2003 (5) TMI 458 - HC - Customs

Summary

Issues Involved:

1. Liability to pay additional duty on imported vessels for breaking up under the Customs Tariff Act, 1975.
2. Interpretation of the Finance Minister's Budget Speech regarding customs duty.
3. Applicability of exemption notifications under the Central Excise Rules to additional duty under the Customs Tariff Act.
4. Relevance of the manufacturing process involving power in determining additional duty liability.
5. Judicial precedents on the levy of additional duty.

Summary:

1. Liability to Pay Additional Duty:
The primary issue was whether the appellants were liable to pay additional duty on a vessel imported for breaking up under the Customs Tariff Act, 1975. The learned Single Judge held that the appellants were liable to pay additional duty.

2. Interpretation of Finance Minister's Budget Speech:
The appellants argued that the Finance Minister's Budget Speech for the financial year 1993-1994 indicated a lower merged duty of customs at 5% ad valorem for the ship-breaking industry. The court noted that while the Budget Speech is not law, it can be referred to for understanding the legislative intent.

3. Applicability of Exemption Notifications:
The appellants contended that under Notification No. 167/86-C.E., dated 1-3-1986, goods falling under Chapter 89 were exempt from excise duty if no power was used in their manufacture. They argued that since no power was used in breaking up the vessels, no additional duty was payable. The court agreed, stating that the rate of additional duty is linked to the rate of excise duty, which was nil by virtue of the notification.

4. Relevance of Manufacturing Process Involving Power:
The court distinguished between the import of a seaworthy vessel and a vessel for breaking up, noting that the latter involves no use of power in the breaking process. The court held that the dutiability of ships built in India is not relevant for determining the duty on ships imported for breaking.

5. Judicial Precedents:
The court referred to several Supreme Court judgments, including Hyderabad Industries Ltd. v. UOI and Thermax Pvt. Ltd. v. Collector of Customs, which held that additional duty can only be levied if excise duty is leviable on a like article produced or manufactured in India. The court concluded that since the excise duty on the imported vessels was nil, no additional duty was payable.

Conclusion:
The court allowed the appeals, set aside the Single Judge's order, and held that the appellants were not liable to pay additional duty on the imported vessels for breaking up. The court emphasized that in cases where two views are possible, the one in favor of the assessee should be adopted.