TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Court ruling: Ship breaking waste subject to excise duty; certain goods exempt.</h1> The court held that waste and scrap obtained from ship breaking are subject to excise duty as goods 'produced or manufactured in India.' However, Tariff ... Manufacture - Dismantling of ships - Waste and scrap Issues Involved:1. Vires of levy of excise duty on goods and materials obtained by breaking up of ships.2. Whether dismantling of a ship constitutes 'manufacture' u/s 2(f) of the Central Excise Act.3. Validity of differential duty rates on waste and scrap obtained from ship breaking.4. Legislative competence of Parliament to levy excise duty on waste and scrap.Summary:1. Vires of Levy of Excise Duty:The petitioners challenged the levy of excise duty on goods and materials obtained by breaking up of ships, arguing that dismantling does not involve manufacturing. They contended that they already paid customs duty and countervailing duty on the imported ships.2. Definition of 'Manufacture' u/s 2(f):The court examined whether dismantling of a ship falls within the definition of 'manufacture' u/s 2(f) of the Central Excise Act. The definition includes any process incidental or ancillary to the completion of a manufactured product. The court concluded that dismantling does not fit this definition as it does not produce a new marketable commodity.3. Differential Duty Rates:The petitioners argued that the higher duty rate of Rs. 1800 per ton on waste and scrap from ship breaking, compared to Rs. 80 or Rs. 365 per ton for other waste and scrap, effectively imposes a higher tax on imported goods. The court found that the duty applies equally to all ships, regardless of origin, and is not discriminatory.4. Legislative Competence:The court addressed the legislative competence of Parliament to levy excise duty on waste and scrap. It held that if ship breaking is considered 'manufacture,' then the end product must be regarded as produced or manufactured in India, thus falling within the legislative competence of Parliament.Judgment:The court held that waste and scrap obtained from ship breaking are goods 'produced or manufactured in India' and are subject to excise duty u/s 3 of the Central Excise Act. However, it declared Tariff Items 72.15 and 73.09 ultra vires to the extent they impose duty on goods like angles, shapes, and sections of iron or steel obtained from ship breaking, as these goods are not produced by the dismantling process.Directions:The court directed that excise duty can be levied on waste and scrap (Heading No. 72.03) obtained by breaking up ships but not on other goods falling under Tariff Items 72.06 to 72.13 and 73.03 to 73.08. The interim order was vacated, and the writ petition was disposed of without costs. The order applies to other related writ petitions as well.Conclusion:The court concluded that while waste and scrap from ship breaking are subject to excise duty, other goods obtained from dismantling ships are not, as they do not constitute 'manufacture' under the Central Excise Act.
TaxTMI 
TaxTMI 
