1986 (1) TMI 104 - HC - Customs

Summary

Issues:
1. Challenge to levy of additional duty on imported watch components under Section 3 of the Customs Tariff Act, 1975.
2. Interpretation of relevant notifications and exemptions under Central Excise Rules.
3. Comparison of judgments regarding eligibility for exemption from countervailing duty on imported components.

Analysis:
1. The petitioner, a watch manufacturer, challenged the levy of additional duty on imported watch components by the Collector of Customs and Central Excise under Section 3 of the Customs Tariff Act, 1975. The petitioner relied on notifications 240/78/Cus and 178/77, seeking a refund of the duty paid and collected. The court noted that the charging section under the Customs Tariff Act is Section 3, which imposes additional duty equal to excise duty on imported articles. The court also highlighted the relevance of Section 25 of the Customs Act, allowing exemptions from Customs duty. However, a specific notification exempting wrist watch parts from duty in excess of 50% ad valorem was found irrelevant to the case.

2. The court addressed the argument that the imported watch components were not eligible for exemption under Notification 118/75, which applies to components manufactured in a factory for use in the same factory where finished products are made. The court dismissed the petitioner's claim, stating that the components did not satisfy the terms of the exemption mentioned in the notification. The petitioner's reliance on a Bombay High Court decision regarding exemption for imported polymaid chips was countered by a Delhi High Court judgment, affirmed by the Supreme Court, which held that imported copper scrap was not exempt from countervailing duty.

3. The court referenced the Supreme Court's interpretation of Section 3 of the Customs Tariff Act, emphasizing that the duty is based on the rate or measure of excise duty on like articles produced in India. The court rejected the petitioner's argument that imported components should be exempt if similar components produced in India would be dutiable. The court concluded that the petitioner's case lacked substance and dismissed the petition, stating that the notification relied upon by the petitioner had no relevance to the case, as it pertained to goods manufactured in and used within the same factory.