customs Act, the Government has authority to grant exemption from duty conditionally or in absolute terms, making imports either free of liability or subject to conditions as deemed appropriate. 

What are the Legal Provisions Refereed to? 

Section 12 of the Customs Act, 1962: 

• Section 12 deals with Dutiable goods. 
• Section 12(1) states that except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India. 
• Section 12(2) provides that the provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government." 

Section 25 of the Customs Act, 1962: 

• This Section empowers the Central Government to exempt goods from customs duty when satisfied it is necessary in the public interest.