1982 (10) TMI 41 - HC - Customs

Court Upholds Customs Duty on Brass Scrap, Dismisses Writ Petitions

The court held that brass scrap is subject to a customs duty rate of 80% and that the imposition of excise duty on 'waste and scrap' is constitutional. ... Brass scrap - Liability to Customs duty Issues Involved:1. Rate of duty of customs applicable to the import of brass scrap.2. Constitutionality of the imposition of excise duty on 'waste and scrap' under the Central Excises & Salt Act, 1944.3. Validity of the levy and collection of additional duties of customs on imported brass scrap.4. Jurisdiction of the High Court to entertain the petition.Issue-wise Detailed Analysis:Point No. 1: Rate of Duty of Customs on Brass ScrapThe petitioners import brass scrap and claim that they are liable to pay only 40% duty of customs based on Notification No. 97, dated 25-6-1977. However, the respondents argue that the applicable rate is 80% as per Notification No. 156, dated 16-7-1977. The court examined whether the brass scrap falls under the category of 'copper waste and scrap' or 'master alloy.' The court concluded that brass scrap cannot be equated with master alloy and must be treated as copper waste and scrap. Consequently, the petitioners are liable to pay duty at the rate of 80% as per Notification No. 156, dated 16-7-1977.Point No. 2: Constitutionality of Imposition of Excise Duty on 'Waste and Scrap'The petitioners challenged the constitutionality of the imposition of excise duty on 'waste and scrap' under Tariff Item 26A(1b) of the Central Excises & Salt Act, 1944, introduced by the Finance Act, 1981. The court held that brass scrap, being a marketable commodity obtained through a process of manufacture, is subject to excise duty. The court further stated that the legislative competence of Parliament to impose excise duty on manufactured goods is well-established, and the inclusion of 'waste and scrap' in the Excise Act is valid and constitutional.Point No. 3: Validity of Levy and Collection of Additional Duties of CustomsThe petitioners argued that additional duty of customs under Section 3 of the Customs Tariff Act, 1975, should not be levied on imported brass scrap. The court held that since brass scrap is excisable under the Central Excises & Salt Act, it is automatically liable for additional duty of customs. The court rejected the petitioners' argument that the imported brass scrap does not involve a manufacturing process, stating that the classification of the articles for customs duty purposes is sufficient to impose additional duty.Point No. 4: Jurisdiction of the High CourtThe respondents raised a preliminary objection regarding the territorial jurisdiction of the High Court to entertain the petitions, as the Bills of Entry were presented at ports outside the jurisdiction of the Delhi High Court. The court acknowledged the objection but decided to address the merits of the case due to the significant time the petitions had been pending and the broader implications of the issues involved. The court left the question of jurisdiction open for future consideration.Additional Points:Civil Writ Nos. 1108 and 1109 of 1981: Import of Aluminium ScrapThe court addressed similar issues regarding the import of aluminium scrap, holding that the inclusion of 'waste and scrap' in the Excise Act by the Finance Act, 1981, was valid. The petitioners were liable to pay full duty of customs and additional duty as per the prevailing rates, rejecting the plea of promissory estoppel.Conclusion:1. The petitioners are liable to pay duty of customs at 80%.2. The imposition of excise duty on 'waste and scrap' is constitutional.3. The levy and collection of additional duty of customs on the petitioners is valid.4. The court decided the petitions on merits but left the question of jurisdiction open for future consideration.The writ petitions were dismissed with costs, and the interim orders permitting the import of goods without paying the full duty were vacated. The respondents were allowed to take appropriate steps to realize the duty from the petitioners.