2006 (5) TMI 519 - HC - Customs

Summary

Issues Involved:
1. Liability of the writ petitioner to pay additional customs duty under the Central Excise Tariff Act, 1985.
2. Applicability of exemptions under the Customs Act, 1962 and the Free Trade Agreement between India and Sri Lanka.
3. Definition and implications of "manufacture" under the Customs Tariff Act, 1975 and Central Excise Act, 1944.
4. Validity of countervailing duty on imported polished marble slabs.

Detailed Analysis:

1. Liability of the writ petitioner to pay additional customs duty under the Central Excise Tariff Act, 1985:
The appeal arose from an order dismissing the writ petition and holding the petitioner liable to pay additional duty under the Central Excise Tariff Act, 1985. The petitioner failed to produce any law exempting them from this additional duty.

2. Applicability of exemptions under the Customs Act, 1962 and the Free Trade Agreement between India and Sri Lanka:
The appellant argued that they were exempt from basic customs duty under Section 12 of the Customs Act, 1962 due to the Free Trade Agreement between India and Sri Lanka, as supported by notification No. 26 dated March 1, 2000. However, the customs authorities imposed additional customs duty under Section 3 of the Customs Tariff Act, 1975 on the imported polished marble slabs.

3. Definition and implications of "manufacture" under the Customs Tariff Act, 1975 and Central Excise Act, 1944:
The key issue was whether cutting and polishing marble slabs constituted manufacturing. The appellant cited Supreme Court rulings in Aman Marble Industries Pvt. Ltd. v. Collector of Central Excise, Jaipur and Rajasthan State Electricity Board v. Associated Stone Industries, which held that such activities did not amount to manufacturing as no new commercial product was created. Therefore, the appellant contended that additional customs duty (countervailing duty) under Section 3(1) of the Customs Tariff Act, 1975 should not apply since excise duty is only levied on manufactured goods.

4. Validity of countervailing duty on imported polished marble slabs:
The respondent argued that both customs duty and countervailing duty are applicable at the time of importation. Section 3 of the Customs Tariff Act, 1975 imposes additional duty equivalent to the excise duty on similar goods manufactured in India. The respondent contended that polished marble slabs are excisable goods under Chapter 6802 21 90 of the Central Excise Act, 1944, thus making them liable for both excise and countervailing duties.

The appellant countered that excise duty could only be imposed on goods manufactured in India, and since polished marble slabs are not manufactured goods, no additional countervailing duty should apply. The Supreme Court's decisions in Hyderabad Industries v. Union of India and Khandelwal Metal and Engineering Works v. Union of India were cited, emphasizing that additional duty under Section 3(1) of the Customs Tariff Act is contingent on the goods being manufactured or produced.

Judgment:
The court concluded that the imposition of additional duty under Section 3(1) of the Customs Tariff Act on imported polished marble slabs was not valid. Since the process of cutting and polishing marble slabs does not constitute manufacturing, excise duty is not leviable, and consequently, countervailing duty cannot be imposed. The order of the Hon'ble First Court was set aside, and the writ petition was allowed. The authorities were directed to reconsider the case without insisting on the payment of additional duty from the appellant.

Separate Judgment:
Tapan Kumar Dutt, J. concurred with the judgment.

This comprehensive analysis preserves the legal terminology and significant phrases from the original text while providing a detailed issue-wise summary of the judgment.