1. This batch of 10 appeals involve a common issue for determination and are, therefore, disposed of by this common order.
2. The issue is whether the consignments of Polyvinyl Alcohol (PVA, for short) imported by the Respondents were liable to be assessed to additional duty of Customs at 10% ad valorem in terms of Central Excise Notification No. 185/83, dated 2-7-1983 as contended by the appellants, which contention was turned down by the Assistant Collector of Customs, but upheld by the Collector of Customs (Appeals), Bombay by his impugned orders.
"In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts Polyvinyl Alcohol, falling under Item No. 15A of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) and manufactured from Vinyl Acetate Monomer, from so much of the duty of excise leviable thereon under the said Act at the rate specified in the said First Schedule, as is in excess of the amount calculated at the rate of ten per cent ad valorem : Provided that such Polyvinyl Alcohol is manufactured from Vinyl Acetate Monomer on which the appropriate amount of the duty of excise under section 3 of the said Central Excises and Salt Act or the Additional duty under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), as the case may be, has been paid.
This notification shall be in force upto and inclusive of the 30th day of September, 1983." 4. It may be seen that the exemption is admisssible subject to compliance with two conditions : (ii) The appropriate amount of the duty of excise under Section 3 of the Central Excises and Salt Act or the additional duty of Customs under Section 3 of the Customs Tariff Act, as the case may be, should have been paid on the vinyl acetate monomer from which the PVA is manufactured.
5. It is the contention of the Revenue that the second condition has not been complied with in the case of the imported consignments of PVA and that, therefore, the exemption does not apply. On the other hand, the Respondents' contention is that this condition is applicable only to indigenously manufactured PVA and has no application to imported PVA. It is their further contention, that, in actual practice, all PVA manufactured in India is out of duty-paid vinyl acetate monomer and is chargeable to excise duty at 10% ad valorem only which is, therefore, what the rate of additional duty of Customs would be on imported PVA.6. Shri A.S. Sundar Rajan, Depth Representative, on behalf of the Revenue, submitted that, in the nature of things, the condition that PVA should be manufactured from duty (excise or addl. duty of Customs) paid vinyl acetate monomer, was capable of fulfilment only by indigenously manufactured PVA. The concession was intended only for such PVA and not for imported PVA which evidently could not comply with the said condition. The Tribunal had occasion to consider a similar issue and had negatived the assessee's contentions in that case which were similar to the ones in the present cases. The decision relied upon is Orders Nos. 222-226/84-C, dated 5-3-1985 in Collector of Central Excise, Bombay v. Texplast Engineers Pvt. Ltd., Thane. The notification in the present cases was worded in such a way as to cut out its benefit to imported goods on economic considerations. The appeals deserved to be rejected following the cited decision, submitted the learned DR.7. Replying to the above submissions, Shri Shanti Bhushan, learned Counsel for the Respondents, began by saying that additional duty of Customs was, as the name suggested, only an additional levy of Customs duty equal to the central excise duty leviable on like goods. The role of protection to indigenous goods was that of Customs duty. The D.R.'s argument that the notification was not intended to apply to imported goods on economic considerations was not, therefore, tenable.
Continuing, the Counsel submitted that the Respondents were not seeking exemption in terms of central excise notification No. 185/83. Only a notification issued under the Customs Act would apply to imported goods. The Respondents' claim was under Section 3 of the Customs Tariff Act. The relevant question was : what was the central excise duty leviable on indigenous PVA If excise duty was leviable at more than one rate, then, additional duty of Customs would be leviable, in accordance with the provisions of the Customs Tariff Act, at the highest of the rates. But, the essential thing to ascertain was the rate of excise duty for the time being leviable on the goods.
Indigenous PVA could have been manufactured only out of duty (excise or additional duty of Customs) paid vinyl acetate monomer. There was thus only one rate of excise duty leviable for the time being on indigenous PVA, viz. 10% ad valorem. And, additional duty of Customs on imported PVA would also be consequently 10% ad valorem. In response to a query from the Bench, the learned Counsel stated that if PVA was manufactured indigenously out of non-duty paid monomer, excise notification No. 201/ 79 would come into play and such a manufacturer would not be eligible for the benefit of set-off of duty in terms of notification No. 201/79.
Turning to the Tribunal's decision in the Texplast Engineers Pvt. Ltd. case (supra), it was submitted that in that case, HOPE could be manufactured out of raw naphtha or alcohol. The notification dealt with the former route. There were two rates of excise duty leviable depending on the route employed for manufacture. In such a case, the higher of the two rates would have applied on imported goods. Such was not the situation in the present matters where only a single rate of excise duty was leviable on indigenous PVA which was manufactured only through the vinyl acetate monomer route. This rate-10% ad valorem-would thus be the rate of additional duty of Customs on imported PVA.8. In response to a query from the Bench, Shri Shanti Bhushan submitted that the condition in notification No. 185/83 regarding payment of duty on the monomer was, in the circumstances of the case, redundant.
9. Shri Shanti Bhushan then said that there was no direct judicial pronouncement on the point. In the Tribunal's order cited by the D.R., Section 3 of the Customs Tariff Act had not been discussed and, because of that the decision went wrong. The Counsel referred to the decision of Madras High Court in Saingal Industries v. Central Board of Excise & Customs -1980 E L T 547, the Gujarat High Court in Neomer Ltd. v. Govt. of India-1981 EL T 134 and of the Tribunal in Southern Petrochemical Industries Corporation Ltd. v Collector of Central Excise, Madras-1984 (18) E.L.T. 103=1984 E.C.R. 2085.
10. In his rejoinder, Shri Sundar Rajan, D.R. submitted that it was not correct to say that only a single rate of excise duty was applicable in respect of indigenous PVA. It was open to a manufacturer not to opt for notification No 185/83. He also stated that no part of the notification could be deemed to be redundant. The second condition in the notification was not without meaning and significance and could not be ignored 11. We have carefully considered the submissions before us We are unable to agree with the learned Counsel for the Respondents that the condition incorporated in the proviso to notification No. 185/83 is redundant since PVA is manufactured indigenously only from duty (excise or additional duty of Customs) paid vinyl acetate monomer. In the first place we would rely on the observations of the Supreme Court in Hemraj Gordhandas v. H.V. Dave, Asstt. Collector of Central Excise & Customs, Surat and Ors.- 1978 E.L.T. J 352 that "in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax payer is within the plain terms of an exemption he cannot be denied its benefit by calling in aid any supposed intention of the exempting authority ... what the legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words or by reasonable or necessary implication". In the face of this clear enunciation of the legal position, there is no scope to hold that the second condition in the proviso to notification No. 185/83 is redundant. The notification comes into play only if duty paid monomer.
If for whatever reasons the monomer used is not duty-paid, then the notification does not apply. However, we think it is unnecessary to enter into these considerations for our present purposes. What we have to see is whether the notification applies to imported PVA. Evidently, the monomer out of which imported PVA was manufactured could not have paid either the central excise duty or the additional duty of customs in force in India. This however, would not result in conclusion that the concessional rate provided for in the notification would nevertheless apply notwithstanding the obvious position that one of the conditions of the notification is not fulfilled. The inference is, therefore, inevitable that the notification is meant to apply only to indigenously manufactured PVA subject, of course, to fulfilment of the stipulated conditions. It is not meant to apply to imported PVA.12. Shri Shanti Bhushan, however, argued that the Respondents' claim was not with reference to notification No. 185/83, but with reference to Section 3 of the Customs Tariff Act. Sub-section (1), which is relevant for our purpose, is extracted below: '3. Levy of additional duty equal to excise duty.- (1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty)) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that 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 alike 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.' The argument appears to be that the excise duty for the time being leviable on the like article, namely, PVA, manufactured in India in India 10% ad. val. Therefore, the imported PVA would attract additional duty of Customs at the same rate. There is a fallacy in this argument.
As we have shown earlier, it is not as if indigenous PVA attracts only a single rate of duty of 10% ad. val. This rate is applicable only if the conditions in notification No. 185/ 83 are fulfilled. Not otherwise, in which event the rate of duty would be higher than 10% ad.
val. It is this higher rate which appears to have been applied to the instant consignments of imported PVA. It is not, therefore, correct, in our opinion, to say that imported PVA would attract additional duty of Customs only at 10% ad. val. This is quite apart from the consideration that imported PVA cannot fulfil the conditions stipulated in notification. No. 185/83 which, therefore, has no application.
The above view is supported by the Tribunal's order in the Texplast Engineers Pvt. Ltd. case.
13. In our opinion, the learned Counsel's submission that the Respondents' claim was with reference to Section 3(1) of the Customs Tariff Act and not with reference to notification No. 185/83 suffers from an inherent contradiction. But for the notification, the question of even considering whether 10% ad. val. is the applicable rate of additional duty of Customs on imported PVA would just simply not arise.
The rate specified in terms of Section 3 of the Central Excises and Salt Act read with the First Schedule to the Act is not 10%; it is much higher. It is only when notification No. 185/83 comes into play, the rate becomes 10% ad. val. in respect of indigenous PVA. Leave out this notification and the rate of 10% ad. val. also leaves the picture.
Therefore, both Section 3 (1) of the Customs Tariff Act and notification No. 185/83 have to be considered and that is what we have done in the preceding paragraphs.
14. The other authorities cited by the learned Counsel for the Respondents do not seem to have any bearing on the issue before us.
In 1980 E.L.T. 547, the Court accepted the petitioners' contention that the imported goods (acrylic sheets) had been manufactured out of methyl methacrylate monomer (one of the raw materials specified in Central Excise Notification No. 38/73, dated 1-3-1973). It is noteworthy that there was no stipulation that the monomer should have paid excise duly or additional duty of Customs as a condition for eligibility to the exemption. The situation before us is vastly different. The cited decision has, therefore, no relevance or application.
In 1981 E.L.T. 134, the Court negatived the contention that additional duty of Customs could not be levied if a like article was not actually manufactured in India. In the present case, like goods are manufactured in the reliance by the Counsel for the Respondents was on para 4 where the Court had observed : The measure is : "at the rate equal to the excise duty for the time being leviable on a like article if produced or manufactured in India".
We have already noted that it is not as though 10% ad. val. is the only rate of duty applicable to indigenous PVA. We do not see how the above passage is of help to the Respondents.
In 1984 (18) E.L.T. 103, the Tribunal was concerned, inter alia, with Section 4 of the Central Excises and Salt Act. The Tribunal said that for the purpose of arriving at the assessable value of goods, the amount deductible as duty was only the effective duty, i.e. the duty leviable under the Act read with any exemption from such duty. Again, we fail to see the relevance of this decision to the present cases.
15. In the result, we hold that the benefit of notification No. 185/83 has been erroneously extended to the imported consigaments of PVA by the Collector (Appeals). The impugned orders have been challenged only in this respect and are, therefore, set aside only to this extent with consequential relief to the appellant.
16. I agree that the appeals should be allowed but for different reasons.
17. Section 3 of the Customs Tariff Act, 1975 speaks of a "levy" of an additional duty equal to the excise duty for the time being "leviable" on a like article produced or manufactured in India and provides further that if such excise duty on a like article is "leviable" at any percentage of its value, the additional duty to which the imported article is so liable shall be calculated at that percentage of the value of the imported article.
18. The expression "the excise duty for the time being 'leviable' on a like article if produced or manufactured in India" was explained to mean the excise duty for the time being in force which would be "leviable" on a like article if produced or manufactured in India.
19. Polyvinyl alcohol-the imported goods in this case is, admittedly, manufactured in India and in terms of item 15A of the First Schedule to the Central Excises and Salt Act, leviable to duty at 50% ad valorem.
However, in terms of Notification No. 185/83-C.E. dated 2-7-1983, "so much of the duty of excise 'leviable' thereon under the said Act at the rate specified in the First Schedule, as is in excess of the amount calculated at the rate of ten per cent ad valorem" was exempted.
20. The question that arises in the Appeals is as to whether the additional duty on the imported goods is to be assessed at the rate specified in the First Schedule (i.e. 50%) or only 10% in terms of the-aforesaid Notification.
21. The answer, to my mind, entirely depends on the true construction of the word "leviable" occurring in S. 3 of the Customs Tariff Act and, significantly enough, in the aforesaid Notification of exemption as well and a determination of its scope and meaning.
22. What then, is a "levy" in the first instance? Is it the same as an "assessment" or "computation" or "collection" or is it the imposition of a duty or tax by statute Are these words synonymous of coterminous in so far as the Central Excises and Salt Act and the Rules thereunder are concerned, for, after all the quantum of additional duty under the Customs Tariff Act is co-equal with what is "leviable" under the former. Does "leviable" mean "assessable" or "payable" Can a Notification of an exemption from a levy be the levy itself so that what is not exempted is the "leviable" tax or duty 23. Construing Article 265 of the Constitution of India, the Hon'ble Supreme Court would appear to have held that the words "levied" and "collected" occurring therein are intended to include the entire process of taxation commencing from an enactment of a taxing statute to the taking away of the money from the pocket of the citizen (AIR 1965 S.C.-Subba Rao v. State 0/A.P.).(Asstt. Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd.). the Hon'ble Supreme Court observed "20". The term "levy" appears to us to be wider in its import than the term "assessment". It may include both "imposition" of a tax as well as assessment. The term "imposition" is generally used for the levy of a tax or duty by legislative provisions indicating the subject-matter of the tax and the rates at which it has to be taxed.
The term "assessment", on the other hand, is generally used in this country for the actual procedure adopted in fixing the liability to pay a tax on account of particular goods or property or whatever may be the object of the tax in a particular case and determining its amount. The Division Bench appeared to equate "levy" with an "assessment" as well as with the collection of tax when it held that "when the payment of tax is enforced, there is a levy". We think that, although the connotation of the term "levy" seems wider than that of "assessment" which it includes, yet, it does not seem to us to extend to "collection". Article 265 of the Constitution makes a distinction between "levy" and "collection". We also find that in N.B. Sanjana v.The Elphinstone Spg. & Wvg. Mills Co. Ltd.-1978 E.L.T. (J 399) (S.C.)=AIR 1971 S.C. 2039 at p. 2045 this Court made a distinction between "levy" and "collection" as used in the Act and the Rules before us. It said there with reference to Rule 10.
'We are not inclined to accept the contention of Dr. Syed Mohammad that the expression "levy" in R.10 means actual collection of some amount. The charging provision Section 3(1) specifically says "There shall be levied and collected in such a manner as may be prescribed the duty of excise... It is to be noted that Sub-section (1) uses both the expressions "Levied and collected" and that clearly shows that the expression "levy" has not been used in the Act or the Rules as meaning actual collection.' 25. So also, in AIR 1957 Punj 5 (Firm L. Hazari Mal v. I.T. Officer) a "levy" in contradistinction to "assessment" and "collection" is said to mean a unilateral act of a superior legislative power to declare the subjects and rates of taxation and to authorise the Collector to proceed to collect the tax. The levy of taxes is generally a legislative function. An "assessment" on the contrary is the official determination of the liability of a person to pay a particular tax and "collection" is the power to gather in the assessed tax, by enforced payment, if necessary. Accordingly, "assessment" is quasi-judicial and "collection" merely an executive function.
26. The Central Excises and Salt Act, 1944 itself, as already observed, speaks in S. 3 of duties that are "levied" and "collected" at the rates specified in the First Schedule and provides that "for the purpose of levying the said duties" the Central Government may fix tariff values where they are chargeable with duty ad valorem. The explanation to S. 4 defines the excise duty "payable". In S. 5 remission of duty "leviable" is provided in certain specified cases. In S. 9 penalises evasion of any duty "payable". In S. 11, the words "leviable" and "payable" are used in contradistinction. So also "levied" and "paid" n Ss. 11-A and 11-C. The provisions in the Customs Act, 1962, regarding the "levy of" and "exemption from" Customs duties are made applicable pursuant to a declaration in a Notification to that effect in terms of S. 12 of the Act. S. 37 empowers the Government to make Rules for (a) the "assessment" and "collection" of duties of excise [S. 37(2) (ib)]; (c) imposition of certain obligations on manufacturers in so far such imposition is essential for a proper "levy" and "collection" of the duties. [S. 37 (2) (x)J; (d) exemption of any goods from the whole or any part of the duty "imposed" by the Act [(S. 37(2)(xvii) ]; (e) Concession in regard to duty "payable" under the Act, as an incentive for increased production [(S. 37(2)(xviia)].
(b) the Central Government was empowered to exempt any excisable goods from the whole or any part of the duty "leviable". (R 8).
28. Without having to go any further, any exemption notification, including the one relied upon by the Appellant, provides for an exemption from the duty "leviable" (at the rate specified in the First Schedule) and not "assessable" or "payable" or "recoverable". What is leviable, therefore, is at the rate specified in the First Schedule.
29. It would, thus, be clear that right through the Act, the Rules, and the Notification of exemption, a distinction is maintained between "levy" and "leviable" on the one hand and "assessment", "collection", "payment" and "payable" on the other. The words are not synonymous or interchangeable. This being so, a duty that is "leviable" under the Central Excises and Salt Act can only mean, imply and have reference to the duties or the rates thereof specified in the First Schedule to the Act and not the duty that may be "assessable" or "assessed" or become "payable" after the application of an exemption notification. An exemption from a levy cannot be the levy itself. What is "leviable" is neither what is exempted from the levy or the remainder after the exemption. A levy is to be found in the First Schedule. What is "leviable" is, therefore, to be derived from the First Schedule and not from an exemption from what is "leviable" in terms of the First Schedule.
30. It would, hence, appear that the additional duty "leviable under S.3 of the Customs Tariff Act, 1975, is the duty leviable in terms of the First Schedule to the Central Excises and Salt Act, 1944, regardless of any exemption from such levy.
31. I, for one, desired a reopening of the case for a hearing on a construction of S. 3 of the Customs Tariff Act as well as a determination of its true meaning scope and effect, particularly because it was not raised or adverted to before the Hon'ble Supreme Court in the cases of Khandelwal Metal & Engineering Works and Anr. v.Union of India (judgment pronounced on June 11, 1985)-1985 E.L.T. 222 (S.C.). But that was not to be.
32. It is argued on behalf of M/s. Parekh Dye-Chem. Industries that there was only one C.E. duty leviable on Indian made PVA because all such alcohols are made from duty-paid vinyl acetatem onomer, and that therefore, according to Section 3 of the Customs Tariff Act, 1975, that would be the duty additional duty "equal to the excise duty for the time being leviable on a like article if produced or manufactured in India". That once C.E, duty is 10% and though prescribed by notification No. 185/83-C.E. the notification itself is not the focal point but Section 3 of the CTA. By virtue of the fact that all PVA manufactured in India pays only this duty whatever be the reason, that is only the duty and there is no other excise duty. Hence the exemption notification is not as the deciding factor.
33. This was the principal argument of the learned counsel for M/s.
Parekh Dye-Chem. This argument forgets that 10% is the duty leviable on PVA manufactured in accordance with the notification, while another duty is leviable on PVA not manufactured in accordance therewith. To say that all PVA manufactured in India pays only 10% is an assumption one cannot accept Furthermore, the 10% is not the duty leviable on PVA but is the duty leviable on PVA manufactured in a particular manner.
34. The argument confuses duty levied with duty leviable. The duty of 10% may have been levied, as claimed by the learned counsel, on all PVA produced in India. But there is another higher duty leviable, and which would have been levied in certain circumstances. The 10% duty is not leviable except on goods manufactured from duty paid monomer and even if this has been so far the only duty levied, it is not the duty leviable on PVA made from monomer which had not paid the (Indian) excise duty. This excise duty has not been shown to have been paid by the monomer from which this PVA was produced. Therefore, 10% is not the leviable rate of duty and plays no part in determining the additional duty leviable under section 3 of C.T.A.35. I therefore, agree with learned brother Sankaran and allow this appeals.