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TMI Blog1995 (7) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners) import asbestos fibre and pay Custome duty thereon under entry 25.01.32, which reads : Mineral substances, not elsewhere specified................. : (1) * * ** **. (2) Asbestos raw including fibre 40% * * ** **. There is no dispute in regard to the levy of Customs duty. The dispute is in regard to the levy on the imported asbestos fibre of additional duty under Sec. 3(1) of the Customs Tariff Act, 1975, which is quoted hereinafter. The appellant in Civil Appeal No. 1354 of 1990 also mines asbestos in India and is made liable to pay excise duty thereon under Tariff Item 22F, which reads thus : "Item No. Description of goods Rate of Duty 22F Mineral Fibres and Yarn, and manufactures therefrom in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. Fifteen per cent ad valorem Explanation : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I (1970) page 427, 428]. Similarly the Encyclopaedia of Natural Chemical Analysis, Vol. II gives the processing of asbestos fibre as follows : "Asbestos fibre is recovered by open pit or underground mining operations. In the open pit operation, the ore is taken from the top of the deposit and in underground method, the ore is removed from the bottom of the deposit. One imported method used in underground mining is known as block carving. In this method, a large block of ore is loosened in such a way that it breaks down from its own weight. The ore is extracted through a network of tunnels and carried to primary crushers which break up the large rock chunks into fragments. The crushed ore falls into bins and then undergoes further crushing and drying prior to processing at the mill. The milling operation are complicated but consist of separating the fibres from the rock. In the mill the rock is crushed more finely and passes ores through vibrating screens which roughly separate the loose fibre from the rock. Powerful hoods, which operate much like vaccum cleaners, lift the loose fibre leaving the heavier rock. This operation is repeated until the separation is complete and only wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... msp;In Minerals and Metals Trading Corporation of India Ltd. v. Union of India and Ors. - 1983 (13) E.L.T. 1542 (SC) =1973-1 S.C.R. 997, this Court was concerned with the exigibility of the mineral wolfram to excise duty. The relevant portion of the judgment is self-explanatory. "The separating of wolfram ore from the rock to make it usable ore is a process of selective mining. It is not a manufacturing process. The important test is that the chemical structure of the one should remain the same. Whether the ore imported is in powder or granule form is wholly immaterial, What has to be seen is what is meant in international trade and in the market by wolfram ore containing 60% ore more WOB. On that there is a preponderation weight of authority both of experts and books and of writings on the subject which show that wolfram ore when detached and taken out from the rock in which it is embedded either by crushing the rock and sorting out pieces of wolfram or by washing or magnetic separation and other similar and necessary process it becomes a concentrate but does not cease to be ore. Unless the ore is roasted or treated with any chemical it cannot be classed as processed." 5. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alter the basic character of leviability. The duty is attracted not because an article is covered in any of the items or it falls in residuary category but it must further have been produced or manufactured and it is capable of being bought and sold." 7. Assuming that Tariff item 22F, when it refers to "asbestos fibre and yarn", covers asbestos fibre that has been separated from its parent rock in the manner aforementioned, such asbestos fibre is not the result of a process of manufacture, it is not a new and commercially identifiable article and it is, therefore, not liable to excise duty. 8. What all the appellants import is, it is not disputed, asbestos fibre that has been separated from its parent rock in the manner aforementioned. 9. The learned Additional Solicitor General submitted that the asbestos fibre imported by the appellants was exigible to additional duty regardless of the fact that it was not the result of manufacture and, therefore, not exigible to excise duty. He placed reliance in this behalf upon this court's judgment in Khandelwal Metal & Engineering Works and Another etc. v. Union of India and Others - 1985 (20) E.L.T. 222 (SC) = (1985) Suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d where such duty is leviable at different rates, the highest duty." 12. The first question which the Bench was required to examine related to the true nature of the duty mentioned in Section 3(1) of the Tariff Act. The Bench said that it had to be appreciated at the threshold that the charging section was Section 12 of the Customs Act and not Section 3(1) of the Tariff Act. Section 12 of the Customs Act incorporated the different ingredients embodied in the concept of a fiscal imposition. It levied a charge, it indicated the taxable event, which was the import or export of goods and it indicated the rate of the levy, which was such "as may be specified under the Customs Tariff Act, 1975". Section 2 of the Tariff Act laid down that "the rates at which the duties of Customs shall be levied under the Customs Act are specified in the First or Second Schedules". The levy specified in Section 3(1) of the Tariff Act was a supplementary levy in enhancement of the levy charged by Section 12 of the Customs Act and with a different basis constituting the measure of the impost. In other words, the scheme embodied in Section 12 was amplified by what was provided in Section 3(1). The Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported did not suffer excise duty for the reason that they were not manufactured, the charge leviable under Section 3(1) of the Tariff Act was not attracted. The Bench rejected the argument. In the first place, it said, Sections 2 and 3(1) of the Tariff Act were not charging sections; the charging section was Section 12 of the Customs Act. The taxable event was not the manufacture of goods. Under Section 3(1) of the Tariff Act, "the excise duty for the time being leviable on a like article if produced or manufactured in India" was only the measure of the duty leviable on the imported article. Section 3(1) did not require that the imported article should be such as was capable of being produced or manufactured in India. The assumption had to be that an article imported into India could be produced or manufactured in India and, upon that basis, the duty had to be determined under Section 3(1). The Bench said : "Any doubt on this point is resolved by the Explanation to Section 3(1) of the Tariff Act. The Explanation furnishes a dictionary for the interpretation of Section 3(1) and provides a clue to its understanding. The Explanation provides in so many words that the expression "e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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