Customs classification of cut silk bolting cloth as fabric, and excise exemptions apply in additional duty computation.

Imported silk bolting cloth cut to size and shape retained its essential character as fabric for customs classification. For additional duty under Section 3(1) of the Customs Tariff Act, the measure was the excise duty actually leviable on a like article in India, including the effect of applicable exemption notifications under excise law. The excise exemption therefore had to be applied when quantifying additional customs duty, and the importer obtained relief on both classification and duty computation.

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Issues: (i) Whether the imported silk bolting cloth cut to size and shape was classifiable as fabrics; (ii) Whether the benefit of the Central Excise exemption notification could be applied while computing additional duty of customs under Section 3(1) of the Customs Tariff Act, 1975.

Issue (i): Whether the imported silk bolting cloth cut to size and shape was classifiable as fabrics.

Analysis: The goods were examined in their tariff context and the conclusion was that cutting the fabric to size and shape for use on machinery did not alter its essential character as fabric. The classification accepted for customs purposes therefore remained that of fabrics.

Conclusion: The goods were classifiable as fabrics.

Issue (ii): Whether the benefit of the Central Excise exemption notification could be applied while computing additional duty of customs under Section 3(1) of the Customs Tariff Act, 1975.

Analysis: The expression "the excise duty for the time being leviable on a like article if produced or manufactured in India" was construed as referring to the duty actually leviable in law, including the effect of exemption notifications issued under Rule 8(1) of the Central Excises and Salt Act, 1944. The levy under Section 3(1) was treated as an additional customs duty measured by the excise duty that would be chargeable on like indigenous goods, and therefore the applicable excise exemption could not be ignored while quantifying the imported article's liability.

Conclusion: The benefit of Notification 24/65-C.E. was applicable to the import while computing additional duty of customs.

Final Conclusion: The appeal succeeded on both classification and exemption, resulting in relief to the importer.

Ratio Decidendi: For purposes of Section 3(1) of the Customs Tariff Act, 1975, the measure of additional duty is the excise duty actually leviable on a like article in India after giving effect to applicable exemption notifications under the excise law.

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