TMI Blog2014 (9) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... be correct inasmuch as the measure for levy of additional duty is the quantum of excise duty leviable on a similar article under the Excise Act. Applying the ratio of the law laid down by the Hon'ble Supreme Court in the case of Hyderabad Industries Ltd. Versus Union of India, [1999 (5) TMI 29 - SUPREME COURT OF INDIA], referred to hereinabove to the facts of the case on hand, and with respect to the additional duty sought to be levied under heading No.89.08 at the rate of 15% on the vessels and other floating structures for breaking up which are not manufactured in India and therefore, no excise duty is leviable on "vessels and other floating structures for breaking up". No additional duty can be levied under section 3(1) of the Tariff Act on the "vessels and other floating structures for breaking up". Under the circumstances, aforesaid heading 89.08 which provides levy of additional duty at 15% on the vessels and other floating structures for breaking up would be contrary to and/or ultra vires to section 3(1) of the Tariff Act and therefore, we are of the opinion that the vessels and other floating structures imported into India for breaking up, additional duty under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act ). That the additional duty as per section 3(1) of the Act is being charged at the rates prescribed under heading No.89.08 of the Schedule to the Act, 1985 which covers vessels and other floating structures for breaking up. That when the petitioners, thus, import many ships or vessel in India for breaking up, the respondents levy and recover additional duty as per the rate prescribed against heading No.89.08 of the Tariff. Hence, the petitioners have preferred all these Special Civil Applications for striking down heading No.89.08 of the Act as unconstitutional and ultra vires to the Constitution of India as well as section 3 of the Customs Tariff Act, 1985 and consequently to issue writ of prohibition against the respondents and restraining the respondents 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. 4.00. Mr.Paresh Dave, learned advocate appearing on behalf of the petitioners has vehemently submitted that as per section 3 of the Act, 1985, in addition to the Basic Duty of Customs, an importer is also liable to pay a duty (additional duty) equal to the exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... List of Seventh Schedule to the Constitution as well as section 3 of the Customs Tariff Act, 1985. 4.02. Mr.Paresh Dave, learned advocate appearing on behalf of the petitioners has further submitted that as such it is not the case on behalf of the revenue - respondents that the vessels and other floating structures for breaking up can be said to be manufacture . It is further submitted that it is not the case of the respondents that on manufacture of vessels and other floating structures or like article if produced or manufactured in India, any excise duty is levied. It is further submitted that as such if plyable vessels and other floating structures are imported, the same are not subjected to any additional duty under any of the headings under Chapter 89 of the Tariff Act, 1985. It is submitted that merely because vessels or other floating structures are imported for the purpose of breaking up, additional duty is being charged / levied under heading 89.08 of Chapter 89 of the Tariff Act, 1985. It is submitted that therefore, as such there is no production and/or manufacture of vessels and other floating structures for breaking up and therefore, no excise duty is being payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondents - revenue. She has heavily relied upon the Affidavit-in-reply filed on behalf of the respondent No.3. It is submitted that under heading No.89.08, import of vessels and other floating structures for breaking up is subjected to additional duty at the rate of 15%. It is submitted that as such Chapter heading of the Central Excise Tariff is required to be referred to only for the purpose to ascertain the rate of duty leviable as additional excise duty on the ships imported by the petitioners for breaking up. It is submitted that, therefore, the petitioners challenge against the validity of Central Excise Duty is without locus and is misconceived. It is further submitted by Ms.Yajnik, learned advocate appearing on behalf of the respondents that heading 89.08 cannot be said to be ultra vires to Entry No.84 of the Union List of the Seventh Schedule to the Constitution of India and/or ultra vires Articles 14 and 19 of the Constitution of India. 5.01. It is submitted that as such the duty leviable on the ships for breaking up imported by the petitioners is Customs Duty. It is submitted that corresponding Central Excise Chapter Heading of the Central Excise Tariff is requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Act, 1975, which reads as under : Section 3. Levy of additional duty equal to excise duty.-- (1) Any article which is imported into India, in addition, be liable to a duty (hereinafter 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 and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article. Explanation : In this section, the expression the excise duty for the time being leviable on a like article if produced or manufactured in India means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India, or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where such duty is leviable at different rates, the highest duty. 6.02. Section 3 of the Act provides as to how the value of the imported goods should be calculated. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eering Works (supra) has been referred to the Larger Bench, decision of Khandelwal Metal Engineering Works (supra) would be applicable as the said judgement stands. However, it is required to be noted that the decision of the Hon'ble Supreme Court in the case of Khandelwal Metal Engineering Works (supra) upon which the department has relied upon, has been partly overruled by the Hon'ble Supreme Court in the case of Hyderabad Industries Ltd. Versus Union of India, reported in 1999 (108) ELT 321, to the extent 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. Therefore, as such the controversy raised in the present Special Civil Application 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. 6.05. Identical question came to be considered by the Hon'ble Supreme Court in the case Hyderabad Industries Ltd. Versus Union of India, reported in 1999 (108) ELT 321 and in the said decision the Hon'ble Supreme Court has considered in detail the levy of additional customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Customs Tariff Act specifically mandates that the CVD will be equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. In other words, we have to forget that the goods are imported, imagine that the importer had manufactured the goods in India and determine the amount of excise duty that he would have been called upon to pay in that event. To our mind the genesis of Section 3(1) of Customs Tariff Act has been brought out in the aforesaid observations of this Court, namely, for the purpose of saying what amount, if any, of additional duty is leviable under Section 3(1) of the Customs Tariff Act, it has to be imagined that the articles imported had been manufactured or produced in India and then to see what amount of excise duty was leviable thereon. 12. Section 12 of the Customs Act levies duty on goods imported into India at such rates as may be specified in the Customs Tariff Act, 1975. When we turn to Customs Tariff Act 1975, it is Section 2 which states that the rates at which duties of customs are to be levied under Customs Act 1962 are those which are specified in the First and Second Schedules of the Customs Tari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the time being leviable on a like article if produced or manufactured in India. In the notes to clauses to the Customs Tariff Bill 1975 with regard to clause 3 it was stated that Clause 3 provides for the levy of additional duty on an imported article to counter-balance the excise duty leviable on the like article made indigenously, or on the indigenous raw materials, components or ingredients which go into the making of the like indigenous article. This provision corresponds to Section 2-A of the existing Act, and is necessary to safeguard the interests of the manufacturers in India. Apart from the plain language of the Customs Tariff Act, 1975 even the notes to clauses show the legislative intent of providing for a charging section in the Tariff Act 1975 for enabling the levy of additional duty to be equal to the amount of excise duty leviable on a like article if produced or manufactured in India was with a view to safeguard the interests of the manufacturers in India. Even though the impost under Section 3 is not called a countervailing duty there can be little doubt that this levy under Section 3 is with a view to levy additional duty on an imported article so as to counter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope of that since, such articles are not and cannot be produced or manufactured. The basis of this conclusion, therefore, was that additional duty was a customs duty, Section 12 of the Customs Act being the charging section, which was leviable on the import of goods into India and it had no nexus with the nature and quality of goods so imported. Another reason which was given by the Bench while upholding the levy was that the brass scrap which was imported was a bye-product and was, therefore, in any case a manufactured product. 17. The decision in Khandewal 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 Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the premise that section 12 of the Customs Act, and not section 3(1) of the Tariff Act, is the charging section. It is further observed and held by the Hon'ble Supreme Court that on a correct interpretation of the relevant provisions of the two Acts, additional duty which is leviable under section 3(1) of the Tariff Act is independent of the Customs Duty which is leviable under section 12 of the Customs Act. It is further observed and held that the observations in Khandelwal Metal Engineering Works (supra) seems to suggest that even no process of manufacture or production has taken place the imported articles can still be subjected to the levy of additional duty, does not appear to be correct inasmuch as the measure for levy of additional duty is the quantum of excise duty leviable on a similar article under the Excise Act. It is further observed that duty under the Excise Act can be levied, as has been held earlier, if the article has come into existence as a result of production or manufacture. It is further observed that in other words when articles which are not produced or manufactured cannot be subjected to levy of excise duty, then on the import of like artic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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