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TMI Blog2005 (12) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... India under the other laws imposing such excise duty. Even in of the said judgment, the Supreme Court observed that when articles which are not produced or manufactured, cannot be subjected to levy of excise duty, then on the import of like article no additional duty can be levied under the Customs Tariff Act. The levy of additional duty being with a view to provide for counter balancing the excise duty leviable, we are clearly of the opinion that additional duty can be levied only if on a like article excise could be levied . There is nothing in the said decision to suggest that additional customs duty was not leviable u/s 3(1) of the Customs Tariff Act even if excise duty was levied on a like article under the other laws. Nor is the decision of the Supreme Court in Motiram Tolaram [ 1999 (8) TMI 68 - SUPREME COURT] suggestive of such an interpretation. Even in that case, the Supreme Court was not concerned with imposition of excise duty under the laws other than the Central Excise Act. It is, therefore, not correct to say that it is a settled law that excise duty referred to u/s 3 of the Customs Tariff Act refers to only the duty payable under the provisions of the Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty of excise leviable as cess under the Rubber Act from the sweep of the provisions of Section 3(1) of the Customs Tariff Act for the purpose of imposing additional duty of customs equal to the excise duty leviable u/s 12 of the Rubber Act. It will be evident from the communications of the Ministry of Finance/Central Board of Excise Customs that there was no question of the department having accepted the stand of the assessees that the additional duty of Customs was not leviable u/s 3(1) of the Customs Tariff Act in respect of the imported rubber on the ground that duty of excise levied as cess u/s 12 of the Rubber Act, 1947, was to be imposed on rubber produced in India and not on imported rubber. There could arise no question of levying such cess under the Rubber Act on any imported product, because under the Rubber Act it was intended to the levied on rubber produced in India. The question of levy of additional duty of Customs on imported rubber u/s 3(1) of the Customs Tariff Act stood totally on a different footing, and in fact that levy was attracted precisely because, duty of excise was levied as cess on rubber produced in India under the Rubber Act. Therefore, the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted to raise a contrary contention in these appeals before the Division Bench or before the Larger Bench. The Division Bench, however, was of the opinion that the order of the Hon ble Supreme Court dismissing the appeal on the ground that it was not pressed against the decision in which a similar question was decided by the Tribunal, cannot be taken to be the law declared by the Hon ble Supreme Court in the terms of such decision of the Tribunal. It was held that the fact that the appeal was not pressed and therefore, was dismissed, clearly indicated that there was no decision rendered by the Hon ble Supreme Court on the merits of the issue involved and that the dismissal of that appeal, on its not being pressed, did not take away the jurisdiction of the Tribunal to decide the issue which was already referred and was pending before the earlier Larger Bench. The Division Bench noted that there was a serious question involved in these matters as to whether the earlier decision of the Tribunal in MRF Ltd. v. Commissioner of Customs, reported in 1997 (96) E.L.T. 198, and the subsequent decisions that followed it, laid down the correct legal position. 3.1 In MRF Ltd., the Tribunal on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atural rubber which was collected under Section 3 of the Customs Tariff Act. The claim for refund was made on the grounds that, while extending the benefit of exemption from the whole of the basic Customs duty in terms of ad hoc exemption Order No. 79/95, dated 31-3-95, and from the levy of countervailing duty (CVD) as per Notification No. 18/95-CEX., cess was collected at the rate of Re. 1/- per Kg. as duty of excise leviable under the Rubber Act, 1947, on the imported natural raw rubber covered by the said claim; that cess could be collected only by the Rubber Board, and, that, the excise duty mentioned under the provisions of the Tariff Act was only excise duty levied under the Central Excise Act, 1944; that the Rubber Board by their circular dated 12-7-95 had clarified that cess on rubber was levied under Section 12 of the Rubber Act, 1947 and was applicable only in the case rubber produced indigenously and not on the imported rubber; that the cess cannot be equated to additional duties of excise levied under other tax laws like Goods of Special Importance Act, 1957, Additional Duties of Excise (Textiles) Act, 1978, where there were inbuilt provisions making Central Excise Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar imported goods an amount of cess leviable is levied as additional duty of customs. For this purpose, what is required to be considered is whether under the relevant Act enabling the levy, cess is levied and collected as a duty of excise, in which event on imports corresponding amount of duty of Customs becomes payable under Section 3 of the Customs Tariff Act. Accordingly, even though the Rubber Act, 1947, did not provide for collection of additional duty of customs on imports, it becomes payable on the import of rubber by virtue of Section 3 of the Customs Tariff Act. The appeal was, therefore, rejected leading to the present appeal. Arguments on behalf of the appellants : 6. We have heard both the sides at great length. It has been contended before us on behalf of the appellants by the learned senior advocate that when something is levied as a cess, the nature and characteristic of that levy changes. It was submitted that cesses are earmarked for particular purposes unlike duties of excise and other taxes which are not so earmarked. He argued that Section 3 of the Customs Tariff Act, 1975, contemplated levy of duty of excise under the Central Excise Act, 1944, and not any du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary to the earlier decisions of the Tribunal relating to the issue referred, since those earlier judgments were accepted by the Revenue by not preferring appeal, and because the appeals filed by the Revenue in the earlier case of Vikrant Tyres Ltd. were not pressed upon instructions and dismissed by the Hon ble Supreme Court by order dated 17-2-2003. 6.1 The learned senior Advocate for the appellants relied on the following decisions in support of his contentions : (a) The decision of the Supreme Court in Hyderabad Industries Ltd. v. UOI, reported in 1999 (108) E.L.T. 321 (S.C.), was cited to point out that it was held in Paragraph 17 of the judgment that, .. the measure for levy of additional duty is the quantum of excise duty leviable on a similar article under the Excise Act. Duty under the Excise Act can be levied, as has been held earlier, if the article has come into existence as a result of production and manufacture. In other words, when articles which are not produced or manufactured cannot be subjected to levy of excise duty then on the import of like articles no additional duty can be levied under the Customs Tariff Act. (b) The decision of the Supreme Court in Moti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validity of the public notice issued by the Textiles Committee under Section 12 of the Textiles Committee Act, 1963, directing all the manufacturers/exporters of silk readymade garments to pay to the Committee the amount of cess at 0.05% ad valorem from 1975 calculated on the basis of the FOB value of the shipping bills, as contemplated under Section 5A(1) of the Textiles Committee Act, 1963, was challenged, and no question was, therefore, involved in the context of additional duty payable under Section 3 of the Customs Tariff Act. (e) The decision of the Supreme Court in Collector of Central Excise, Pune v. Tata Engineering Locomotives Co. Ltd., reported in 2003 (158) E.L.T. 130 (S.C.), was cited to point out from Paragraph 7 of the judgment that it was observed herein that, apart from the question of interpretation of the notification, the appellant had not offered any explanation why the decision of the Tribunal in M/s. Bajaj Auto where identical issue was decided in respect of an earlier year allowing the benefit of the notification in respect of gauges manufactured and captively consumed in the factory had not been challenged, and, therefore, it was concluded that the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provide them a level playing field. He relied on Paragraph 15 of the judgment of the Supreme Court in Hyderabad Industries (supra) in support of this contention. The Supreme Court in Paragraph 15 of the judgment in Hyderabad Industries, held that the Customs Tariff Act, 1975 was preceded by the Indian Tariff Act, 1934 and in Section 2A of the Tariff Act of 1934, a provision was made for levy of countervailing duty. That section stipulated that any article which was imported into India shall be liable to customs duty equal to the excise duty for the time being leviable on like article if produced or manufactured in India. It was noted by the Supreme Court that, in the Explanatory Notes to Clauses of the Customs Tariff Bill, 1975, with regard to Clause 3, it was stated that the said Clause 3 provided for the levy of additional duty on an imported article to counter-balance the excise duty leviable on the like article made indigenously or on the indigenous raw materials, components or ingredients which go into the making of the like indigenous article. The learned authorized representative for the Department further argued that it was apparent from the provisions of Section 12 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue on merits and that the said letter was with reference to levy of cess on the rubber produced in India and had no relevance to the additional duty payable under Section 3 of the Customs Tariff Act. There was no valid reason to hold that the additional duty of customs under Section 3 of the Customs Tariff Act was not payable on the basis of that letter. It was submitted that the subsequent judgments merely followed the MRF judgment and the Ministry of Finance s letter dated 22-7-97, but did not consider the effect of the Ministry of Finance letters dated 2-9-97 and 29-9-97 though cited by the Department before the Tribunal in the case of T.T.K.-LIG Ltd. (supra) and M.M. Rubber Ltd. (supra). He further submitted that the Tribunal in MRF Ltd. (supra) did not consider the earlier decisions in Birla Jute Industries (supra) of the Tribunal and Vareli Textile Ltd. (supra) of the Gujarat High Court and, therefore, the judgment in the case of MRF Ltd. (supra) and subsequent judgments following the same were rendered per incuriam. It was also submitted that the letter dated 12-7-95 of the Rubber Board and the letter dated 30-6-97 of the Ministry of Commerce have been misinterpreted inasmuc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in 2004 (166) E.L.T. 296 (S.C.) (Paras 8 and 9), Director of Settlements, A.P. Others v. M.R. Apparao and Another reported in 2002 4 SCC 638 (Paras 7, 10 to 14), Uptron India Ltd. v. Shammi Bhan and Another reported in AIR 1998 SC 1681 (Para 19) in support of this contention. He submitted that the judgment in the case of Birla Corporation Ltd. (supra) relied on by the appellant was distinguishable, because in that case, as recorded in Paragraph 3 of the judgment, there was a specific letter from the department that the order of the Tribunal had been accepted by the Chief Commissioner, and the statement was made by the learned Attorney General that he did not wish to press the appeal on the basis of such letter. However, in the case where appeals which were not pressed before the Supreme Court (Vikrant Tyres and Others), no such instructions were given by the department, and in fact the department had filed an application before the Hon ble Supreme Court seeking clarification that the appeal was dismissed on the ground of delay and not on merits, which application came to be dismissed on 31-10-2003 stating that there was no ground to modify/clarify the order dated 17-2-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference in Section 3(1) to any particular Act of the Parliament or the Legislature imposing the excise duty and the expression excise duty for the time being leviable would, therefore, be the excise duty for the time being leviable under any law on a like article if produced or manufactured in India. The theory put forth by the learned senior Advocate for the appellant that the excise duty contemplated in Section 3(1) of the Customs Tariff Act would mean only the central excise duty leviable under the Central Excises Salt Act, 1944, is not at all borne out from the wordings of Section 3(1) and stands excluded by the proviso, which was subsequently introduced w.e.f. 1-3-2005, to sub-section (1) of Section 3., which clearly contemplates consideration of excise duty for the time being leviable in different States on alcoholic liquor produced or manufactured in different States. Even the explanation to sub-section (1) of Section 3 does not confine the extent of the levy of an additional duty of customs merely to the extent of central excise duty leviable under the Central Excises Salt Act, 1944, and it defines the expression the central excise duty for the time being leviable on a li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into India shall be liable to customs duty equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. The rationale behind the provision was that it was necessary to safeguard the interests of the manufacturers in India. Since Section 3 of the Customs Tariff Act, 1975 corresponds to Section 2A of the Indian Tariff Act, 1934 and both referred to the excise duty leviable on the like article made indigenously, there is no scope for imposing any narrow construction on the provisions of Section 3(1) by confining the excise duty for the time being leviable on a like article if produced or manufactured in India only to such excise duty leviable under the Central Excises Salt Act, 1944 and not to the excise duty leviable on a like article if produced or manufactured in India under the other laws imposing such excise duty. Even in Paragraph 17 of the said judgment, the Supreme Court observed that when articles which are not produced or manufactured, cannot be subjected to levy of excise duty, then on the import of like article no additional duty can be levied under the Customs Tariff Act. The levy of additional duty being with a view to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 272) (FC) : 1941 F.C.R. 90, 101 and the decision of the Judicial Committee, in Governor General in Council v. Province of Madras - 1978 (2) E.L.T. (J 280) (PC) = (1945) L.R. 72 I.A. 91, 103, Hon ble Supreme Court held in R.C. Jall (supra) as under : With great respect, we accept the principles laid down by the said three decisions in the matter of levy of an excise duty and the machinery for collection thereof. Excise duty is primarily a duty on the production or manufacture of goods produced or manufactured within the country. It is an indirect duty which the manufacturer or producer passes on to the ultimate consumer, that is, its ultimate incidence will always be on the consumer. Therefore, subject always to the legislative competence of the taxing authority, the said tax can be levied at a convenient stage so long as the character of the impost, that is, it is a duty on the manufacture or production, is not lost. The method of collection does not affect the essence of the duty, but only relates to the machinery or collection for administrative convenience. Whether in a particular case the tax ceases to be in essence of an excise duty, and the rational connection between the dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of an owner, the total quantity of rubber produced on the estate in each such period : Provided that in respect of an estate situated only partly in India, the owner shall in the said return, show separately the quantity of rubber produced within and outside India. (ii) in the case of a manufacturer, the total quantity of rubber used by him in such period out of the rubber produced in India. (5) If any owner or manufacturer fails to furnish, within the time prescribed, the return referred to in sub-section (4) or furnishes a return which the Board has reason to believe is incorrect or defective, the Board may assess the amount of the duty of excise in such manner as may be prescribed. (6) Any person aggrieved by an assessment made under this Section may, within three months of the service of the notice under sub-section (3), apply to the District Judge for the cancellation or modification of the assessment, and the District (which shall be final) as he thinks proper. (7) The proceeds of the duty of excise collected under this section reduced by the cost of collection as determined by the Central Government shall first be credited to the Consolidated Fund of India, and then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever take away the characteristics of the duty of excise and it remains like any other duty of excise under any law for the time being in force including the one leviable under the Central Excise Act. In any event, such subsequent allocation of an amount by appropriation made by law by Parliament will not take away the duty of excise leviable as cess under the Rubber Act from the sweep of the provisions of Section 3(1) of the Customs Tariff Act for the purpose of imposing additional duty of customs equal to the excise duty leviable under Section 12 of the Rubber Act. 10. The major defect that, in our respectful opinion, occurred while deciding MRF Ltd. (supra) was a total mis-construction of the meaning and effect of the communications of the Government of India issued on 22-7-97 on the basis of the office memorandum by the Ministry of Finance on 30-6-97 which had been reproduced in the order made in MRF Ltd. After reproducing these two communications, the Tribunal disposed of the appeal by observing : The instructions as given by the Ministry of Finance are binding on the authorities as held by the Hon ble Supreme Court. In this circumstance, therefore, inasmuch as the Ministry co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may note here that, alarmed by the mis-interpretation of the these communications, the Ministry of Finance, within a few months of these communications, informed all Commissioners of Customs on 2-9-97 to ensure collection of additional duty of Customs on imported goods equal to cess wherever leviable as duty of excise on goods produced/manufactured in India. It was again clarified on 29-9-97 that, when cess is leviable as duty of excise on goods produced/manufactured in India under an Act then on similar imported goods an amount equivalent to the amount of cess leviable is levied as additional duty of Customs. It was clarified that though the Rubber Act, 1947, may not provide collection of cess on imports, additional duty of Customs is payable on the import of rubber by virtue of Section 3 of the Customs Tariff Act, 1975. By Circular No. 75/98-Cus., dated 8-10-98, the Government of India, Ministry of Finance withdrew the circular dated 22-7-97 by which the Ministry of Commerce letter dated 30-6-97 was circulated, with immediate effect. It is a sad comment on the processes of adjudication that these important communications should have been overlooked as a result of either the dex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation vide TRU s letter of even number dated 2-9-1997 is not levy of cess but levy of additional duty of Customs equivalent to the amount of cess wherever such cess is leviable as duty of excise. When cess is levied on goods as duty of excise, then as per Section 3 of the Customs Tariff Act, 1975 additional duty of Customs equivalent of such cess (collected as duty of excise) is leviable on similar imported goods. 3. In view of the above, wherever under an Act, cess is levaible as duty of excise on goods produced/manufactured in India, then on similar imported goods an amount equivalent to the amount of cess leviable is levied as additional duty of Customs. For this purpose, what is required to be considered is whether under the relevant Act enabling levy of cess, cess is levied as a duty of excise. If the enabling legislation provides for levy and collection of cess as a duty of excise, then on imports corresponding amount of additional duty of customs becomes payable under Section 3 of the Customs Tariff Act, 1975. Accordingly, even though the Rubber Act, 1947 may not provide for collection of cess on imports, additional duty of Customs is payable on import of rubber by virtue of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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