1999 JTR(SC) 1215
2000 120 ELT 54 ; 2000 10 SCC 393 ; 2000 KHC 1640
SUPREME COURT OF INDIA
D.P.Mohapatra : S.P.Bharucha : V.N.Khare
Collector Of Central Excise, Jaipur
Versus
J.K.Synthetics
Case No. : 2256 of 1993
Date of Decision : 10/14/99
Additional duty of customs under Section 3 of the Customs Tariff Act, 1975, is equal to the excise duty leviable on a like article produced in India; therefore, if an article is exempt from excise duty, no additional duty of customs is leviable.
Act
Referred
:CENTRAL EXCISE ACT
: S.5(a)
CENTRAL EXCISE RULES: R.8
CUSTOMS TARIFF ACT: S.3
(A) Customs Tariff Act, 1975 - Section 3 - Central Excise Rules, 1944 - Rule 8 and Chapter X - Additional duty of customs - Exemption from excise duty - Section 3 provides that an article imported into India is liable to an additional duty equal to the excise duty for the time being leviable on a like article if produced or manufactured in India - Where a notification exempts an article from the whole of the excise duty leviable thereon, there is no excise duty leviable, and consequently, no additional duty of customs can be levied under the plain words of Section 3 of the Customs Tariff Act. (Para 5)
Facts of the case:
The respondents, manufacturers of polyester chips, polyester staple fibre and tow, imported mono-ethylene glycol. They claimed exemption from additional duty of customs based on a notification issued under Rule 8 of the Central Excise Rules, 1944, which exempted the imported material from excise duty if used in the manufacture of specific polyester products and the procedure in Chapter X of the Central Excise Rules, 1944 was followed. The Tribunal had previously upheld the claim, finding substantial compliance with the prescribed procedure.
Findings of Court:
The court found that since the respondents satisfied the conditions of the excise notification and there was substantial compliance with the procedure under Chapter X of the Central Excise Rules, the exemption from excise duty applies.
Issues: Whether an exemption notification granted under the Central Excise Rules, 1944, which exempts an article from excise duty, also exempts the imported version of that article from the additional duty of customs under Section 3 of the Customs Tariff Act, 1975.
Ratio Decidendi: Under Section 3 of the Customs Tariff Act, 1975, the additional duty of customs is equal to the excise duty leviable on a like article produced in India. If the excise duty is exempted by notification, the amount of excise duty leviable is nil, and therefore, no additional duty of customs can be charged.
Result: Appeal dismissed.
Facts of the case:
The respondents, manufacturers of polyester chips, polyester staple fibre and tow, imported mono-ethylene glycol. They claimed exemption from additional duty of customs based on a notification issued under Rule 8 of the Central Excise Rules, 1944, which exempted the imported material from excise duty if used in the manufacture of specific polyester products and the procedure in Chapter X of the Central Excise Rules, 1944 was followed. The Tribunal had previously upheld the claim, finding substantial compliance with the prescribed procedure.
Findings of Court:
The court found that since the respondents satisfied the conditions of the excise notification and there was substantial compliance with the procedure under Chapter X of the Central Excise Rules, the exemption from excise duty applies.
Issues: Whether an exemption notification granted under the Central Excise Rules, 1944, which exempts an article from excise duty, also exempts the imported version of that article from the additional duty of customs under Section 3 of the Customs Tariff Act, 1975.
Ratio Decidendi: Under Section 3 of the Customs Tariff Act, 1975, the additional duty of customs is equal to the excise duty leviable on a like article produced in India. If the excise duty is exempted by notification, the amount of excise duty leviable is nil, and therefore, no additional duty of customs can be charged.
Result: Appeal dismissed.
Exemption - Used to support the position that if excise duty is exempt, additional customs duty under Section 3 of the Customs Tariff Act is not applicable.
Exemption - Used to support the position that if excise duty is exempt, additional customs duty under Section 3 of the Customs Tariff Act is not applicable.
Applicability - Distinguished because it did not consider the specific terms of Section 3 of the Customs Tariff Act, 1975.
(1) THE Customs Authorities are in appeal from a judgment rendered by the Customs, Excise and Gold (Control) Appellate Tribunal.
(2) THE respondents manufacture polyester chips, polyester staple fibre and tow from mono-ethylene glycol (MEG). They imported the same and claimed that they were not liable to pay an additional duty of customs thereon because MEG was exempt from the payment of excise duty by virtue of a notification dated 4-5-1987 issued under Rule 8 of the Central Excise Rules, 1944. The said notification provided that "MEG was exempt from the payment of the whole of the duty of excise leviable thereon which is specified in the said Schedule provided that such mono-ethylene glycol is used in the manufacture of polyester chips or polyester staple fibre and tow, including tops or polyester filament yam and the procedure set out in Chapter X of the Central Excise Rules, 1944 is followed". The claim was rejected by the Assistant Collector and, in appeal, by the Collector. The Tribunal, in further appeal, upheld the respondents claim.
(3) IT appears from the judgment of the Tribunal that the departmental representative appearing on behalf of the Customs Authorities submitted before it that the respondents could not claim the benefit of the said notification, but there is no discussion on this aspect. It was also urged on behalf of the Customs Authorities that, in any event, the respondents had not satisfied the condition of the said notification because they had failed to follow the procedure laid down in Chapter X of the Central Excise Rules. On this aspect there is a discussion in the order of the Tribunal and it has been held, based on facts, that there had been substantial compliance with the said procedure by the respondents.
(4) THE Tribunal having found on facts that there was substantial compliance with the procedure under Chapter X of the Central Excise Rules, it must be held that the respondents satisfied the condition of the said notification.
(5) THE question then is in regard to the availability of the said excise notification for the purposes of the additional duty of customs. Section 3 of the CUSTOMS TARIFF ACT , 1975 provides for the levy of the additional duty of customs. It says that an article which is imported into India would, in addition to duties of customs levied under the Customs Act, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. The said excise notification exempts MEG from the whole of the excise duty leviable thereon. There being, therefore, no excise duty leviable on MEG, there is no additional duty that MEG can be made liable to, having regard to the plain words of Section 3 of the CUSTOMS TARIFF ACT .
(6) THIS position has been adverted to by this Court in Students of Dattatraya Adhyapak Vidyalya v. State of Maharashtra and Hyderabad Industries Ltd. v. Union of India.
(7) REFERENCE was made by learned counsel for the Customs Authorities to the judgment of this Court in Union of India v. Modi Rubber Ltd. and the conclusion therein that the expression "duty of excise" in notifications under the Central Excise and Salt Act, 1944 applied only in respect of duty under that enactment. That judgment does not consider the terms of Section 3 of the CUSTOMS TARIFF ACT , 1975. The two judgments aforementioned specifically relate thereto.
(8) THE appeal is, accordingly, dismissed. No order as to costs.