TMI Blog2013 (10) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... that:- The vessels imported by the appellant are not seaworthy and they are admittedly for the purpose of breaking. There is a separate entry for this purpose both under the Customs Tariff Act and Central Tariff Act. The product actually imported is the material that can be retrieved from the ship; the structure by itself is of no value and the appellant subjects the vessel to a process to retrieve the material from the structure without the use of power - Therefore, appellant is eligible for the benefit of Notification No. 167/86 - Following decision of ENGEE INDUSTRIAL SERVICES (P) LTD. Versus UNION OF INDIA [2003 (5) TMI 458 - KARNATAKA HIGH COURT] - Decided in favour of assessee. - C/1/2008 - Misc. Order No. M/12292/2013-WZB/AHD - Dated:- 3-5-2013 - Shri M.V. Ravindran and H.K. Thakur, JJ. Shri P.M. Dave, Advocate, for the Appellant. Shri K.M. Mondal, Special Counsel, for the Respondent. ORDER This application for rectification of mistake is filed by the appellant-applicant for rectification of error apparent on the face, in our Final Order No. A/1139-1140/WZB/AHD/2012, dated 6-8-2012 [2012 (286) E.L.T. 113 (Tri.-Ahmd.)]. 2. Ld. Counsel would submit that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities. It is his submission that be as it may, since the appellant is contesting the issue on non-applicability of CVD, by claiming exemption under Notification No. 167/86, dated 1-3-1986, the judgment of Hon ble High Court of Karnataka in the case of Engee Industrial Services Pvt. Ltd. - 2004 (164) E.L.T. 242 (Kar.) will apply in its full force. He reads the relevant paragraph from the said judgment. 7. Ld. Special Counsel, on the other hand, would submit that the lower authorities were correct in rejecting the benefit claimed by the appellant. It is his submission since the judgment of Hon ble High Court of Karnataka was not considered by the lower authorities, the matter may be remanded back to the lower authorities to reconsider the issue afresh. 8. In rejoinder, the ld. Counsel would submit that remanding the matter will be of no consequence as the judgment of Hon ble High Court of Karnataka is binding on this Bench and that the question of law which has been decided by Hon ble High Court would cover the issue. He would draw our attention to the copy of Bill of Entry which was filed, wherein they had claimed the benefit of exemption Notification No. 167/86, dated 1-3-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contributes a substantial amount of iron and steel scrap for the Iron and Steel Industry. It is stated that the ship-breaking industry in India is carried on without the aid of power (electricity) and is largely a manual operation involving semi-skilled and unskilled labourers. It is further stated that the ship-breaking industry is instrumental in supplying a substantial part of the raw material required by mini-steel plants which have set up induction furnaces. Some of the bigger steel plants also utilise the scrap generated by the ship-breaking industry. The steel produced by the ship-breaking industry is utilised for re-rolling by mini-steel plants. It is claimed that on account of the ship-breaking industry, there is a substantial saving of electricity utilisation. 3. The Union Finance Minister in his Budget Speech for the financial year 1993-1994, delivered on 27-2-1993, stated thus : 91. The ship-breaking industry is employment intensive and an important source of raw materials for the secondary sector of our steel industry. In order to encourage the growth of this industry, I propose to prescribe a lower merged duty of customs at 5% ad valorem. The ferrous materials o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns No. 38005 and 38006 of 1993. Further, the additional duty as nil claimed by the appellant with regard to import of vessels M.V. BOUVET/Ex RANA under Bill of Entry No. 6, dated 2-7-1993 and M.V. ARGOS under Bill of Entry No. 001741, dated 8-11-1993 was also rejected by the fourth respondent vide Assessment Order dated 14-7-1993 and Assessment Order dated 13-11-1993 respectively, and those orders were also assailed by the appellant in Writ Petition No. 26685 of 1993 and Writ Petition No. 43567 of 1993 respectively. In all these writ petitions, inter alia, it was contended by the appellants that on all goods imported into the country, duty of customs is levied under the Act; the procedure for calculation of duty and other connected matters is specified in the Customs Act, 1962; the vessels imported by the appellant are classifiable under Chapter 89.08.00 of the Schedule to the Act which reads as follows : DESCRIPTION RATE OF DUTY Vessels and other floating structures for breaking up. 40% + Rs. 1,400/- per light displacement tonnage Under Notification No. 74/93-Cus., dated 28-2-1993, all goods falling under the Heading 8908 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import of a vessel for the purpose of breaking up and both of them cannot be equated for the purpose of levying additional duty. Shri Naganand would also contend that the Finance Minister in his Budget Speech for the financial year 1993-1994 spoke about merged duty of Customs at 5% ad valorem to be imposed on vessels used by ship-breaking industry. According to Shri Naganand, the expression merged duty denotes the merger of the two duties leviable on the product imported under Sections 2 and 3 of the Customs Tariff Act. Shri Naganand would highlight that though two interpretations are possible from the relevant provisions of the Act, the Court should adopt the one which is beneficial to tax-payers and not to the Revenue. Shri Naganand would also contend that the State cannot practise an invidious discrimination in the matter of levy of taxes and the ground of invidious discrimination urged in the writ petition is not at all dealt with by the learned Single Judge. 9. Learned Senior Standing Counsel for Government of India, on the other hand, contended that an exemption notification granting exemption under Rule 8(2) of the Central Excises and Salt Rules, 1944, does not automa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in relation to the manufacture of the said goods with the aid of power. The relevant portion of the Notification No. 167/86-C.E., dated 1-3-1986 reads as follows : In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods of the description specified in column (2) of the Table hereto annexed and falling under the Schedule to the Central Excise Tariff Act; 1985 (5 of 1986), from the whole of the duty of excise leviable thereon which is specified in the said Schedule : Provided that no process in or in relation to the manufacture of the said goods is ordinarily carried on with the aid of power : Provided further that the exemption contained in this notification shall not apply to sandalwood oil. The Table : Sl. No. Description of goods (1) (2) 1. All goods falling within Chapters 14, 71, 89 and 92. 2. All goods falling under Heading Nos. 30.01, 32.03, 33.01, 33.03, 36.02, 44.01, 44.02, 44.03, 44.04, 44.05, 46.01, 51.05, 62.92, 69.01, 69.02, 69.03, 69.04, 69.05, 83.01, 83.15, 95.01, 95.01, 95.02, 95.03, 95.05, 95.06, 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a relevant consideration to determine the duty on ships imported for the purpose of breaking. 14. Learned Single Judge has held that the actual product imported is a ship and, therefore, whether the product got from it is exempted from Central Excise or not is of no consequence. In holding so, learned Single Judge has placed reliance on the decision of the Supreme Court in Thermax Pvt. Ltd. v. Collector of Customs - 1992 (61) E.L.T. 352 (S.C.) and Hyderabad Industries Ltd. v. UOI - 1999 (108) E.L.T. 321 (S.C.). 15. The vessels imported by the appellant are not seaworthy and they are admittedly for the purpose of breaking. There is a separate entry for this purpose both under the Customs Tariff Act and Central Tariff Act. The product actually imported is the material that can be retrieved from the ship; the structure by itself is of no value and the appellant subjects the vessel to a process to retrieve the material from the structure without the use of power. 11. It can be seen from the above reproduced paragraphs of judgment of Hon ble High Court of Karnataka that their Lordship were exactly considering the very same issue which is raised in this appeal before us. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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