TaxTMI 
TaxTMI 
2014 (9) TMI 441
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....ing the respondents, their servants and agents from levying and collecting Additional Customs Duty from the petitioners as per the rates prescribed under heading No.89.08 of the Central Excise Tariff Act, 1985. 3.00. For the sake of convenience, facts of Special Civil Application No. 10607 of 1995 are considered and said Special Civil Application is treated as lead matter. 3.01. That the petitioner firm is inter-alia engaged in the activity of ship-breaking. That the petitioners purchased old discarded and un-seaworthy ships from Indian as well as foreign sources and bring them at the plot allotted to them for breaking up of such old and scrap ships at Sosiya, Alang. It is the case on behalf of the petitioners that when the old and scraped vessels are purchased from the international market, the petitioners have to pay the Customs duty thereon under section 12 of the Customs Act, 1962. That in addition to the above customs duty which is commonly known as Basic Duty of Customs, an importer is also liable to pay a duty equal to the Excise for the time being leviable on a like article if produced or manufactured in India. That such additional duty is prescribed under section 3(1) of....
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....89.01 to 89.07 of the tariff. It is submitted that when these goods are meant for breaking up, they would not be classifiable under heading No.89.08 of the Tariff. It is submitted that however, there is no conversion of any rawmaterial into a new substance when any of the vessels and floating structures covered under any of the heading No.89.01 to 89.07 is brought at a breaking yard and as a result of purchase of such vessel for breaking up by the persons like the petitioners, no new and different article having distinctive name, character or use emerges. It is submitted that there is no process by which the vessels and floating structures of heading Nos.89.01 to 89.07 are converted into a new article falling under heading No.89.08 and thus, the latter heading No.89.08 of the Tariff seeks to cover fully manufactured goods classifiable under other heading only because the purchaser desires to break up such floating structure. It is submitted that there being no process of manufacture involved in such activity of purchasing a vessel or a floating structure for breaking up, the excise duty under heading No.89.08 of the Tariff cannot be legally and validly levied and this heading is, t....
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....r reported in 1999 (108) ELT 321 (SC) : (1999) 5 SCC 15, the Hon'ble Supreme Court has partly overruled the decision of the Hon'ble Supreme Court in the case of Khandelwal Metal & Engineering Works (supra) to the extent holding that additional duty of customs is leviable on the import of the article even if it is not manufactured or produced in India. It is submitted that, therefore, as such the issue / controversy raised in the present Special Civil Applications is squarely covered by the decision of the Hon'ble Supreme Court in the case of Hyderabad Industries Ltd. Versus Union of India, reported in 1999 (108) ELT 321. Making above submissions and relying upon above decisions, it is requested to declare Entry No.89.08 of Chapter 89 of the Central Excise Tariff Act, 1985, by which the additional duty is levied on import of vessels and other floating structures for breaking up, as unconstitutional and/or beyond the scope of section 3 of Central Excise Tariff Act, 1985 and permanently prohibit the respondents from levying and recovering additional duty under head No.89.08 of the Tariff on import of vessels and other floating structures for breaking up. 5.00. Ms.Amee Ya....
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....ble to pay additional duty at the rate mentioned under heading 89.08 of Chapter 89 of the Central Excise Tariff Act, 1985 on import of vessels and other floating structures for breaking up. 5.03. However, Mr.Amee Yajnik, learned advocate appearing on behalf of the respondents is not disputing that the decision of the Hon'ble Supreme Court, relied upon by the respondents in the Affidavit-in-reply, in the case of Khandelwal Metal & Engineering Works (supra), has been subsequently partly overruled to the extent only holding that additional duty of customs is leviable merely on the import of the article even if it is not manufactured or produced in India. Making above submissions it is requested to dismiss the present Special Civil Applications. 6.00. Heard the learned advocates appearing on behalf of the respective parties at length. 6.01. What is challenged in the present Special Civil Applications is heading No.89.08 of the Central Excise Tariff Act, 1985 by which Additional Customs Duty at the rate of 15% is sought to be levied on the vessels and other floating structures imported for breaking up. It is required to be noted that levy of Additional Custom Duty is prescribed ....
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....g structures imported for breaking up are produced and/or manufactured in India and/or even outside India. It is also not the case on behalf of the department that any article is produced or manufactured in India and/or outside the India. It is also required to be noted that if vessels or other floating structures which are plyable are imported, in that case, no additional duty is leviable. It is also required to be noted that even vessels and other floating structures manufactured in India (plyable) are non-exciseable. It is also required to be noted that it is not the case of the department that any excise duty is leviable on manufacture of vessels and other floating structures imported for breaking up. Considering the above facts and circumstances of the case, the controversy raised in the present Special Civil Applications is required to be considered. 6.04. It is required to be noted that in the Affidavit-inreply, the department has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Khandelwal Metal & Engineering Works (supra). In the Affidavit-in-reply it is further submitted that though the decision of the Hon'ble Supreme Court in the case ....
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....if produced or manufactured in India. The condition precedent for levy of additional duty thus contemplated by the explanation is that the article is produced or manufactured in India. The second limb to the explanation deals with a situation where a like article is not so produced or manufactured. The use of the word so implies that the production or manufacture referred to in the second limb is relatable to the use of that expression in the first limb which is of a like article being produced or manufactured in India. 11. The words if produced or manufactured in India does not mean that the like article should be actually produced or manufactured in India. As per the explanation if an imported article is one which has been manufactured or produced then it must be presumed, for the purpose of Section 3(1), that such article can likewise be manufactured or produced in India. For the purpose of attracting additional duty under Section 3 on the import of a manufactured or produced article the actual manufacture or production of a like article in India is not necessary. As observed by this Court in Thermax Private Limited Vs.Collector of Customs, Bombay [(1992) 4 SCC 440 at page 452-....
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.... duty imposed under this Act or under any other law for the time being in force. 14. There are different types of customs duty levied under different acts or rules. Some of them are; (a) a duty of customs chargeable under Section 12 of the Customs Act, 1962; (b) the duty in question, namely, under Section 3 (1) of the Customs Tariff Act; (c) additional duty levied on raw-materials, components and ingredients under Section 3 (3) of the Customs Tariff Act; and (d) duty chargeable under Section 9A of the Customs Tariff Act, 1975. Customs Act 1962 and the Customs Tariff Act, 1975 are two separate independent statutes. Merely because the incidence of tax under Section 3 of the Customs Tariff Act, 1975 arises on the import of the articles into India it does not necessarily mean that the Customs Tariff Act cannot provide for the charging of a duty which is independent of the customs duty leviable under the Customs Act. 15. The Customs Tariff Act, 1975 was preceded by the Indian Tariff Act, 1934. Section 2 A of the Tariff Act, 1934 provided for levy of countervailing duty. This section stipulated that any article which was imported into India shall be liable to customs duty equal to the ....
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.... words, the scheme embodied in Section 12 is amplified by what is provided in Section 3(1). The customs duty charged under Section 12 is extended by an additional duty confined to imported articles in the measure set forth in Section 3(1). Thus, the additional duty which is mentioned in Section 3 (1) of the Tariff Act is not in the nature of the countervailing duty. At page 628 it held that We are unable to accept the argument of the appellants that Section 3(1) of the Tariff Act is an independent, charging section or that, the additional duty which it speaks of is not a duty of customs but is a countervailing duty. After referring to the explanation to Section 3 (1) the Bench at page 630 held that These provisions leave no doubt that the duty referred to in Section 3(1) of the Tariff Act does not bear any nexus with the nature and quality of the goods imported into India. On this aspect the Court then concluded by observing at page 630 that For these reasons, we must reject the argument of Mr. Sorabjee and of the other learned counsel for the appellants that Section 3(1) of the Tariff Act is not attracted because, the damaged articles, which are in the nature of brass scrap, are o....
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.... Works case to the extent it takes a contrary view, does not appear to lay down the correct law. Sh. Vaidyanathan contended that this Court should be reluctant to reconsider a judgment which has held the field for a long time, but in our opinion public interest requires that law be correctly interpreted more so in a taxing statute where the ultimate burden may fall on the common man. We hasten to add that we are not over-ruling the Khandelwal Metal & Engineering Works case in its entirety because the Court also held in that case that brass scrap was in any case an item which was manufactured and, therefore, excise duty was leviable. We have not examined, in the present cases, whether brass scrap can or cannot be regarded as a manufactured item for that question does not arise in the present cases." Thus, in the aforesaid decision of Hyderabad Industries Ltd. (supra), the Hon'ble Supreme Court has held that decision the case of Khandelwal Metal & Engineering Works (supra) goes to the effect that additional duty of customs is leviable merely on the import of the article even if it is not manufactured or produced in India, does not appear to be correct inasmuch as the said conclu....