TMI Blog2016 (8) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... be reconsidered. This will in turn determine if CVD can be levied on the cut tyre pieces imported by the Petitioner - petition placed before the Hon'ble Chief Justice. - W.P. (C) 1268/2015 & CM APPL. 2251/2015 - - - Dated:- 8-8-2016 - S. Muralidhar And Najmi Waziri, JJ. For the Petitioner : Mr. V. Lakshmikumaran, Ms. Charunya Lakshmi Kumara, Mr. Abhishek Anand, Mr. Aditya Bhattacharya, Mr. Anandh K. and Mr. Yogendra Aldak, Advocates For the Respondents : Mr. Anurag Ahluwalia, CGSC with Ms. Srishti Banerjee and Mr. Vaibhav Verma, Advocates ORDER 1. This petition, under Article 226 of the Constitution of India, by Tinna Rubber Infrastructure Limited questions the validity of a clarification dated 2nd January 2015 issued by the Tax Research Unit ( TRU ) of the Department of Revenue, Ministry of Finance to the effect that there was no exemption from payment of excise duty in respect of tyre scrap cut into two to three pieces produced from used and old tyres and that, therefore, the said goods are chargeable to additional customs duty or countervailing duty ( CVD ) under Section 3(1) of the Customs Tariff Act, 1975 (CTA). 2. This is the second round of litig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is stated that this ensures that the used tyres are not put to use again with minor or major reconditioning. It is also pointed out by the Petitioner that the tyres are cut into two-three pieces for ease of accommodation in the shipping vessels. The cost of transportation of tyre scrap with one cut is much higher than transportation of tyres cut into two or three pieces. 5. Referring to the CTA and the Customs Tariff Heading, it is pointed out by Mr. V. Lakshmikumaran, learned counsel for the Petitioner that it is importing the aforementioned tyres cut into two-three pieces, classifying them under the Customs Tariff Heading 4004, according to which the Petitioner has to pay 12% CVD. It is pointed out that CVD is payable only if identical goods manufactured domestically suffers excise duty. According to the Petitioner, the cutting of old tyres into two-three pieces does not amount to manufacture and, therefore, the question of such goods being subject to CVD when imported does not arise. He placed considerable reliance on the decision of the Division Bench of this Court in Modi Rubber Limited, Modi Nagar, U.P. v. Union of India 1987 (29) ELT 502 (Del). He submitted that it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s into two or three pieces amounts to manufacture was to ask if the processes to which the old tyre was subjected to resulted in transformation of the old tyre into a new product having a different identity, characteristics and use. He pointed out that the old tyre ceased to remain as such when it was subjected to the process of cutting which resulted in two or three pieces of tyres which had a distinct identity and were marketable as such. 9. Mr. Ahluwalia, pointed out Tariff Entry 4004 acknowledged that all waste, pairings and scrap of rubber including powder and granules obtained therefrom were distinct commodities obtained by subjecting old tyres to the process of cutting and, therefore, the process did amount to manufacture. He referred to the decisions in Commissioner of Central Excise, Bangalore-II v. Osnar Chemical Pvt. Ltd. 2012 (276) ELT 162 (SC); CIPLA Ltd. v. Commissioner of Central Excise, Bangalore 2008 (225) ELT 403 (S.C.) and Union of India v. Delhi Cloth General Mills Co. Ltd. 1977 ELT (J 199). 10. The central question that arises in this petition is whether CVD at 12% can be levied on the import of tyre scrap cut into two or three pieces . For the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing. If the raw material of rubber compound has undergone some change in the process of manufacture so as to turn into waste or scrap, it cannot be equated with any finished product. There is a change but every change in the raw material is not manufacture. There is no transformation in case of waste/scrap of a new and different article. No one has brought into, existence a new substance having a distinctive name, character or use. xxxx xxxx xxxx xxxx xxxx xxxx 10. Rule 49 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules), provides for duty chargeable only on removal of the goods from the factory premises or from an approved place of storage. Payment of duty in respect of excisable goods is made when they are about to be issued out of the place or premises specified. Under second proviso to Rule 49, the proper officer may not demand duty due on any goods claimed by the manufacturer as unfit for consumption or marketing. The excisable goods lying in the licensed premises and found unfit for consumption or for marketing can be destroyed without payment of duty leviable thereon subject to the prior permission and fulfilment of such conditions as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or scrap was generated by cutting and punching the defective tyres. As far as the present case is concerned, the starting point would be the old tyres. They are subject to the process of cutting or splitting or paring and that results in two or three pieces of cut tyre. When the issue is examined from the point of view of a recycling Industry it is conceivable that an entire unit could be set up for the purposes of converting old and used tyres into pieces of cut tyres which could no longer be used in automobiles but which are marketable and are, in fact, sold for being used in road laying, etc. The question that would then arise is whether in such an instance it could be said that there is no 'manufacture'. Although the decision in Modi Rubber Limited v. Union of India (supra) does not directly address the above issue, it appears that in para 11 of the decision the Court was conscious of waste matter being put to use by recycling or other use. The Court observed but there is no event of manufacture of waste within the meaning of the Act. 14. This Court is of the view that the entire aspect of recycling of used tyres to generate cut pieces of tyres, which are marketab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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