1985 (7) TMI 227 - AT - Central Excise

Summary

Issues Involved:
1. Applicability of Central Excise Notification No. 185/83 to imported Polyvinyl Alcohol (PVA).
2. Interpretation of Section 3 of the Customs Tariff Act, 1975 regarding additional duty on imported goods.
3. Distinction between "levy," "assessment," "collection," and "exemption" in the context of duty imposition.

Issue-Wise Detailed Analysis:

1. Applicability of Central Excise Notification No. 185/83 to Imported Polyvinyl Alcohol (PVA):
The primary issue was whether the consignments of Polyvinyl Alcohol (PVA) imported by the Respondents were liable to be assessed to additional duty of Customs at 10% ad valorem in terms of Central Excise Notification No. 185/83. The notification exempts PVA manufactured from Vinyl Acetate Monomer, on which the appropriate amount of excise duty or additional duty of Customs has been paid, from so much of the duty of excise leviable thereon as is in excess of 10% ad valorem.

The Revenue contended that the second condition of the notification, which requires the monomer used to manufacture PVA to have paid the appropriate duty, was not met by the imported consignments. The Respondents argued that this condition applied only to indigenously manufactured PVA and not to imported PVA.

The Tribunal concluded that the notification was meant to apply only to indigenously manufactured PVA, subject to the fulfilment of the stipulated conditions. Since the imported PVA could not fulfil the condition of being manufactured from duty-paid monomer, the notification did not apply to it.

2. Interpretation of Section 3 of the Customs Tariff Act, 1975:
The Respondents claimed that their case was based on Section 3 of the Customs Tariff Act, which mandates an additional duty equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. They argued that since the excise duty on indigenous PVA was 10% ad valorem, the additional duty on imported PVA should also be 10%.

The Tribunal, however, noted that the 10% rate was applicable only if the conditions in Notification No. 185/83 were fulfilled. If these conditions were not met, the rate of duty would be higher. Therefore, the additional duty on imported PVA could not be limited to 10% ad valorem.

The Tribunal emphasized that the notification's conditions must be met for the concessional rate to apply, and since imported PVA could not fulfil these conditions, the higher rate of duty was applicable.

3. Distinction between "Levy," "Assessment," "Collection," and "Exemption":
The Tribunal discussed the legal distinction between "levy," "assessment," "collection," and "exemption." It was noted that "levy" refers to the imposition of a duty by statute, while "assessment" pertains to the procedure of determining the liability to pay the tax. "Collection" involves the actual gathering of the tax.

The Tribunal clarified that an exemption notification provides relief from the duty "leviable" but does not alter the levy itself. The duty "leviable" is the rate specified in the First Schedule of the Central Excises and Salt Act, not the rate after applying an exemption.

This interpretation was crucial in determining that the additional duty on imported PVA should be based on the rate specified in the First Schedule, not the reduced rate under the exemption notification, which the imported PVA did not qualify for.

Conclusion:
The Tribunal held that the benefit of Notification No. 185/83 was erroneously extended to the imported consignments of PVA by the Collector (Appeals). The impugned orders were set aside to this extent, and the appeals were allowed with consequential relief to the appellant.

Separate Judgment:
Member (J) agreed that the appeals should be allowed but for different reasons, emphasizing the interpretation of "leviable" in the context of Section 3 of the Customs Tariff Act and the distinction between "levy" and "exemption."

Member (T) concurred, highlighting that the 10% duty was not the only duty leviable on PVA and that the higher rate applied if the conditions of the notification were not met.