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Issues: (i) Whether additional duty under section 3(1) of the Customs Tariff Act, 1975 is leviable on imported asbestos fibre when the like article is not liable to excise duty because it is not produced or manufactured in India; (ii) Whether, despite the assessee succeeding on the levy issue, refund of additional duty already realised should be ordered.
Issue (i): Whether additional duty under section 3(1) of the Customs Tariff Act, 1975 is leviable on imported asbestos fibre when the like article is not liable to excise duty because it is not produced or manufactured in India.
Analysis: The charging mechanism under section 3(1) is independent of section 12 of the Customs Act, 1962 and is measured by the excise duty for the time being leviable on a like article if produced or manufactured in India. The explanation to section 3(1) proceeds on the basis that the imported article must answer the description of an article capable of attracting excise duty on a like article. The earlier view in Khandelwal Metal & Engineering Works, to the extent it treated additional duty as leviable even where no excise duty could be attracted because there was no manufacture or production, was held not to state the correct law. Since the imported asbestos fibre had already been found not to be the result of manufacture and not liable to excise duty, the countervailing additional duty could not be sustained.
Conclusion: The issue was answered in favour of the assessee and against the Revenue.
Issue (ii): Whether, despite the assessee succeeding on the levy issue, refund of additional duty already realised should be ordered.
Analysis: The Court declined to decide the applicability of unjust enrichment on the record before it. Taking into account the long interval since the earlier view had held the field and the public exchequer implications, the Court considered it inequitable to direct refund of the amount already collected, while at the same time holding that no further amount could be demanded from the assessee.
Conclusion: The assessee was not entitled to refund of the additional duty already realised.
Final Conclusion: The levy of additional duty on the imported asbestos fibre was unsustainable, so the demand was quashed, but the amount already collected was left undisturbed and no further recovery could be made from the assessee.
Ratio Decidendi: Additional duty under section 3(1) of the Customs Tariff Act, 1975 is leviable only where excise duty is leviable on a like article produced or manufactured in India; if the imported article is not excisable because it is not the product of manufacture or production, no additional duty can be imposed.
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