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TMI Blog1996 (9) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No. 33/81, dated 1-3-1981 and exempt from Central Excise duty and hence the additional duty payable was nil. The Central Government took up the matter in suo motu review under Section 131(3) of the Customs Act, 1962 and issued notice to the Respondent to show cause why the appellate order should not be set aside as it appeared that the Notification No. 33/81 seemed to be applicable in respect of the Excise duty leviable on indigenous waste and scrap and not applicable in respect of additional duty on imported waste and scrap. During the pendency of the review proceedings, the proceedings came to be transferred to this Tribunal for disposal according to law as if it is an appeal. 2.On the ground that High Courts and Benches of the Tribunal have expressed conflicting views on the question arising for consideration this appeal, as also certain other appeals have been referred to a larger Bench. This Bench duly constituted has heard the appeal. 3.The relevant part of Section 3 of the Customs Tariff Act, 1975 reads thus:- "3.(1) Any article which is imported into India shall, in addition, be liable to duty (hereinafter in this section referred to as the additional duty) equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Zinc - item (1a) Waste and Scrap - Chapter 27 Aluminium - item (aa ) Waste and Scrap - Chapter 27A Lead - item (2) Waste and Scrap 5.As the Excise Tariff stood at the relevant time, Excise duty was leviable on Brass Scrap (Chapter 26A) and tariff prescribed specific rate of duty for Brass Scrap. The additional duty on import of Brass Scrap will be payable and the amount payable would be equal to the Excise duty leviable on a like article produced in India or the Excise duty which would be leviable on a like article if produced, There can be no doubt that Brass Scrap was and is being "produced" in India. Thus, without anything more, it follows that additional duty would be payable on imported Brass Scrap. The question is whether this position is, in any way, entered as a consequence of the Notification No. 33/81, dated 1-3-1981 issued under Rule 8(1) of the Central Excise Rules, 1944. 6.Notification No. 33/81 reads as follows : ".....the Central Government hereby exempts Waste and Scrap of Copper, Zinc, aluminium and lead, falling under Item Numbers 26A, 26B, 27 and 27B, respectively, of the First S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) of Notification 33/81 is clearly inapplicable since it requires that Copper (major part of Brass contains Copper and hence `Copper Alloy' includes Brass) from which the scrap was manufactured should be duty paid, that is, paid excise duty or additional customs duty and in the case at hand, since the scrap was of foreign origin, no such duty had been paid. Clause (b) in its original form should be attracted if it is shown that - the scrap arose from products not falling under items 26A,(a) 26B, 27 or 27A: and such products were manufactured from copper falling under(b) item number 26A. What led the Assistant Collector to hold against the respondent is not known since he did not prepare a reasoned order. The appellant Collector who held in favour of the Respondent did not advert to the above two conditions required to be proved by the Respondent in order to be entitled to the benefit of Notification No. 33/81. The Brass Scrap imported by the Respondent attracted the description "Scrap" in Tariff item 26A (1b). If the above two conditions, namely, the scrap arose not from products of the nature falling under item 26A (i.e. crude form, ingots, bars, blocks, slabs, billets, sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be read with the provisions of Central Excise Act and the liability to levy the countervailing duty would depend upon the fact as to whether such an article is liable to pay excise duty. In these circumstances, it is futile to urge that the exemption notification can have no bearing to determine liability to pay countervailing duty under the Customs Tariff Act." 11.The High Court of Delhi in Khandelwal Metal and Engg. v. Union of India, 1983 (12) E.L.T. 292 held that Brass scrap is an excisable article brought into existence by a process of manufacture that exemption Notification 34/81 granted exemption for scrap if it is used in the manufacture within the factory of production and such a conditional exemption Notification has no relevance for the purpose of payment of additional duty of customs under the Customs Tariff Act, 1975. It was pointed out that the Notification does not as such exempt the Copper Scrap from payment of Excise duty. The condition in the Notification was imposed to avoid paying twice over the Excise duty, once on the Copper Scrap and again on the manufactured product obtained from use of Copper Scrap. It was further observed as follows : "This avoidan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .We may refer to the following observations of the High Court of Rajasthan in Prem Cables Pvt. Ltd. v. Assistant Collector, 1981 (8) E.L.T. 440 :- "If the excise duty was not payable on the goods at the relevant time under relevant provisions of the Central Excises Act, the Customs authorities were not entitled to recover the countervailing duty on those goods under Section 2A of the Indian Tariff Act". These observations were followed by a three Member Bench of the Tribunal in Modella Textile Industries v. Collector of Customs, l983 (13) E.L.T. 1020 (Tribunal). 14.The earliest decision of Tribunal this question is that of a three- Member Bench in Collector of Customs v. M/s. Travancore Chemical Manufacturing Co. Ltd. 1985 (20) E.L.T. 413 (Tribunal) = 1985 ECR 1326. Copper Scrap covered by Item 26A (lb) was imported, apparently after 4-11-1981, the date of Notification No. 181/81 according to item (b) of which the product should have been manufactured in India. Since the imported scrap did not arise from products manufactured in India, it was held that the benefit of the amended notification was not available and additional duty was leviable. The Bench found the facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blished satisfaction of the conditions prescribed therein. 17.There is no doubt that the article like the one imported by the Respondent, namely, Brass Scrap is produced in India. If excise duty was leviable at the relevant time on such article produced in India, an amount equal to such excise duty shall be levied as additional duty on the imported article. If no excise duty was leviable at the relevant time on such article produced in India, the additional duty leviable on the imported article shall be Nil. This is the clear position emerging from a proper understanding of Section 3(1) of the Customs Tariff Act, 1975. At the time this provision was enacted, old T.I. 68 was in the Schedule to Central Excises Salt Act, 1944. If the Tariff indicated nil rate of duty for like article or if like article was exempt from levy of excise duty fully, it would be a case where no excise duty would be leviable on such like article or the excise duty leviable would be Nil. That being so, no additional duty would be leviable under section 3(1) of the Customs Tariff Act, 1975. This was the view taken by the High Court of Bombay in Century Enka Ltd., 1982 (10) E.L.T. 64 and Indian Lead Private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied the two conditions. He has not indicated the basis for such assumption. This aspect has to be examined and the importer must establish satisfaction of these conditions, only then it can be found that no excise duty was leviable on like article and no additional duty would be leviable on the imported article. 19.The substituted item (b) of the Notification No. 33/81 requires that the Brass Scrap must be from products produced in India and not falling under item 26A of the Schedule to CESA, 1944. We have indicated that it cannot ordinarily be that the imported Brass Scrap would have been manufactured from product produced in India falling within the above description (though it is open to the importer to attempt such proof which of course is not ordinarily practicable). But the substitution was made by Notification No. 181/81, dated 4-11-1981 and can have only prospective effect; that being so, it cannot be invoked in the case at hand. To get over this difficulty, Shri K.K. Jha, SDR contended that the later notification was clarificatory in nature and therefore item (b) of the earlier notification must be taken to have the amplitude and content found in the substituted ite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ul any order passed under Section 128 or any order passed under section 130 etc. On the application of any person aggrieved by such order. Sub-section (4) of Section 131 conferred power on the Central Government to annul or modify, suo motu, any order under section 128 or section 130. The then existing section 131 has been retained as Section 129DD by the 1980 amendment which also introduced Section 131B. By section 131B(2) every proceeding pending immediately before 11-10-1982 (the date of coming into force of the amendments) before the Central Government under the erstwhile Section 131 shall stand transferred on that day to the Tribunal which shall deal with the same as an appeal filed before it. The present appeal was one resulting from statutory transfer of a suo moto revision proceeding initiated prior to 11-10-1982 by and pending before the Central Government on 11-10-1982. It is pointed for the Respondent that the records merely show that the Government had decided to initiate suo moto revision against the order passed by the Collector (Appeals) and the Additional Secretary to the Government had signed the show cause notice on 16-3-1981 with the endorsement "copy forwarded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the Members agreed to refer to a third Member the question regarding the applicability of erstwhile Section 131(5) in the case at hand or whether this and other points are required to be determined by Larger Bench. 23.The points of difference were referred to a third Member, Shri K.S. Venkataramani. The third Member agreed with the finding of the Technical Member that there was valid proceeding pending before the Central Government before 11-10-1982 which stood validly transferred to the Tribunal and that the erstwhile Section 131(5) requiring service of show cause notice on the Respondent within the prescribed time limit was not applicable to proceeding under erstwhile Section 131(4). Thus it is clear that the two contentions now urged before us had been urged earlier and referred to a third Member and had been overruled by the majority, namely, the Technical Member and the third Member. These two contentions are therefore no longer open before us and are concluded by the majority view referred to above. 24.Thus, there is only one question remaining for decision in the appeal and that is the question relating to the merits already dealt with by us. The Collector (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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