1996 (9) TMI 158 - AT - Customs

Brass scrap - Additional Duty of Customs - Interpretation of Statute - Amending Notification - Appeal - Maintainability

Issues Involved:
1. Levy of additional duty on imported Brass Scrap.
2. Applicability of Exemption Notification No. 33/81.
3. Conflicting views of High Courts and Tribunals on the issue.
4. Validity of proceedings transferred to the Tribunal.

Detailed Analysis:

1. Levy of Additional Duty on Imported Brass Scrap:

The primary issue is whether additional duty is leviable on the imported Brass Scrap under Section 3 of the Customs Tariff Act, 1975. The provision mandates that any imported article shall be liable for additional duty equal to the excise duty leviable on a like article if produced in India. If a like article is not produced in India, the duty is calculated based on the class or description of the articles to which the imported article belongs, applying the highest duty rate if multiple rates exist.

2. Applicability of Exemption Notification No. 33/81:

The respondent argued that Brass Scrap is exempt from additional duty under Notification No. 33/81. This notification exempts waste and scrap of Copper, Zinc, Aluminium, and Lead from additional excise duty, subject to specific conditions. Clause (a) requires that the scrap must be manufactured from duty-paid materials, which is inapplicable here as the scrap is of foreign origin. Clause (b) in its original form applies if the scrap arises from products not falling under specified items and such products are manufactured from Copper falling under Item No. 26A. The Tribunal noted that the Assistant Collector did not prepare a reasoned order, and the Collector (Appeals) did not examine the conditions required to be proved by the respondent to be entitled to the benefit of Notification No. 33/81.

3. Conflicting Views of High Courts and Tribunals:

The Tribunal reviewed various conflicting decisions:
- Bombay High Court in Century Enka Limited v. Union of India (1982): Held that if an article is exempt from excise duty, it cannot be subjected to countervailing duty.
- Delhi High Court in Khandelwal Metal and Engg. v. Union of India (1983): Held that conditional exemptions in excise notifications have no relevance for additional customs duty.
- Bombay High Court in Indian Lead Private Ltd. v. Union of India (1988): Held that Notification No. 33/81 (before amendment) would apply to imported scrap, making additional duty nil.
- Rajasthan High Court in Prem Cables Pvt. Ltd. v. Assistant Collector (1981): Stated that if excise duty was not payable on goods, countervailing duty under Section 2A of the Indian Tariff Act could not be recovered.

The Tribunal also reviewed its own decisions, noting partial dissent from the decision in Eagle Smelting Co. v. Collector of Customs (1989), which assumed that evidence of origin could not be adduced for imported scrap.

4. Validity of Proceedings Transferred to the Tribunal:

The respondent challenged the maintainability of the appeal, arguing that the Central Government did not serve the show cause notice within the prescribed time limit. The Tribunal noted that this issue had been previously addressed by a third Member, who agreed with the Technical Member that there was a valid proceeding pending before the Central Government, which stood transferred to the Tribunal. This contention was therefore concluded by the majority view.

Conclusion:

The Tribunal concluded that the Collector (Appeals) erred in assuming that the imported Brass Scrap satisfied the conditions in item (b) of Notification No. 33/81 without examining the necessary evidence. The Tribunal remanded the case to the jurisdictional Assistant Commissioner for a fresh decision, allowing the respondent an opportunity to produce evidence to satisfy the conditions of the notification. The appeal was accordingly allowed.

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