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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 ..... an, Mr. V.A. Bobde, Mr. H.N. Salve, Dr. V. Gaurishanker, Mr. Soli J. Sorabjee and Mr. V.C . Mahajan, Sr. Advs. Mr. N.K. Bajpayee, Mr. S.D. Sharma, Mr. G. Prakash, Mr. P. Parmeshwaran, Mr. V.K. Verma, (Mr. Ravinder Narain, Ms. Amrita Mitra, Mr. Rajan Narain) Advs. for M/s. JBD Co. (M/s. Aseem Mehrotra, Darshan Singh, Suman Khaitan, Shalini Lums, (Rahul Roy) Advs. for M/s. Khaitan Co., Mr. Satish Agarwal, Ms. P. Gautam, Mr. Pramod B. Aggarwala, Mr. D.A. Dave, Mr. R.N. Karanjawala, Mr. Bhasker Pradhan, Mr. Manik Karanjawala, Ms. Vidula, Mr. R. Ashok, Mr. S.Rajappa, Mr. P. Narasimhan, M/s. Sarva Mitter, Pradeep Kumar) Advs. for M/s. Mitter Mitter Co., Advocates, with them for the appearing parties. [Judgment per : S.P. Bharucha, J.]. - The appellants (original writ petitioners) 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 fib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and additional crushers or fibrizers. At each shaking screen the liberated fibres are sucked off by an airstream and collected for grading and packaging. The larger pieces of ore, which are retained by the screen are recycled for further crushing. Smaller pieces, which pass through the screen and are called throughs, are sent to the next crushing or fiberizing sequence. The extremely small pieces that fall through the screens following the final fiberizer are discarded. [Vide Encyclopaedia Americans Vol. II (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. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maller size with the aid of power and the resultant is subject to series of screening surfaces so that the asbestos fibre which is very much lighter is removed and separated from the dust and the grit. The fibre however, still contains rock particles and spicules. The fibre is then pressed through a Hurricane Hill where rapidly rotating rotors pulverise the stones and spicules without damaging the fibre. It is in this process that ultimately the asbestos fibre free of all dust and stone particles is produced." 4. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etability. Consequently it is always open to an assessee to prove that even though the goods in which he was carrying on business were excisable goods being mentioned in the Schedule but they could not be subjected to duty as they were not goods either because they were not produced or manufactured by it or if they had been produced or manufactured they were not marketed or capable of being marketed." It also said : "The tariff schedule by placing the goods in specific and general category does not 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 sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at percentage of the value of the imported article. Explanation. - In this section the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India" means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or if a like article is not so produced or manufactured which would be leviable on the class or description of article to which the imported article belongs, and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that there were indigenous goods belonging to the class of goods which were imported which were chargeable to excise duty. The illustrations he gave were the import of live animals, live trees, burnt up cables, broken glass or fused bulbs. The argument was that there was and could be no additional duty on these goods, if imported, because they could not be and were not manufactured. To put it in one sentence, the argument was that if indigenous goods similar to those which were 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 manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of that class or description of goods when imported are, then, not liable to additional duty. The assumption underlying the Explanation to Section 3(1) would appear to be that an imported article which is the result of production or manufacture can be produced or manufactured in India; the emphasis in the assumption is on the words "in India". In other words, if the imported article is the result of production or manufacture, it must be assumed that it can be produced or manufactured in India. In this context the Statement of Objects and Reasons is relevant. It says that the levy of additional duty on an imported article is provided for to counterbalance the excise duty leviable on the like article made indigenously. 15. It may also be reconsidered why, insofar as additional duty is concerned. Section 3 of the Tariff Act is not the charging section. It provides for the levy, namely, additional duty; it provides for the taxable event, which is the import of goods that have been produced or manufactured; and it sets out the measure of the duty, which is the excise duty on the indigenously produced or made equivalent article. The Statement of Objects and Reasons is meaningful in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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