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TMI Blog1991 (12) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... 3th September, 1982 Bill of Entry was filed with the Customs Authorities by the petitioner who in the meantime had sold the said goods on High Seas to M/s. Mehta Industrial Corporation. It is claimed by the petitioner that under the Power of Attorney given by M/s. Mehta Industrial Corporation to the petitioner, the goods were cleared by the petitioner as an Importer. (e) On 17th September, 1982 the petitioner gave notice to the Customs Authorities informing them that the copper scrap was imported for the manufacture of copper oxychloride. (f) On 21st September, 1982, the above writ petition was filed inter alia challenging the levy of additional customs duty on scrap as one of the main grounds of challenge. 2. In view of the above facts, the petitioner has sought to challenge in this petition the levy of the basic customs duty at 80% ad valorem as well as the levy of additional customs duty as mentioned above. It was contended that since the copper scrap is not excisable as it was not a product of manufacture, the excise duty could not have been levied by the Excise Authorities on the said scrap and therefore, according to the petitioner, since the scrap is not excisable, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion which arises for our consideration in the present petition as to whether the exemption Notification No. 35/81-C.E., dated 1st March, 1981 issued under the Excise Act applies automatically to the levy of additional duty under Section 12 of the Customs Act, 1962 read with Section 3(1) of the Customs Tariff Act, 1975. 5. Before dealing with the legal submissions, the above facts indicate that the petitioner sold the goods on High Seas to a company by the name M/s. Mehta Industrial Corporation. The said M/s. Mehta Industrial Corporation has not filed the writ petition. The said M/s. Mehta Industrial Corporation has not also filed any affidavit on the basis of which it can be claimed that the petitioner intended to use the imported material for the manufacture of copper oxichloride. In fact, no material whatsoever has been shown by the petitioner till this date indicating that M/s. Mehta Industrial Corporation had used the imported material for the manufacture of copper oxychloride. In fact, there is no averment in the petition that the petitioner has complied with the statutory conditions before claiming exemption under exemption Notification No. 35/81-C.E., dated 1st March, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale: Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under section 46, or a shipping bill or bill of export, as the case may be, is presented under section 50. (1A) Subject to the provisions of sub-section (1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf. (2) Notwithstanding anything contained in sub-section (l) or sub-section (1A) if the Central Government is satisfied that it is necessary or expedient so to do it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted article belongs and where such duty is leviable at different rates, the highest duty. (2) For the purpose of calculating under this section the additional duty on any imported article, where such duty is leviable at any percentage of its value, the value of the imported article shall, notwithstanding anything contained in section 14 of the Customs Act, 1962, be the aggregate of - (i) the value of the imported article determined under sub-section (1) of the said section 14 or the Tariff value of such article fixed under sub-sec. (2) of that section, as the case may be; and (ii) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962, and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs, but not including the duty referred to in sub-section (1). (3) If the Central Government is satisfied that it is necessary in the public interest to levy on any imported article whether on such article duty is leviable under sub-section (1) or not such additional duty as would counterbalance the excise duty leviable on any raw materials, components and ingredients ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Act of 1962. Secondly, it also lays down that the taxable events for the levy of the customs duty including additional duty shall be importation of the goods into India. Therefore, the incidence of taxability for the purpose of customs duty levied on import of the goods into India is quite different from incidence in the case of manufacture of goods under the Central Excises and Salt Act, 1944 and keeping this concept in the mind, the controversy in the present petition can be solved on the first principles. It may also be mentioned that as regards the additional duty of customs, the charging section is Section 12 of the Customs Act, 1962 read with Section 3 of the Customs Tariff Act, 1975. 10. The above view also finds support in the judgment of the Supreme Court in the case of Khandelwal (supra). Before coming to the ratio laid down by the Supreme Court in the said judgment, it may be mentioned that at one point of time prior to the said judgment an argument was sought to be advanced that the additional duty is equal to the countervailing duty and therefore the additional duty did not fall under the Customs Act, 1962. The said view did not favour in the above judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with Rule 8 of the Central Excise Rules, 1944 would automatically exempt the additional duty under Section 12 of the Customs Act, 1962 read with Section 3(1) of the Customs Tariff Act, 1975. Looking at the same proposition from another angle, the Legislature could have stipulated additional duty to be calculated as the percentage of the value of the goods, instead of providing that the additional duty would be equal to excise duty. In such an event, it was not open to the petitioner to argue that the exemption under the Central Excises Salt Act, 1944 would automatically apply to the additional duty Under the Customs Act, 1962. Therefore, looking at the same problem from a different perspective, it is clear that when the additional duty is equal to excise duty the latter is only a yardstick to calculate the additional duty under the Customs Act and the exemption under the Central Excises Salt Act, 1944 cannot automatically exempt the additional duty under the Customs Act, 1962. 11. In the present case, Mr. Halwasia, the learned Counsel appearing for the petitioner, has submitted that the Notification No. 35/81-C.E., dated 1st March, 1981 applies to the present case, inasmu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Khandelwal v. Union of India decided by the Delhi High Court, which was subsequently approved by the Supreme Court of India as mentioned above, has referred to the above notification in extenso and in order to clarify the position, in the present petition also we hereby quote the above Item No. 26A of the First Schedule to the Central Excises Salt Act, 1944 as duly amended by Section 48 of the Finance Act, 1981 read with Notification No. 32 of 1981 dated 1st March, 1981. "Item No. 26A of the First Schedule to the Central Excises and Salt Act, 1944 is as under :- 26A - Copper and Copper alloys containing not less than fifty per cent by weight of copper. (1) In any crude form including ingots, bars, blocks, slabs, billets, rupees per metric tonne. shots and pellets One thousand and five hundred (1a) Wire bars, wire rods and castings, not otherwise specified. (2) Manufactures the following, namely - plates, sheets, circles, strips and foils in any form or size. Two thousand rupees per metric tonne. (3) Pipes and tubes. Ten per cent ad valorem ." By Section 48 of the Finance Act, 1981 the schedule t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be used for the manufacture of chemical as laid down in the First Proviso to the impugned notification. In fact no material has been shown to the effect that the petitioner has manufactured the said chemical. In fact, there is no such averment in the petition to the effect that both the conditions mentioned in the Proviso to the notification dated 1st March 1981 have been fulfilled by the petitioner. As it may be, even assuming for the sake of argument that the said goods were intended to be used for the manufacture of the chemical, a benefit of the said exemption notification could be given only under the Proviso. No provision whatsoever has been shown by the learned Counsel appearing for the petitioner to show that the benefit of the said exemption notification should automatically be extended to the goods imported by the petitioners in the matter of computation of levy or chargeability of additional duty under the Customs Act, 1962. The result is that there is no notification issued Under Section 25 of the Customs Act, 1962 and in view of what is stated above the said notification dated 1st March, 1981 issued under the Central Excises and Salt Act, 1944, cannot per Ac, be exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India in the case of Khandelwal v. Union of India (supra). In view of the said decision of the Delhi High Court, with which we agree with respect, it is clear that the exemption from payment of duty of excise under the Central Excises Salt Act, 1944 does not stand automatically applicable to the additional duty levied under the Customs Act, 1962. 13. As regards the contention of Mr. Halwasia that his client has fulfilled the conditions mentioned in the said notification dated 1st March, 1981, the same argument was also advanced before the Delhi High Court in the said Khandelwal's case dealing with the said conditions and Delhi High Court specifically ruled that the notification under the Central Excises Salt Act, 1944 deals with the certain conditions and if those conditions are not fulfilled then the question of benefit of Excise Act also per se is not applicable even to the excise duty calculated under the Excise Act. In the present case, it is very clear that the conditions mentioned in the said notification dated 1st March, 1981 are not fulfilled inasmuch as there is nothing to indicate that the waste and/or scrap imported by the importer has been at all intended to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... countervailing duty, cannot be charged at the rate of 42% but it should be reduced to 27% because according to the petitioner in that case the additional duty which was charged was not a customs duty under the Customs Act, 1962 but in fact, it was a countervailing duty which did not fall within the ambit of the Customs Act, 1962. It was contended on behalf of the petitioner that the additional duty was charged under the Customs Tariff Act, 1975 and not under the Customs Act, 1962 and therefore, it was submitted that following the earlier judgment of the Bombay High Court in the case of Century Enka Ltd. v. Union of India, reported in 1982 (10) E.L.T. 64, the additional duty should be treated as countervailing duty and not as an independent duty under the Customs Act, 1962. This argument of the petitioner was rejected by the Division Bench of the Bombay High Court in view of the above judgment of the Supreme Court in Khandelwal's case (supra). It was specifically held by the Division Bench in the case of Ashok Traders (supra) that the additional duty was not a countervailing duty, inasmuch as, the additional duty was chargeable under Section 12 of the Customs Act, 1962 read with Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shown to justify the contention of the petitioner that the conditions mentioned in the exemption notification are duly complied with. 15. Mr. Halwasia, the learned Counsel for the petitioner drew our attention to the judgment of the Division Bench of the Bombay High Court in the case of Century Enka Ltd. and Ors. v. Union of India and Two Ors. reported in 1982 (10) E.L.T. 64 as also the judgment of the Bombay High Court in the case of Hordillia Chemicals Ltd. and Am. v. Union of India and Ors. reported in 1987 (31) E.L.T. 651. It may be at the outset stated that both the aforestated judgments were delivered prior to the judgment of the Supreme Court in Khandelwal's case as well as prior to the judgment in Ashok Traders' case (supra). It may be seen from the said two judgments in the cases of Century Enka Ltd. as well as Hordillia Chemicals Ltd. case, that an argument was advanced to the same effect viz. that the additional duty was the same as countervailing duty and that the additional duty was not a duty of customs but it was a countervailing duty chargeable only under Section 3 of the Customs Tariff Act, 1975. This view initially was accepted by the Bombay High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever has been shown in respect of compliance of both the conditions mentioned in the proviso to the exemption Notification No. 35/81-C.E., dated 1st March, 1981. No averment whatsoever has been made in the petition to the extent of compliance of both the conditions mentioned in the proviso to the notification. On the other hand, as mentioned hereinabove the averment in the petition shows that the goods imported were sold on High Seas basis to M/s. Mehta Industrial Corporation and therefore, in the circumstances, one fails to appreciate the contention of the petitioner based on the said judgment dated 22nd October, 1991 of this Court in Writ Petition No. 1402 of 1988. The second question which arose in the said case evolved on the interpretation of the provisions of Central Excise and Customs Laws (Amendment) Act of 1991. In the circumstances, the reliance placed by the petitioner on the said unreported judgment of this Court dated 22nd October, 1991 is totally ill-founded. 17. To sum up our conclusions :- (a) that the exemption granted by the Central Government, either fully or partially, under Rule 8(1) of the Central Excise Rules, 1944 does not automatically stand extended to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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