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Collector of Customs Vs. Travancore Chemical and - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)(20)ELT413TriDel
AppellantCollector of Customs
RespondentTravancore Chemical and
Excerpt:
.....under entry 74.01/02 of the customs tariff and additional duty under item 26a (lb) of the central excise tariff. the respondents paid the duty and cleared the goods.subsequently they claimed a refund on the ground that central excise duty was leviable only on goods manufactured and since the copper scrap imported by them was not a manufactured item, no central excise duty was leviable in respect of such products in india. since central excise duty is not leviable on such an article, no additional customs duty would be leviable on import of such an item. respondents claim for refund of duty was rejected by the asstt. collector of customs, cochin but allowed by the collector of customs (appeals), madras. the appellant in this case, namely, collector of customs, cochin has now filed an.....
Judgment:
1. In this case the respondents imported eight consignments of copper scrap which were assessed to basic duty under entry 74.01/02 of the Customs Tariff and additional duty under Item 26A (lb) of the Central Excise Tariff. The respondents paid the duty and cleared the goods.

Subsequently they claimed a refund on the ground that central excise duty was leviable only on goods manufactured and since the copper scrap imported by them was not a manufactured item, no central excise duty was leviable in respect of such products in India. Since central excise duty is not leviable on such an article, no additional customs duty would be leviable on import of such an item. Respondents claim for refund of duty was rejected by the Asstt. Collector of Customs, Cochin but allowed by the Collector of Customs (Appeals), Madras. The appellant in this case, namely, Collector of Customs, Cochin has now filed an appeal before CEGAT against this order, holding that it is not proper and against law. Shri S.C. Rohtagi, learned JDR, has urged before us that so long as there is an article which is imported into India, it would be subject not only to customs duty under Section 12 of the Customs Act, 1962, read with Section 2 of the Customs Tariff Act, but also to additional duty prescribed by Section 3 of the Customs Tariff Act. The tax-able event, according to the appellant is the import of the product and it is immaterial whether such product is manufactured in India or not. It is pleaded that the mere fact that as per notification the additional duty is stated to be equal to excise duty leviable for the time being on a like article does not mean that duty cannot be charged or calculated unless Central Excise Duty is charged on a like article manufactured or produced in India. It is stated that reference to Central Excise Duty is only for purposes of quantification of duty. It is further pleaded that copper waste and scrap are specifically included in Item 26A (lb) of the schedule to the Central Excises and Salt Act. The question whether there is production or manufacture of the article in India is not relevant for purposes of Section 3 of the Customs Tariff Act, 1975. In such cases duty is to be determined on the assumption that a like article is produced or manufactured in India. Even in a case where like article is not manufactured in India, additional duty would be leviable on the same basis as in the case of other articles of the same class or description. The words waste and scrap appearing in Item 26A (lb) of the Central Excise Tariff are comprehensive enough to cover all types of waste and scrap of copper. The appellant has cited the following decisions in his favour : 1. Hon'ble Bombay High Court decision in the case of Commissioner of Sales Tax v. Aggarwal & Co.1983 ECR 65D. 2. Hon'ble Delhi High Court decision in the case of Khandelwal Metal and Engineering v. Union of India and Ors. (Order CW 1387/1981, dt.

19-10-1982) 1983 E.L.T. 292.

3. Hon'ble Supreme Court decision in the case of Dunlop India Ltd. AIR 1977 S.C. 597.

2. Appearing on behalf of the respondents Shri Joseph Vellapally, learned advocate, has pointed out that the essential point for consideration in this matter is that the copper scrap imported by them is not a manufactured item. It arises out of condemned copper wire. It is urged that their claim to exemption also rests on two notifications, namely, Notification No. 33/81, under which there is duty exemption on scrap falling under Item 26A of Central Excise Tariff, and Notification No. 35/81 which exempts scrap used in the manufacture of chemicals. It is stated that the condemned copper wire is used in the manufacture of copper sulphate and copper oxychloride. Further it is stated that under Section 3(1) of Customs Tariff Act, 1975, countervailing duty is leviable on like product manufactured or produced in the country. Scrap obtained in the market after use does not attract Central Excise duty.

No excise duty, therefore, would be leviable on similar scrap imported from abroad. The respondents have referred to the following decisions in their favour : 1. Decision of Hon'ble Madras High Court in the case of Saigal Industries v. Central Board of Excise & Customs and Anr.1980 E.L.T. 2. Hon'ble Bombay High Court decision in the case of Century Enka: Ltd. and Ors. v. Union of India and two Ors.-1982 E.L.T. 64.Modella Textile Industries Pvt.

Ltd. v. Collector of Customs, Bombay1983 E.L.T.3. We have carefully considered the facts of the matter and the submissions made by both sides. The main points for consideration before us are, (a) Whether the imported product, namely, copper waste and scrap which is stated to be not a manufactured item but second-hand used materials would be classifiable under central excise tariff and, therefore, liable to countervailing duty on import even though by itself not a manufactured item ; and (b) If so, whether such products could claim exemption from countervailing duty by virtue of similar exemption enjoyed by like indigenous products under Notification No. 35/81 which exempts scrap used in the manufacture of chemicals.

4. The Collector (Appeals) granted relief to the respondents on consideration of only first point. We also proceed to consider the matter first on this point and if on examination, the finding is in favour of the appellants then we would have to consider the second point which was included in the respondents' submissions before the Collector (Appeals), although not dealt with in view of the fact that the respondent was given relief asked for on; consideration of the first point alone.

5. We have given very careful thought to the various judgments cited by the appellant in his favour. In the case of the Commissioner of the Sales Tax v. Aggrawal & Co.1983 ECR 65D, the Hon'ble Bombay High Court have held that under entry 36 in Schedule A of the Bombay Sales Tax Act, 1959, the item milk would include skimmed milk powder. It was held that unless there were express words to confine the term 'milk' only to milk in its liquid form, milk would include all types of milk including milk powder. It was pointed out that the Supreme Court has taken the view that while interpreting a general term used for describing any commodity in any fiscal legislation, the general term so used should be taken to cover the particular commodity or item or article in all its forms and varieties.Dunlop India Ltd., Madras Rubber Factory Ltd. v.Union of India and Ors.AIR 1977 S.C. 597, the Hon'ble Supreme Court have held as follows : "Meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance then there is no difficulty for statutory classification under a particular entry." 7. This point had also come up on very similar grounds before the Hon'ble Delhi High Court in the case of Khandelwal Metal and Engg. v.Union of India and Ors.1983 E.L.T. 292, and it was held that while it is true that the taxable event for excise duty is manufacture of goods but the taxable event in the case of customs duty is the import of goods into India. Similarly, additional duty of customs is payable under Section 3 of the Tariff Act, irrespective of process of manufacture involved. It was held that it is well settled that for liability under Section 3 of the Indian Tariff Act, it is not even necessary that like articles are actually being manufactured in India.

It is enough that duty is leviable on the class or description of articles to which the imported article belongs. Examining the issue at length, the Hon'ble Delhi High Court observed that although the product under import was brass scrap which was claimed to have been obtained not as a result of any process of manufacture as such the waste and scrap was not to be taken as items which were thrown away or rubbish.

They observed : "Had brass scrap not been a commercially known commodity in the sense that it can be bought and sold, it might have been open to argument that brass scrap, even if obtained in the process of manufacturing fine products cannot be considered goods and thus no manufacture is involved but admittedly that is not the position here because the brass scrap is understood in the common trade parlance and is accepted as a commodity which can be bought and sold." 8. Referring to the petitioners case that they import brass scrap, the said scrap does not consist of scrap obtained in the process of manufacture of brass product but of broken water tapes, worn out and damaged sanitary fittings and other worn out and damaged parts and components of brass products which have been discarded after use since they have become unfit for such use and are sold as junk, the Hon'ble High Court observed that the claim to exemption on this ground blots out the distinction of the liability under the Customs Act and the liability under the Excise Act and came to the following conclusions : "Now in the present case the petitioners are importing brass scrap which is an excisable goods. Even if the brass scrap was not being manufactured in India they would be liable to pay additional duty of customs under Section 3 of the Tariff Act. In this context it is not even necessary to find out whether the brass scrap as such is being manufactured in India or not. Thus the enquiry to determine leviability under the Tariff Act does not encompass the determination whether the brass scrap consignment imported has been obtained during manufacturing process. The only matter that the customs authorities have to satisfy themselves is that when the consignment of a petitioner comes into the Port whether a like article i.e. brass scrap is subject to excise duty, and on finding in the affirmative additional duty of customs becomes payable. Law does not require an enquiry to be made to determine whether a particular consignment of brass scrap was one which was obtained by process of manufacture or was obtained from discarded and worn out brass products, for the reason that 'brass scrap' is one specific article. Such an enquiry backwards into how and wherefrom this particular consignment of scrap was obtained whether in the manufacturing process of some foreign merchant or trader is totally irrelevant because taxable event in the matter of customs is the import into India and not manufacture. Just as duty of customs under Section 12 is payable whether the goods imported involved an element of manufacture or not, similarly additional duty of customs is payable under Section 3 of the Tariff Act, irrespective on the manufacture involved in that particular consignment. Of course an enquiry has to be made if any like article produced or manufactured in India will bear excise duty. That requirement is satisfied because the amendments made by the Finance Act of 1981 make the brass scrap on excisable goods. We would, therefore, hold that the demand on the petitioners to pay additional duty of customs is valid and permissible." 9. We have also carefully considered the case law cited by the respondents. In the case of Saigal Industries v. Central Board of Excise & Customs and Anr., the Hon'ble High Court of Madras held that in order to attract liability for payment of countervailing duty under Section 2(a) of the Customs Tariff Act, 1934, an excise duty shall be leviable on like produ cts if produced or manufactured in India. If no excise duty was payable on a like article, if produced or manufactured in India, no countervailing duty would be payable. We do not think that the respondents can get any benefit from this decision in view of the fact that in the instant case, the facts were quite different since the products imported by the petitioners, namely, acrylic sheets were specifically exempted from payment of duty when manufactured from methyl methacrylate monomer which condition the petitioners product satisfied. It was accordingly held that since no central excise duty was leviable on the product manufactured within the country, there would be no countervailing duty attracted on import of like goods into the country.

10. Coming to the facts of this case, we find that the respondents had claimed exemption under Notification No. 33/81, dated 1-3-81. However, on perusal of the notification it is seen that it is specifically restricted to waste and scrap arising from products manufactured or produced in India and also if they fall under items other than 26A, 26B, 27 and 27A of the First Schedule to the Central Excises and Salt Act, 1944 or if such waste and scrap are manufactured from copper on which appropriate amount of duty of excise or as the case may be the addl. duty leviable under Section 3 of the Customs Tariff Act, 1975 has already been paid. In view of these provisos, the respondents cannot have the benefit of Notification No. 33/81.

11. The respondents have also referred to the decision of the Honbl'e Bombay High Court in the case of Century Enka Ltd. and Ors. v. Union of India and two Ors.1982 E.L.T. 64. But in this case again the finding was that since the goods imported, namely, polymide chips were exempt from payment of excise duty, it was not permissible to ,levy countervailing duty thereon under Section 3 of the Customs Tariff Act, 1975.

In the facts of the present case, the decision of the Bombay High Court also, therefore, does not help the respondents.

12. We have also carefully considered the contention of the respondents that the CEGAT decision in the case of Modella Textile Industries Ltd. v. Collector of Customs, Bombay (1983 E.L.T. 1020) is in their f|vour.

We find that in that case the products imported were old rags of woollen textile fabrics. Referring to the definition of rags as contained in the various central excise notifications, it was held that the definition could not apply to the rags which were imported and, therefore, since the goods imported did not answer the description of rags under the central excise tariff, they could not be deemed to be excisable goods. It is true that the CEGAT decision also referred to the fact that the worne out rags which had been imported did not involve any process of manufacture but this view has to be read as a part of the judgment as a whole and not in isolation.

13. In the matter before us we feel that the facts are quite similar to those in the case of Khandelwal Metal & Engineering v. Union of India, decided by the Hon'ble Delhi High Court. Concurring with the view taken in that matter we hold that the products imported, namely, copper scrap were correctly assessable to basic duty under entry 74.01/02 of the Customs Tariff and additional duty under Item 26A (lb) of the central excise tariff.

14. Coming now to the exemption claimed by the respondent under central excise notifications, we have already held that the respondents cannot derive any benefit from Notification No. 33/81. However, it would appear that the goods imported would get the benefit from exemption from countervailing duty on account of Notification No. 35/81 which exempts waste and scrap of copper intended to be used in the manufacture of chemicals.

15. In the result, we agree with the finding of the Collector (Appeals) that the goods in question are not chargeable to additional duty not on the ground because the goods are not manufactured products but on the ground that they are covered by a specific exemption.

16. Accordingly, the Order-in-Appeal is upheld and the appeal is dismissed.


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