2024 (2) TMI 778 - HC - Customs

Madras HC sets aside Appellate Tribunal order on CVD levy for rubber scrap imports, remands for fresh consideration

The Madras HC set aside the Appellate Tribunal's order regarding CVD levy on rubber scrap imported by the respondent. The case involved whether cut pieces ... Liability to Countervailing Duty (CVD) on imported tyre scrap - reliance on a High Court decision subsequently set aside by the Supreme Court - incomplete adjudication requiring fresh consideration of Chapter 40 and Chapter Note 6 - remand for fresh consideration on meritsReliance on a High Court decision subsequently set aside by the Supreme Court - incomplete adjudication requiring fresh consideration of Chapter 40 and Chapter Note 6 - Validity of the Appellate Tribunal's reliance on the Delhi High Court decision in Tinna Rubber which was subsequently set aside by the Supreme Court - HELD THAT: - The Tribunal set aside the Commissioner (Appeals) orders by following the Delhi High Court's decision that had held imposition of CVD on cut pieces of used tyres to be unlawful. The Supreme Court later set aside the Delhi High Court order on the ground of incomplete adjudication, noting that Chapter 40 of the Customs Tariff Act read with Chapter Note 6 was not considered and directing fresh adjudication. In view of the Supreme Court's order undermining the foundational precedent on which the Tribunal relied, the High Court held that the impugned Tribunal order cannot be sustained and must be set aside. [Paras 6, 7]Impugned order of the Appellate Tribunal that followed the Delhi High Court decision is set aside because the High Court decision was subsequently set aside by the Supreme Court as an incomplete adjudication.Liability to Countervailing Duty (CVD) on imported tyre scrap - remand for fresh consideration on merits - Whether the question of CVD liability on the imported tyre scrap is to be decided on merits by the Tribunal - HELD THAT: - The High Court did not decide the substantive question of whether the imported tyre scrap (cut into pieces) is liable to CVD on the merits. Instead, having found that the Tribunal's decision was founded on a precedent subsequently set aside by the Supreme Court, the High Court remitted the matters to the Appellate Tribunal for fresh consideration on merits and in accordance with law, after affording the respondent a reasonable opportunity of hearing. [Paras 7, 8]Matters remanded to the Appellate Tribunal for fresh adjudication on merits in accordance with law; substantive CVD question left open for determination by the Tribunal.Final Conclusion: All appeals are allowed to the extent that the Appellate Tribunal's order is set aside; the matters are remanded to the Tribunal for fresh consideration on merits in accordance with law, and the substantial questions of law are answered in favour of the Revenue. No costs. Issues Involved:The judgment involves the following Issues:1. Whether the Tribunal was justified in allowing the appeal of the assessee regarding the liability to pay CVD on imported rubber scrap.2. Whether the Tribunal erred in not deciding the issue on merits and following a judgment that was later set aside by the Supreme Court.3. Whether the Tribunal failed to consider that the imported rubber scrap was a different commercial commodity resulting from the processing of old tires.4. Whether the Tribunal overlooked the compliance with the twin test of manufacture and marketability in determining the liability of the imported rubber scrap to CVD.Issue 1:The respondent imported Tyre scrap cut into two or three pieces for use in manufacturing Crumb Rubber Powder or Crumb Rubber Modified Bitumen for road laying. The respondent claimed 'Nil' CVD rate, leading to payment under protest and subsequent appeals. The Appellate Tribunal allowed the appeals, which were challenged by the Revenue in the present batch of appeals.Issue 2:The respondent faced similar issues in other ports, including Delhi, where a Circular was set aside by the Delhi High Court, declaring the imposition of 12% CVD on cut pieces of used tires as unlawful. The Appellate Tribunal's order in the present case followed the Delhi High Court's decision, setting aside the Commissioner's order.Issue 3:The Revenue appealed to the Supreme Court against the Delhi High Court's decision, which was set aside as incomplete adjudication. Consequently, the Appellate Tribunal's order was deemed unsustainable, leading to the remand of the matters for fresh consideration.Conclusion:The judgment addressed the issues surrounding the liability of the imported rubber scrap to CVD, considering previous decisions and subsequent developments. The Tribunal's decision was set aside due to incomplete adjudication, leading to a remand for fresh consideration in accordance with the law. The substantial questions of law were answered in favor of the Revenue, with no costs imposed.