There is quite of bit of misunderstanding in regard to the concept of benefit of doubt in fiscal law which I have set out to clear in this treatise. More often than not the practising lawyers argue in cases relating to customs, excise, sales tax and income tax that there being a doubt in the interpretation, the benefit of doubt should go to the assessee.
This is not correct so far as the fiscal law is concerned. It is correct in criminal law. But that is the difference between the criminal law and fiscal law. If we go through the judgements by the Supreme Court carefully, we find that no benefit of doubt has been given by the court just because there is a doubt.
It is very easy to create a doubt in interpretation of fiscal law there being innumerable judgements on every issue where judgements differ on some points or other. So the Supreme Court has given benefit of doubt after first going deep into the facts and law and coming to the conclusion that the assessee is right on merit. Then only the benefit of doubt has been given which is more or less a superfluity. It is never the first consideration but only the second and last.
This concept about benefit of doubt in fiscal law has been discussed in the latest Supreme Court judgement in the case of CCE vs. Calcutta Springs — 2008(229) ELT 161(SC).The issue was whether Glass Filled Nylon Insulating Liners (GFNIL) was classifiable under Tariff Item 39.26 as articles of plastics or under Item 85.46 as electrical insulator.
After discussing the function of the item, the Supreme Court came to the conclusion that it was not insulator but other articles of plastic (39.26). Then only the Supreme Court invoked the theory of benefit of doubt while first argument of the Supreme Court was that on merit the classification was in favour of the assessee. The same principle has been upheld earlier in previous judgements.
The Supreme Court in the cases of Commissioner of Customs, Mumbai vs JD Orgochem Ltd — 2008 (226) E.L.T. 9 (S.C.) and Commissioner of Customs, Calcutta vs South India Television (P) Ltd 2007 (214) E.L.T. 3 (S.C.) held that under-valuation has to be proved with proper evidence. If the charge of under-valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer.
In respect of penalty in fiscal cases the principle followed is more like the principle in criminal cases. That is to say the benefit of doubt is more easily given to the assessee, as has been expounded in the case of V V Iyer vs CC —1999(110)ELT414(SC).
In respect of exemption the benefit of doubt is not given to the assessee but to Revenue. This principle has been upheld by the Supreme Court held in the cases of Novopan India Ltd Vs CCE — 1994(73) ELT769(SC) and Liberty Oil Mills vs CCE — 1995(75)ELT13(SC).
So the conclusion is that the concept of benefit of doubt in fiscal law is quite different from the concept in criminal law. In the case of fiscal law, if there is a doubt, the benefit goes to Revenue if it is an exemption. In the case of classification involving rate of duty the benefit goes to the assessee but only if the merit also goes in his favour. Merely because there is doubt, no case is decided in fiscal matters in favour of the assessee. It is quite easy to just raise some doubt in view of multiplicity of judgements but that is not enough.
