9911796707
TMI Blog1986 (8) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the petitioner Company requires about 1,000 Metric Tonnes per year. It is not disputed that the "copper scrap" imported consisted of scrap derived from old, used and condemned, defective, non-standard, wires, which had only its value in its metal content. The department did not collect any additional customs duty in respect of the "copper scrap" imported by the petitioner from 1956 till 1979. In March, 1979, the respondent, the Assistant Collector of Customs began demanding a duty of 8% under entry 68 of the Central Excise Tariff Act. The petitioner objected to this levy. However, as they required these materials urgently for their factory, they cleared the goods after execution of a bond for duty at 8% under protest. In a few cases they were also allowed to clear the goods without levy of any additional or countervailing duty and without any objection from the authorities. Thus, it is said that the petitioner cleared without levy of additional duty in 14 instances from 24-2-1979 to 13-7-1979. Thereafter, purporting to act under Section 28 of the Customs Act, 1962, the respondent informed the petitioner by notice dated 20-11-1979 that the goods so cleared are leviable to cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntertained as to whether "copper scrap" would come within this entry also. This point was discussed in the South Zone Tariff Conference held at Madras on 10th May, 1979, in the 13th North Zone Conference held at Jaipur in October, 1980, the 10th and 11th East Regional Conference held at Calcutta in December 1980 and January 1981. Divergent views were expressed and eventually the Ministry of Law was inclined to take the view that "copper scrap is copper in crude form". Subsequently the 1981 amendment of the Finance Act set at rest all conflict by inserting a new specific provision "copper scrap and waste". This, it is said, is classificatory or declaratory in nature and hence copper scrap imported by the petitioner was rightly assessed under entry 26A though the actual demand was restricted to the lesser claim under entry 68. It is, therefore, said that the petitioner only stands to gain by the impugned orders and no cause to issue a writ has been made out. 6. The tariff entries in the Central Excise Act describe the classes of goods which attract duty and specify the rates at which the tax has to be levied. It is the duty of the assessing authority, and it is also his primary dut ..... 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 articles to which the imported article belongs and where such duty is leviable at different rates, the highest duty". 10. The position, therefore, is that customs duty is levied under the Customs Act, Section 12 of that Act is the charging section when the statutory liability to customs duty is imposed, when import or export is made the taxable event and the rate of levy is also indicated. The rate is prescribed under the Tariff Act. Section 2 of the Tariff Act is thus not an independent charging section. And Section 3 provides for an enhancement of the duty, "a supplementary levy" and enables imposition of an additional duty. This statutory construction has the full support of the Supreme Court in the decision in Khandelwal Metal Engg. Works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er metric tonne Manufactures, the following namely, plates, sheets, (2) circles, strips and foils in any form or size. Three hundred ruppes per metic tonne xxx Xxx xxx" 15. Item 26A as it stood in 1979 read thus :- Tariff Item No. Description of goods Rate of duty Basic 26A Copper and copper alloys containing not less than fifty per cent by weight of copper In any crude form including ingots, bars, blocks, slabs, (1) billets, shots and pellets Rs. 4,000/- per metric tonne. castings, not otherwise Wire bars, wire rods and (a) specified Rs. 4,000/- per metric tonne. Manufactures, the following namely, plates, sheets, (2) circles, strips and foils in any form or size Rs. 4,500/- per metric tonne. Pipes and tubes (3) 20 per cent ad valorem 16. Finance Act 16 of 1981 inser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained from reclaimed articles but also to such by-products of copper production as "trimmings", "sweepings", and "drosses"." 22. On 'brass scrap', the Supreme Court observed in Khandelwal Metal Engg. Works v. Union of India 1985 (20) E.L.T. 222 (S.C.) (AIR 1985 S.C. 1211) (1985 ECR 2571 S.C.) thus :- "......As stated above, damaged goods of brass, which are compendiously called 'brass scrap', can come into existence during the process of manufacturing brass articles and such brass scrap has an established market in India..." 23. On the source of scrap and its utilisation in manufacture, the counter affidavit of the officer states thus :- "It is not disputed by the petitioner that what is imported is copper in the form of scrap and that it was imported as raw material. The only question therefore is whether the scrap in question is copper in a crude form. The expression 'crude' according to Black's Law Dictionary is a very flexible term depending largely on the context. It may mean inter alia "in normal state, raw, unrefined, not artificially altered, unfinished". It is submitted that copper scrap is certainly copper in a raw form. The expression 'raw' only signifies some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les. And it is in this sense that it could be called as copper in crude form. On parity of reasoning, copper scrap which is fit only to be used as a raw material could also be called as copper in crude form." "......It is not correct to say that copper scrap is only a waste. Copper scrap is a very valuable item which has got a commercial identity and which is purchased and sold in very large quantities because of its use as a raw material for the production of a variety of articles and chemicals..... As has already been submitted the question is not whether Copper scrap is a manufactured item or not. Copper scrap may be produced either in the course of a manufacturing process or by some other process but the fact remains that an article known to trade is produced by some process or other and on such article coming into existence, it is leviable to duty." "Copper Scrap can come into existence as waste when other articles like wire rods, castings etc. are manufactured with copper. Copper scrap can also come into existence on vessels, containers, castings, wires and other manufactured articles of copper became nusable and such articles got condemned. However, the important fact is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capable of giving rise to a confounding controversy as in this case unless the ...after is beyond doubt in view of the popular meaning or meaning ascribed in the term in commercial parlance. ...... It is only when a taxing law provides for a clear and unequivocal test for determination as to whether a particular product would fall under strip or skelp it may be possible for the authorities to address itself to the evidence submitted by the parties in order to come to a decision on the basis of the test. This is, however, not possible in this case in view of the fact that there is no identifiable standard. The best way is to define the product for the purpose of excise duty in appropriate terms demarcating clearly the distinction between the two terms. The absence of any identifiable standard would, therefore, naturally give rise to the scope for arbitrary assessment at the hands of different authorities." 26. In the present case, the Act described the dutiable item as "copper in crude form". It was a vague description which gave rise to sharp differences of opinion in the Department. Discussion at various levels and at conferences held in several regions could not reach any dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner is actually saving a sum of Rs. 93,801.47 on the basis of the error in Ext. P2 in citing item 68 rather than item 26A(1)." Hence the goods are exigible to duty under a particular entry, the department is bound to levy under that entry and there is no scope to show any favoured treatment to any assessee including the petitioner. It is thus clear that whatever be the attempt, in effect the department has assessed in these cases only under entry 68 on the ground that copper scrap does not fall under entry 26A(1). 29. The Government had issued a trade notice (Ext. Rl) on 17-10-1967. We shall extract the relevant portions :- "Doubts have, however, been expressed whether articles of copper and copper alloys which are neither the manufacture (specifically enumerated in item 26A(2) nor pipes and tubes covered by them 26A(3) and are, the same time, not in any crude form would be liable to pay Central Excise duty. Though in the case of indigenous production, articles of the type would have paid the crude stage duty under item 26A(1), the question arises about the liability of countervailing duty in respect of such articles. The whole question has been carefully examined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed under Section 3 that is questioned. It is for that purpose the entries in the Excises and Salt Act, 1944, are referred; and in that Act, scrap was omitted. The legislature was aware of the existence of copper scrap. The legislature included copper scrap in the relevant entries whenever it thought it was liable to duty. Non-inclusion of the words "scrap and waste" in item 26A(1) itself indicated that these items were not intended to be treated as dutiable till those words were inserted. 31. As stated already, scrap and waste were expressly included only by the 1981 amendment to be effective after 1-4-1981. It was contended by the Central Government Pleader that this amendment was only clarificatory or declaratory in character and he relied on a Budget speech made by the Hon'ble Minister for Finance in 1981 thus :- "The other major area where rationalisation of the tariff entries has been proposed, is in regard to non-ferrous metals under the respective entries in the Central Excise Tariff. There has been considerable debate and dispute on the question of assessment of waste and scrap of these metals. To set this at rest, it is proposed to specifically cover waste and sc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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