TMI Blog2003 (5) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The ship-breaking industry in India is labour intensive and contributes a substantial amount of iron and steel scrap for the Iron and Steel Industry. It is stated that the ship-breaking industry in India is carried on without the aid of power (electricity) and is largely a manual operation involving semi-skilled and unskilled labourers. It is further stated that the ship-breaking industry is instrumental in supplying a substantial part of the raw material required by mini-steel plants which have set up induction furnaces. Some of the bigger steel plants also utilise the scrap generated by the ship-breaking industry. The steel produced by the ship-breaking industry is utilised for re-rolling by mini-steel plants. It is claimed that on account of the ship-breaking industry, there is a substantial saving of electricity utilisation. 3. The Union Finance Minister in his Budget Speech for the financial year 1993-1994, delivered on 27-2-1993, stated thus : 91. The ship-breaking industry is employment intensive and an important source of raw materials for the secondary sector of our steel industry. In order to encourage the growth of this industry, I propose to prescribe a lower me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above order of the fourth respondent, preferred Writ Petitions No. 38005 and 38006 of 1993. Further, the additional duty as nil claimed by the appellant with regard to import of vessels M.V. BOUVET/Ex RANA under Bill of Entry No. 6, dated 2-7-1993 and M.V. ARGOS under Bill of Entry No. 001741, dated 8-11-1993 was also rejected by the fourth respondent vide Assessment Order dated 14-7-1993 and Assessment Order dated 13-11-1993 respectively, and those orders were also assailed by the appellant in Writ Petition No. 26685 of 1993 and Writ Petition No. 43567 of 1993 respectively. In all these writ petitions, inter alia, it was contended by the appellants that on all goods imported into the country, duty of customs is levied under the Act; the procedure for calculation of duty and other connected matters is specified in the Customs Act, 1962; the vessels imported by the appellant are classifiable under Chapter 89.08.00 of the Schedule to the Act which reads as follows : DESCRIPTION RATE OF DUTY Vessels and other floating structures for breaking up. 40% + Rs. 1,400/- per light displacement tonnage Under Notification No. 74/93-Cus., dated 28-2-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a vessel which is sea-worthy and the import of a vessel for the purpose of breaking up and both of them cannot be equated for the purpose of levying additional duty. Shri Naganand would also contend that the Finance Minister in his Budget Speech for the financial year 1993-1994 spoke about merged duty of Customs at 5% ad valorem to be imposed on vessels used by ship-breaking industry. According to Shri Naganand, the expression merged duty denotes the merger of the two duties leviable on the product imported under Sections 2 and 3 of the Customs Tariff Act. Shri Naganand would highlight that though two interpretations are possible from the relevant provisions of the Act, the Court should adopt the one which is beneficial to tax-payers and not to the Revenue. Shri Naganand would also contend that the State cannot practice an invidious discrimination in the matter of levy of taxes and the ground of invidious discrimination urged in the writ petition is not at all dealt with by the learned Single Judge. 9. Learned Senior Standing Counsel for Government of India, on the other hand, contended that an exemption notification granting exemption under Rule 8(2) of the Central Excises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here no operation is carried on in or in relation to the manufacture of the said goods with the aid of power. The relevant portion of the Notification No. 167/86-C.E., dated 1-3-1986 reads as follows : In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods of the description specified in column (2) of the Table hereto annexed and falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from the whole of the duty of excise leviable thereon which is specified in the said Schedule : Provided that no process in or in relation to the manufacture of the said goods is ordinarily carried on with the aid of power : Provided further that the exemption contained in this notification shall not apply to sandalwood oil. The Table : Sl.No. Description of goods (1) (2) 1. All goods falling within Chapters 14, 71, 89 and 92. 2. All goods falling under Heading Nos. 30.01, 32.03, 33.01, 33.03, 36.02, 44.01, 44.02, 44.03, 44.04, 44.05, 46.01, 51.05, 62.92, 69.01, 69.02, 69.03, 69.04, 69.05, 83.01, 83.15, 95.01, 95.01, 95.02, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... built in India is not a relevant consideration to determine the duty on ships imported for the purpose of breaking. 14. Learned Single Judge has held that the actual product imported is a ship and, therefore, whether the product got from it is exempted from Central Excise or not is of no consequence. In holding so, learned Single Judge has placed reliance on the decision of the Supreme Court in Thermax Pvt. Ltd. v. Collector of Customs - 1992 (61) E.L.T. 352 (S.C.) and Hyderabad Industries Ltd. v. UOI - 1999 (108) E.L.T. 321 (S.C.) 15. The vessels imported by the appellant are not seaworthy and they are admittedly for the purpose of breaking. There is a separate entry for this purpose both under the Customs Tariff Act and Central Tariff Act. The product actually imported is the material that can be retrieved from the ship; the structure by itself is of no value and the appellant subjects the vessel to a process to retrieve the material from the structure without the use of power. 16. It is the contention of Shri Naganand that in deciding the claim of the appellant for exemption from duty, the Budget Speech of the Finance Minister for the financial year 1993-1994 in Parliament ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also known as purposive construction or mischief rule , enables consideration of four matters in construing an Act : (i) what was the law before the making of the Act; (ii) what was the mischief or defect for which the law did not provide; (iii) what is the remedy that the Act has provided, and (iv) what is the reason of the remedy. The rule then directs that the Courts must adopt that construction which shall suppress the mischief and advance the remedy. K. LLEWELLYN, in his article, Remarks on the Theory of Appellate Decision and the Rules or Canons About How Statutes Are to be Construed , speaking on the necessity of legislative purpose to legislative interpretation, has said, If a statute is to make sense, it must be read in the light of some assumed purpose. A statute merely declaring a rule, with no purpose or objective, is nonsense . HART and SACKS have inquired whether it is not true that, the meaning of a statute is never plain unless it fits with some intelligible purpose . Although the above statements of LLEWELLYN, HART and SACKS go beyond tautology to self-contradiction and may not be true, because, a statute may have no discoverable purpose, what they highl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erce by indiscriminate exercise of taxing powers by the different provincial Legislatures founded on the theory of territorial nexus, S.R. Das, C.J., proceeded to say : It was to cure this mischief of multiple taxation and to preserve the free flow of inter-State trade or commerce in the Union of India regarded as one economic unit without any provincial barrier that the Constitution-makers adopted Article 286 in the Constitution . The rule was again applied by the Supreme Court in similar context while construing the changes brought about by the Constitution 46th Amendment Act in Goodyear India Ltd. v. State of Haryana - AIR 1990 SC 781. 19. As per the rule of purposive construction , the Parliament is presumed to intend that in construing an Act the Court, by advancing the remedy which is indicated by the words of the Act for the mischief being dealt with, and the implications arising from those words, should aim to further every aspect of the legislative purpose, construction which promotes the remedy Legislature has provided to cure a particular mischief. In Section 304 of Statutory Interpretation by FRANCIS BENNION dealing with nature of purposive construction, it is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine from a consideration of the provisions of the Act read as a whole precisely what the mischief was that it was the purpose of the Act to remedy; secondly, it was apparent that the draftsman and Parliament had by inadvertence overlooked, and so omitted to deal with, an eventuality that required to be dealt with if the purpose of the Act was to be achieved; and thirdly, it was possible to state with certainty what were the additional words that would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law. Unless this third condition is fulfilled any attempt by a Court of justice to repair the omission in the Act cannot be justified as an exercise of its jurisdiction to determine what is the meaning of a written law which Parliament has passed Jones v. Wortham Park Settled Estates, (1980) AC 74. 20. The Supreme Court in Administrator, Municipal Corporation, Bilaspur v. Dattatraya Dahankar Anr. - AIR 1992 SC 1846, while disapproving the mechanical approach of construction, in para 4, held : It seems to us that the High Court had a mechanical approach to construction. The mechanical appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Act and therefore, there was a liability to pay the duty of excise. The Government of India and the Ministry of Finance also informed the appellants vide Ministry of Finance s letter dated 17-8-1997 that the process by which the asbestos fibre was obtained was a process of manufacture and the said item correctly fell within Tariff Item 22(F) of the First Schedule to the Excise Act. The consequence of this was that the demand under Section 3(1) of the said Act was raised because the imported item, namely, asbestos fibre was regarded as an article which was liable to duty of excise under the Excise Act. The appellants then filed various writ petitions before the Delhi High Court. 25. The main contention of the appellants was that the asbestos fibre which was imported had not been manufactured or produced and, under Section 3(1) of the Customs Tariff Act, additional duty of customs could be levied only if the article which is imported is one which is produced and manufactured in India and is liable to payment of excise duty. In other words, the submission was that asbestos fibre had not undergone any manufacturing or other process and, therefore, no additional duty could be char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 3 is with a view to levy additional duty on an imported article so as to counterbalance the excise duty leviable on the like article indigenously made. In other words Section 3 of the Customs Tariff Act has been enacted to provide for a level playing field to the present or future manufacturers of the like articles in India. 17. The decision in Khandelwal Metal Engineering Works case 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 conclusion is based on the premise that Section 12 of the Customs Act, and not Section 3(1) of the Tariff Act, is the charging section. As we have already observed on a correct interpretation of the relevant provisions of the two Acts there can be no manner of doubt that additional duty which is levied under Section 3(1) of the Tariff Act is independent of the customs duty which is levied under Section 12 of the Customs Act. Secondly, it has been held by the Three Judges Bench in this case that excise duty is leviable if the article has undergone production or manufacture. The observation in Khandelwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereon at the appropriate rate under the relevant entry of the Customs Tariff, but, claimed exemption from the additional duty of customs leviable under Section 3(1) of the Customs Tariff Act, 1975. The assessee cleared the imported goods after paying the customs duty as well as the additional duty but, on second thoughts, decided that it should have claimed a concession in respect of the additional duty on the strength of Notification No. 63/85 and 93/76 issued under Section 8 of the Act. It, therefore, made applications for refund of the additional duty, but, these applications were rejected by the Assistant Collector of Customs by his orders dated 25-2-1985 and 30-9-1985. When those orders were assailed before the Collector of Customs (Appeals), the Collector allowed the appeal from the order dated 25-2-1985, but his successor-in-office, who dealt with the appeal from the later order of 30-9-1985, took a different view and dismissed the assessee s appeal. The assessee as well as the Department preferred appeals from the respective order which went against them. The Tribunal accepted the Department s appeal, but dismissed the assessee s appeal. Hence, the assessee carried the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the importer will be entitled to say that the CVD should only be the amount of concessional duty and, if he has paid more, will be entitled to ask for a refund. In our opinion, the Tribunal was in error in holding that the assessees could not get a refund because the procedure of Chapter X of the rules is inapplicable to importers as such. 28. In Collector of Central Excise v. J.K. Synthetics s case (supra), the respondents therein were the manufacturers of 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 claim of the respondents was rejected by the Assistant Collector and, in appeal, by the Collector. The Tribunal, in further appeal, upheld the respondents claim. When the legality of the order of the Tribunal was assailed before the Apex Court, the Apex Court held, in Para 5, thus : The question then is in regard to the availability of the said excise notification for the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
