1986 (11) TMI 239 - AT - Customs

Issues Involved:

1. Eligibility of imported High-Density Polyethylene (HDPE) for concession under exemption Notification No. 302/79-C.E., as amended by Notification No. 184/80-C.E.
2. Precedential value of the Bombay High Court's decision in Pan Asia Commercial Enterprises v. Union of India.
3. Compliance with conditions of the exemption notification regarding payment of excise duty on raw naphtha.
4. Applicability of different rates of duty and the highest rate under Section 3 of the Customs Tariff Act, 1975.
5. Binding nature of High Court decisions on administrative tribunals.

Issue-wise Detailed Analysis:

1. Eligibility of Imported HDPE for Concession:
The primary issue was whether imported HDPE Moulding Powder was eligible for a concession in respect of additional duty under exemption Notification No. 302/79-C.E., as amended by Notification No. 184/80-C.E. The Tribunal had previously ruled that the benefit of the notification was not available because the importers failed to prove that the raw naphtha used for manufacturing the imported HDPE had already paid the appropriate excise duty under the Central Excises & Salt Act, 1944.

2. Precedential Value of the Bombay High Court's Decision:
The appellants argued that the Bombay High Court in Pan Asia Commercial Enterprises v. Union of India had held that HDPE is exempt from excise duty under the notification and that it was not permissible to levy countervailing duty under Section 3 of the Customs Tariff Act, 1975. The appellants contended that this decision should be preferred over the Tribunal's previous decisions. They cited various judgments to support the binding nature of High Court decisions on administrative tribunals.

3. Compliance with Conditions of the Exemption Notification:
The Tribunal noted that the Bombay High Court's decision in Pan Asia was based on the specific pleadings and arguments in that case, where the respondents failed to deny the petitioners' claims adequately. The High Court found that the conditions of the notification were fulfilled due to the state of pleadings and arguments. However, in the present appeals, there was no averment or proof that the raw naphtha or chemicals derived therefrom used in manufacturing the imported HDPE had paid the appropriate excise duty. Therefore, the Tribunal held that the appellants did not fulfill the conditions of the notification.

4. Applicability of Different Rates of Duty:
The Tribunal referred to the Supreme Court's decision in Khandelwal Metal & Engineering Works v. Union of India, which held that additional duty under Section 3(3) of the Customs Tariff Act is not countervailing duty but partakes of the same character as Customs duty. The Tribunal also cited the Karnataka High Court's decision in B.S. Kamath & Co. v. Union of India, which held that exemptions under the Excise Act cannot be the basis for claiming exemptions under the Customs Act. The Tribunal concluded that the highest rate of duty would be applicable for quantifying additional duty when different rates of duty are in force.

5. Binding Nature of High Court Decisions:
The Tribunal acknowledged the principle that administrative tribunals are bound by the decisions of the High Court within their jurisdiction. However, it noted that the Bombay High Court's decision in Pan Asia was based on specific pleadings and did not lay down a general principle applicable to all cases. The Tribunal also considered the Supreme Court's decisions, which impliedly overruled the Bombay High Court's decision in Century Enka Ltd. v. Union of India, on which the Pan Asia decision was based.

Conclusion:
The Tribunal concluded that the imported HDPE Moulding Powder was not eligible for concession under the exemption notification because the appellants failed to prove that the raw naphtha or chemicals derived therefrom used in manufacturing the HDPE had paid the appropriate excise duty. The Tribunal also held that the highest rate of duty would be applicable for quantifying additional duty when different rates are in force. Consequently, the appeals were dismissed.

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