CESTAT Chennai Upholds Customs Duty On Imported Natural Rubber, Dismisses MRF's Appeal

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 30 March, held that the levy of Additional Duty of Customs equivalent to Rubber Cess on imported natural rubber is legally sustainable.

A Bench comprising Judicial Member P. Dinesha and Technical Member Vasa Seshagiri Rao dismissed the appeal filed by MRF Limited, noting that the issue stands covered against the taxpayer by coordinate Bench and Larger Bench decisions.

. The Tribunal observed:

“…as on date, there is no stay order or any interim order granted by the Hon'ble Apex Court in any of the Appeals that were admitted by the Apex Court and hence, we follow the order of the coordinate Bangalore Bench in the Appellant's own case wherein, the issue has been decided against the Appellant and hence, we do not find any deviating facts to change our view.”

The dispute arose from demands raised by the Department alleging that MRF, which imported natural rubber under various Bills of Entry, was liable to pay cess equivalent to Rubber Cess under Section 3(1) of the Customs Tariff Act, 1975. The adjudicating authority confirmed a demand of Rs. 46,94,700 along with interest, which the Commissioner (Appeals) upheld, prompting the present appeal.

Before the Tribunal, MRF contended that Rubber Cess under Section 12 of the Rubber Act, 1947 applies only to domestically produced rubber and cannot extend to imported goods. It also relied on earlier Tribunal decisions in favour of assessees, affirmed by the Supreme Court.

The Revenue countered, citing the Larger Bench decision in TTK-LIG Ltd. and subsequent rulings, including decisions in MRF's own case, asserting that the levy is valid and settled in favour of the Department.

The Tribunal noted that while both sides argued the issue is no longer res integra, coordinate Bench rulings and the Larger Bench decision against the assessee prevail. It further observed that although certain appeals are pending before the Supreme Court, no interim stay or contrary judgment exists.

Accordingly, the Tribunal dismissed MRF's appeal, upholding the levy of Additional Duty of Customs equivalent to Rubber Cess on imported natural rubber.

Appearance for the Appellant: Shri Karthick Sundaram, Advocate

Appearance for the Respondent: Smt. Anandalakshmi Ganeshram, Authorized Representative