1997 (1) TMI 526 - SC - Customs

Summary

Issues Involved:
1. Classification of imported goods under the Customs Tariff Act, 1975.
2. Applicability of additional duty as per Section 3 of the Customs Tariff Act, 1975.
3. Interpretation of "excise duty for the time being leviable on a like article" under Section 3(1) of the Customs Tariff Act.
4. Applicability of Notification No. 55/78 concerning the rate of duty on textured yarn produced out of base yarn.
5. Tribunal's error in applying the highest rate of duty under the Explanation to Section 3(1).

Detailed Analysis:

1. Classification of Imported Goods:
The appellants imported bulked nylon fabric described as "Nylon Woven Dipped Diffusion Resistance Fabric, Goodyear Code EO2 NN." The goods were cleared upon payment of the demanded duty. The appellants later sought a refund of the additional duty paid, which was refused by the authorities and subsequently by the Tribunal.

2. Applicability of Additional Duty:
Section 3 of the Customs Tariff Act, 1975, prescribes the levy of additional duty equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. The relevant sub-sections and explanation of Section 3 were examined to determine the duty applicable to the imported goods.

3. Interpretation of "Excise Duty for the Time Being Leviable on a Like Article":
The Tribunal considered the contention that the imported goods fell under the category of "textured yarn produced out of base yarn" and not "other textured yarn" as per Notification No. 55/78. The Tribunal noted that the description "textured yarn produced out of base yarn" is merely descriptive of the manufacturing process and that different concessional rates of duty apply based on the process of manufacture.

4. Applicability of Notification No. 55/78:
Notification No. 55/78 exempts textured yarn produced out of base yarn from so much of the excise duty as specified in the corresponding entry in the Table. The Tribunal found that the imported goods should be classified under the concessional rate applicable to "textured yarn produced out of base yarn" rather than the higher rate applicable to "other textured yarn."

5. Tribunal's Error in Applying the Highest Rate of Duty:
The Tribunal's decision to apply the highest rate of duty under the Explanation to Section 3(1) was challenged. The Explanation states that if excise duty is leviable at different rates, the highest duty is applicable. However, since the imported goods were classified as "textured yarn produced out of base yarn," they should be subject to the rate specified for that category in the Table of Notification No. 55/78.

Conclusion:
The Supreme Court found that the Tribunal erred in applying the highest rate of duty. The imported goods, being "textured yarn produced out of base yarn," should attract the duty specified for that category in the Table of Notification No. 55/78. The appeal was allowed, and the Tribunal's judgment and order were set aside. No order as to costs was made.