1999 (7) TMI 83 - HC - Customs

Imported ships subject to additional customs duty equal to excise duty if produced in India. Exemption denied for lack of power-free manufacturing. Petitions dismissed. Alleged forged documents to be addressed under Customs Act.

The court held that the imported ships were subject to additional customs duty equal to the excise duty on similar articles if produced in India. The ... Customs duty and additional customs duty Issues Involved:1. Liability of additional duty of customs on imported ships for breaking.2. Applicability of exemption notifications to additional customs duty.3. Interpretation of Section 3 of the Customs Tariff Act, 1975.4. Relevance of previous judicial decisions.5. Allegations of forged documents and prosecution under Section 132 of the Customs Act, 1962.Detailed Analysis:1. Liability of Additional Duty of Customs on Imported Ships for Breaking:The petitioner challenged the liability of additional duty of customs on imported vessels for ship breaking. The petitioner argued that, based on the Finance Minister's Budget Speech for 1993-94, the ship breaking industry should benefit from a lower merged customs duty of 5% ad valorem and full exemption from excise duty on ferrous materials obtained from ship breaking.2. Applicability of Exemption Notifications to Additional Customs Duty:The petitioner contended that under Notification No. 167/86-C.E., dated 1-3-1986, there was full exemption from Central Excise Duty for goods falling under Chapter 89 if produced without the aid of power, and thus, no additional customs duty should be levied. Additionally, Notification No. 74/93, dated 28-2-1993, was cited to claim exemption from customs duty exceeding 5% ad valorem.3. Interpretation of Section 3 of the Customs Tariff Act, 1975:Section 3 of the Customs Tariff Act mandates that any imported article is liable to additional duty equal to the excise duty that would be levied on a like article if produced or manufactured in India. The explanation to Section 3 clarifies that this additional duty is to counterbalance the excise duty levied on similar indigenous articles. The court emphasized that the levy of additional duty is contingent upon the excise duty that would be applicable if the article were produced or manufactured in India.4. Relevance of Previous Judicial Decisions:The petitioner relied on judgments such as Amar Steel Industries v. Collector of Customs and Hyderabad Industries Ltd. v. Union of India to argue that additional duty is linked to the excise duty rate. The court noted that in Hyderabad Industries, the Supreme Court held that additional duty could only be levied if excise duty could be levied on a like article produced in India. The court also referenced the decision in Thermax Private Ltd. v. Collector, which emphasized considering the excise duty on the imported goods as if they were manufactured in India.5. Allegations of Forged Documents and Prosecution under Section 132 of the Customs Act, 1962:The respondent alleged that the petitioner submitted forged documents and could be liable for prosecution under Section 132 of the Customs Act, 1962. The court noted that it was up to the department to take appropriate action in this regard.Conclusion:The court concluded that the ships imported by the petitioner are manufactured products and thus subject to additional customs duty equal to the excise duty that would be leviable on similar articles if produced in India. The exemption under Notification No. 167/86-C.E. could not be claimed as the ships were not manufactured without the aid of power. The petitions were dismissed, and the petitioner was held liable for the additional customs duty. The court also left the matter of alleged forged documents to be addressed by the appropriate authorities under Section 132 of the Customs Act, 1962.