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Madras Rubber Factory Ltd. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC1159DTri(Delhi)
AppellantMadras Rubber Factory Ltd.
RespondentCollector of Customs
Excerpt:
.....the assessable value.9. as regards the argument that countervailing duty was not leviable on the goods imported by the appellants, shri kunhikrishnan submitted that under section 3(2) of the customs tariff act countervailing duty was clearly leviable whether or not such goods were at that time being produced or manufactured in india. in this connection he referred to a decision of the tribunal in the case of dai-ichi karkaria pvt. ltd., bombay v. collector of customs, bombay, reported in 1983 (12) elt 556 (cegat). on the argument that it was not the intention of parliament to levy countervailing duty where such goods were not manufactured in india, shri kunhikrishnan submitted that there is no room for any intendment in the construction of a taxing statute. in this connection he quoted.....
Judgment:
1. These are two revision applications (hereinafter called "appeals") filed before the Central Government which under Section 131B of the Customs Act, 1962, stand transferred to this Tribunal to be disposed of' as if they were appeals presented before the Tribunal.

2. Both these appeals relate to Nylon Tyre Yarn type 66 which was imported by the appellants and which was charged to basic customs duty as well as countervailing (additional) customs duty. Two main issues have been raised by the appellants in these appeals. One of these relates to the inclusion of landing charges in the value of the goods for the levy of basic customs duty. The other relates to the legality of levying countervailing duty on the goods.

3. At the outset, Shri Ignatius stated that certain writ petitions filed by the appellants on similar issues were pending in the High Court. He therefore requested that decisions on these appeals be kept in abeyance pending disposal of the writ petitions. In reply to our query, he clarified that these writ petitions were not with reference to the particular orders against which the present appeals have been filed, and also that no stay orders had been issued by the High Court in regard 'to the present proceedings. As we saw no justification for indefinitely postponing a decision on these cases only because writ petitions had been filed on connected issues in some other cases, we proceeded to hear the appeals.

4. The arguments advanced on these issues, in the memorandum of appeal and by Shri Ignatius in the personal hearing before us, are-set out below.

5. As regards the landing charges, for which an addition of 0.6% to the GIF value of the goods was made, it has been contended that these would amount to post-importation charges. It has also been contended that the addition actually made in this regard is more than the actual expenses incurred by the appellants in the Port Trust area, and that even if the landing charges had to be included, they would be entitled to a refund of Rs. 116.47.

6. The appellants' second main contention is that Section 3(1) of the Customs Tariff Act, 1975, does not authorise the levy of countervailing duty on an imported article when such an imported article is not being produced or manufactured in India. In support of this argument, Shri Ignatius sought to rely on the "Notes on Clauses" with reference t6 Section 3(1) of the Customs Tariff Act when it was introduced as a Bill in Parliament. In these notes it has been stated that "this provision...is necessary to safeguard the interests of the manufacturers in India". According to him, this explanation makes it clear that the intention of the Government was that countervailing duty should be levied only if such an article is actually being manufactured in India.

7. Shri Ignatius also drew our attention to Section' 3 of the Central Excises and Salt Act, 1944. Sub-section (2) of this Section empowers Government to fix tariff values of any articles enumerated in the First Schedule to that Act. Sub-section (3) ibid provides that different tariff values may be fixed for different classes or descriptions of the same excisable goods. According to him, this provision supported his argument that countervailing duty was not leviable on an article if such an article was not being manufactured in India.

8. Replying to Shri Ignatius, Shri Kunhikrishnan submitted that the question of inclusion of landing charges in the assessable value for customs duty was already settled by judicial pronouncements. In this connection he cited the judgment of the Delhi High Court in the case of Bhartiya Plastic Udyog and Another Vs. Union of India and Others, reported in 1983 E.L.T. 661 (Delhi). In this case it had been held that landing charges were not post-importation expenses and were liable to be included in the assessable value.

9. As regards the argument that countervailing duty was not leviable on the goods imported by the appellants, Shri Kunhikrishnan submitted that under Section 3(2) of the Customs Tariff Act countervailing duty was clearly leviable whether or not such goods were at that time being produced or manufactured in India. In this connection he referred to a decision of the Tribunal in the case of Dai-ichi Karkaria Pvt. Ltd., Bombay v. Collector of Customs, Bombay, reported in 1983 (12) ELT 556 (CEGAT). On the argument that it was not the intention of Parliament to levy countervailing duty where such goods were not manufactured in India, Shri Kunhikrishnan submitted that there is no room for any intendment in the construction of a taxing statute. In this connection he quoted the observations of the Supreme Court in the case of Hansraj Gordhandas Vs. H.H. Dave, reported in AIR 1970 SC 775, and Innanuri Gopalan and Others Vs. State of Andhra Pradesh, reported in 1964 (2) SCR 888. He further submitted where the wording of an enactment was very clear, there was no question of going into the intendment.

10. Regarding the argument of Shri Ignatius based on the "class of goods", Shri Kunhikrishnan submitted that there was no warrant for dividing all goods into a class of "imported articles" and a class of "indigenous articles" as sought to be done by the appellants, and to say that the two classes were mutually exclusive.

11. In the end, Shri Kunhikrishnan submitted that the appeals had no merit and should be rejected.

12. We have carefully considered the submissions made on behalf of the appellants. On the issue of landing charges, there are, as has been pointed out by Shri Kunhikrishnan, clear judicial decisions holding that they ate includible in the assessable value for levy of customs duty. Reference may be made to the judgment of the Delhi High Court in the case of Super Traders and Another v. Union of India and Ors., reported in 1983 E.L.T. 258 (Del). In paragraphs 25 to 27 of this judgment it has been specifically held that "when valuation of the goods for the purpose of the assessment is to be calculated under Section 14 of the Customs Act, it will have to be at a value inclusive of landing charges". This judgment was followed in another judgment of the Delhi High Court which was cited by Shri Kunhikrishnan, namely in the case of Bhartiya Plastic Udyog, (vide paragraph 8 above) where it was observed that the question was no longer res Integra. In view of such clear judicial authority, there is no scope for the appellants to contend that landing charges should be excluded from the assessable value. As regards their alternative plea that landing charges should have been limited to the amount actually incurred by them in the Port Trust area, which would have resulted in the refund to them of Rs. 116.47, we observe that no evidence has been led to show the actual expenses incurred by the appellants in the Port Trust area. It appears that Government have adopted the practice of making a flat percentage addition to the GIF value, to take landing charges into account, this percentage being modified from time to time, and that at the relevant time it Was 0.6% of the GIF value. On the material before us we are not prepared to hold that the adoption of such a flat addition, as a matter of convenience, was not correct. As already observed, the appellants have not substantiated their calculation in this regard. Accordingly, we hold that the landing-charges were correctly levied.

13. As regards the levy of countervailing duty, Shri Ignatius argued at length that countervailing duty could be levied only where such an article was being manufactured in India. Such a contention has been advanced from time to time, and has not been found to be valid. A decision in this regard is contained in a recent order of the Tribunal in the case of Daiichi Karkaria, which has been relied upon by Shri Kunhikrishnan. Although that order explains the position clearly, we are doing so once again for the sake of completeness. The relevant provision is Sub-section (1) of Section 3 of the Customs Tariff Act, 1975, which is reproduced below :- "3.(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 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".

14. We also reproduce paragraph 6 of our order in the case of Daiichi Karkaria referred to above :- "6. The Explanation makes it clear beyond any reasonable doubt that it Covers both a case where a like article is being produced or manufactured in India, and a case where a like article is not being produced or manufactured, as would be evident from the words "if a like article is not so produced or manufactured...". We do not, therefore, think it necessary to dwell further on this ground, which is plainly not sustainable." 15. In view of the very clear wording of the statute, the argument of Shri Ignatius with reference to the intention of Government as set out in the notes on the draft Bill has no force. Apart from the authorities cited by Shri Kunhikrishnan, to the effect that "intendment has no place in a taxing statute", we would observe that the argument of Shri Ignatius would go against the primary rule of literal construction of statutes, which is "to intend the legislation to have meant what they have actually expressed". (Maxwell on the Interpretation of Statutes, 12th Edition, Chapter 2). Where the language is plain and admits of but one meaning, the task of interpretation can hardly be said to arise (Maxwell-ibid), and there is no question of referring to the legislative history of the Act. As already explained above, the wording of the explanation to Sub-section (1) of Section 3 makes it very clear that it also covers a case where a like article is not being produced or manufactured in India. We therefore find that the argument of Shri Ignatius in this regard is misconceived and has no force. Incidentally, it has been contended in the Memorandum of Appeal that the explanation to the above Section cannot "control" the law contained in that Sub-section. The argument reduces itself to saying that this explanation, which has been specifically added to the Sub-section, cannot be used in interpreting it. No specific authority for such a proportion has been given, and we have no hesitation in rejecting it.

16. Although the position is abundantly clear, some observations may be added in the context of the present case. Section 3(1) of the Customs Tariff Act, read with the Explanation thereto, in effect makes two provisions. The first deals with liability to duty, and makes any article imported into India liable to an additional duty.- The second provision, which regulates the quantum of this duty, related to a like article, makes it clear that the countervailing duty is leviable whether or not a like article is being produced or manufactured in India : it also provides guidance as to how the additional duty is to be calculated in a case where a like article is not being produced or manufactured in India. The differentiation as between the articles which are being produced or manufactured in India and articles which, are not being so produced or manufactured, is only in regard to the method of calculating the quantum of duty leviable, and not in regard to the liability for the additional duty which attaches to "any article which is imported into India". If the quantum of duty leviable on the like indigenous article happens to be nil, the quantum of duty leviable on the imported article would also be nil. However, an imported article would not be relieved from the liability to countervailing duty merely because a like article is not being produced or manufactured in Indian 17. The remaining argument of Shri Ignatius was with reference to the use of the expression "class or description of articles" in the explanation to Section 3(1). He tried to argue that articles the counterparts of which were being manufactured in India and articles the counterparts of which were not being manufactured in India should be deemed to be different classes, and countervailing duty could not be levied on the second "class" on the basis of goods falling within the first "class". We find no warrant for this wholly artificial creation of two different "classes" of goods. On the other hand, the words "class" and "description" go together and have to be read together. In the context in which they are used, namely the levy of countervailing duty related to the Central Excise duty, they also have to be read with the First Schedule to the Central Excises and Salt Act, which sets out the rates of duty leviable on different goods. It will be seen that the second column of the Schedule has the heading "description of goods".

Evidently, therefore, the words "class or description of articles" in Section 3(1) of the Customs Tariff Act have to be related to the "description of goods" as occurring in the Central Excise Tariff Schedule, as indeed is evident from the entire context.

18. In connection with the above argument regarding the "class" of the imported goods, Shri Ignatius stated that Nylon Tyre Yarn type 66, which was imported, was not being manufactured in India, and was different from Nylon Tyre Yarn type 6, which was being manufactured in India. We asked Shri Ignatius whether it was his contention that a wrong rate of duty had been applied to the imported Nylon Tyre Yarn by comparing it with a different type of tyre yarn and placing it in a wrong classification in the Central Excise Tariff Schedule. Shri Ignatius stated that this was not his contention.

19. This last argument of Shri Ignatius is really a round-about way of repreating his first argument, namely, that where the counterparts of certain articles are not manufactured in India, countervailing duty is not leviable on such articles. We have already rejected this argument, and we again reject it as reformulated. We may mention that in the Tribunal's order in the case of M/s. Daiichi Karkaria, in paragraph 21, there are detailed observations' as to what could be considered as a class of articles for the purposes of levy of countervailing duty.

20. In the result we do not find any force in various contentions raised by the appellants. We therefore uphold the two orders of the authorities below and reject the two appeals.


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