2003 (4) TMI 104 - SC - Customs

Imported low ash coking coal washing and 'manufacture' debate u/s3 additional customs duty; importer held liable

Whether additional customs duty under s.3 of the Customs Tariff Act, 1975 was leviable on imported low ash coking coal turned on whether a like excise ... Additional customs duty - imported low ash coking coal - Whether the respondent is liable to pay additional customs duty as provided in Section 3 of the Customs Tariff Act, 1975 on the imported low ash coking coal? - Held that:- In the present case also Section 6 of the Coal Act as quoted above specifically provides that excise duty is levied on the coal raised and dispatched. Therefore, the Legislature specifically understood that there is no question of manufacturing or producing coal. Coal is required to be raised and hence a different phraseology has been used in the said Section. Even Section 7 of the Act only empowers the Central Government to impose on all coal imported or brought into India a duty of customs at the rates equivalent to the rates of duty of excise leviable under Section 6. It nowhere provides that coal is produced or manufactured in India. Washing of coal would not amount to production or manufacture of a new item. Section 4 of the Coal Act also provides that for the purpose of conservation of and for development of coal, the Central Government may require the agent or manager of all coal mines to take measures which may include washing of coal with a view to reducing the ash contents of the coal. Washing of coal or reducing the ash content of the coal was not considered by the Parliament as a manufacturing activity. Even if coal is washed and ash contents are reduced, Section 6 uses the phraseology ('of all coal raised') and 'on all coke manufactured and dispatched', which would mean that coke is manufactured while coal is only raised. It is not manufactured. In this view of the matter, there is no substance in the argument raised by the learned Counsel of the appellant. Against assessee. Issues:1. Whether the respondent is liable to pay additional customs duty on imported low ash coking coal under Section 3 of the Customs Tariff Act, 1975.2. Interpretation of Section 3 of the Customs Tariff Act and its application to the case.3. Relevance of provisions of the Coal Mines Act, specifically Sections 6 and 7, in determining the liability for additional customs duty.4. Distinction between 'raised' and 'manufactured' in the context of coal and coke under the Coal Mines Act.5. Whether washing of coal amounts to a manufacturing process for the purpose of imposing additional customs duty.Analysis:The appeals were filed against a Tribunal's decision that the respondent was not liable to pay additional customs duty on imported low ash coking coal under Section 3 of the Customs Tariff Act, 1975. The Department contended that even though coal and coke were exempted from general excise duty, the respondent was still liable for additional customs duty under the Act due to the excise duty imposed under the Coal Mines Act. However, the respondent argued that coal, being an item not manufactured, was not liable for additional customs duty under Section 3. The respondent relied on a previous court decision regarding asbestos fiber import to support their argument that coal, like asbestos fiber, was not manufactured and therefore not liable for additional customs duty.The Central Government had not issued any notification under Section 7 of the Coal Mines Act for imposing customs duty on imported coal. The court noted that the duty under Section 3 of the Customs Tariff Act is a countervailing duty levied only on imported goods. The court emphasized that coal being 'raised' and not 'manufactured' as per the Coal Mines Act, washing coal to reduce ash content did not amount to manufacturing. The court also highlighted that the Parliament's use of distinct terms for coal and coke in the Act indicated that coal was not considered a manufactured item. Therefore, the court dismissed the appeals, stating that there was no merit in the arguments presented by the Department.In conclusion, the court's decision was based on the interpretation of relevant legal provisions, distinguishing between production and raising of coal, and clarifying that washing coal did not constitute manufacturing. The court upheld that coal, being raised and not manufactured, was not subject to additional customs duty under Section 3 of the Customs Tariff Act.