2008 (3) TMI 7 - SC - Customs

Import of Copper Waste and Scrap at NIL rate of CVD - The entry 74.04 of 8/96 CE datd 23-7-1996 nowhere uses the word generated or imported Therefore import of copper waste and scrap are entitled to attract NIL rate of duty and refund of duty paid is allowed.

Summary

Issues Involved:
1. Applicability of Exemption Notification No. 8/96-CE dated 23rd July 1996 to imported copper/brass waste and scrap.
2. Interpretation of the phrase "within the factory of production" in Tariff Heading 7404.10.
3. Entitlement to refund of the additional customs duty paid under protest.

Issue-wise Detailed Analysis:

1. Applicability of Exemption Notification No. 8/96-CE dated 23rd July 1996 to imported copper/brass waste and scrap:
The appellants imported copper/brass waste and scrap for manufacturing handicrafts and claimed exemption under Notification No. 8/96-CE. The Department rejected this claim, stating that the exemption under Tariff Heading 7404.10 applies only to waste generated and used within the factory of production, not imported waste. The Tribunal upheld this view. However, the Supreme Court disagreed, stating that the entry does not specify that the scrap must be generated in the factory, only that it must be used within the factory of production for making specified products.

2. Interpretation of the phrase "within the factory of production" in Tariff Heading 7404.10:
The Tribunal and lower authorities interpreted "within the factory of production" to mean that the waste and scrap must be generated and used within the same factory. The Supreme Court found this interpretation unwarranted, noting that the entry does not use the word "generated." It clarified that the phrase "within the factory of production" pertains to the usage of the scrap, not its origin. The Court emphasized that the exemption's intent is to prevent double duty on imported waste used in manufacturing within the factory.

3. Entitlement to refund of the additional customs duty paid under protest:
The appellants paid the duty under protest and sought a refund, arguing that paying both the customs duty and the additional duty (CVD) would result in double taxation. The Supreme Court supported this view, referencing the Hyderabad Industries Ltd. case, which established that excise duty should be imagined as if the imported goods were manufactured in India. The Court ruled that the appellants are entitled to the exemption and thus to a refund of the duty paid, as denying the exemption would contradict the legislative intent to avoid double taxation.

Conclusion:
The Supreme Court allowed the appeals, setting aside the Tribunal's order and the decisions of the lower authorities. It held that the appellants are entitled to the benefit of Exemption Notification No. 8/96-CE and the refund of the duty paid. The judgment clarified that the exemption applies to imported waste used within the factory of production, aligning with the legislative intent to prevent double taxation. No costs were awarded.