TMI Blog2008 (4) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... ction imports certain goods for use as raw material in the manufacture of textile goods. It submitted Bills of Entry for clearance of Dystar Indigo VAT 40 per cent SOL/Indigo Powder 90 per cent Wettable falling under Tariff Heading 32041559. Additional duty (CVD) was charged on the assessable value of the goods in terms of Section 3 of the Customs Tariff Act, 1975. Feeling aggrieved and contending that the goods were not liable for excise duty under Notification No. 4/2006-C.E., dated 1-3-2006, the respondent preferred appeals. By the impugned order, upholding the contention of the respondent, assessment was modified deleting the additional duty (CVD), and the appeals were allowed. 3. Section 3(1) of the Customs Tariff Act, 1975 provides for levy of additional duty equal to excise duty. If the import is found to be covered under the said Notification dated 1-3-2006, the respondent would not be liable for any additional duty as the goods in question was chargeable to 'nil' rate of excise duty. Having regard to its significance, the provision i.e. Section 3(1) may be quoted as under :- "3. Levy of additional duty equal to excise duty. - (1) Any article which is imported in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .................... Table S.No. Chapter or heading or sub-heading or tariff item of the first schedule Description of excisable goods Rate Condition No. (1) (2) (3) (4) (5) 67 3204 or 3809 Finishing agents, dye carriers to accelerate the dyeing or fixing of dye-stuffs, printing paste, and other products and preparations of any kind used in the same factory for the manufacture of textiles and textile articles Nil - " 6. The case of the Revenue is that the exemption i.e. the 'nil' rate of duty provided in the notification is subject to the condition that the goods are used in the same factory which means that the goods must be used in the same factory in which they were manufactured. Where the goods are manufactured but sold to some other factory or person, for whatever purpose, excise duty would be leviable. Similarly, where the goods are not manufactured in the factory where they are used, the benefit of the Notification cannot be claimed. The case of the respondent is that if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion involved in Thermax Pvt. Ltd. was as to applicability of Rule 192 occurring in Chapter X of the Central Excise Rules, 1944 relating to con cession. Dealing with the question the Apex Court observed as under :- "11. It will at once be seen that there is nothing in the scheme of the rule which makes it inapplicable to an importer of goods. The assessee here has imported the goods and is selling them for use in a factory, a use which qualifies for the concession under the S. 8 Notifications. The types of use specified in the concessions notified could be of any kind and, even in the notifications under our consideration, they are many and varied. In respect of items falling under S. Nos. 3 and 8, in particular, the actual users may be private individuals or authorities and need not necessarily be manufacturers using the goods in question is an 'industrial process' in a narrow sense of that term. For instance, any computer room, hospital or factory purchasing parts of refrigerating and air-conditioning appliances and machinery for use in the computer room, hospital or factory would be entitled to claim the concession by following the prescribed procedure. Only, for claimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation to Section 3 has two limbs. The first limb clarifies that the duty chargeable under Sub-section (1) would be the Excise duty for the time being leviable on a like article 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 of (sic) manufactured in India. 11. The words ' 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue, their Lordships held as under :- " The entry nowhere uses the word 'generated' or 'imported'. The condition that only that scrap would be entitled to exemption which has been generated in the factory of production is, therefore, unwarranted and unsustainable. The word 'within' occurs after the word, 'used'. The Assessing Authority as well as the Tribunal have arrived at the finding that only that scrap waste of copper would be entitled to the exemption which had been generated in the same factory because of the word, 'within' used in the Heading 74.04. According to them, the word, 'within' pre-supposes that the copper waste arid scrap was generated in the same factory. We are unable to read the entry in the manner as suggested by the Revenue." The Court recalled the dictum laid down in Thermax Pvt. Ltd., approved in Hyderabad Industries Ltd., that "one has to forget that the goods are imported, imagine that the importer had manufactured the goods in India, determine the amount of Excise duty that he would have been called upon to pay in that event". 10. In the case of Plastic Processors (supra), while considering the validity of a circular of the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apart from being sold in the market. It is to be kept in mind that actual production of a like goods is not essential, and if that be so, the Revenue cannot insist that notification can be applied only when the goods (imported goods) were manufactured in India. In the case of Lohia Sheet Products, the words were "used within the factory of production". In the present case, the words are "used in the same factory". In our opinion, the words "used in the same factory" simply mean that the goods in question should not be used in any other factory i.e. anywhere else other than the factory for the purpose of manufacture of textiles and textile articles. The case of the respondent is that it has only one factory of production. It is not in dispute that the goods in question are 'finishing agents' and they otherwise conform to the description in Column 3 of the Table appended to the notification - extracted above. The conclusion is irresistible that the 'nil' rate of duty was chargeable and, therefore, the respondent was not liable to pay any additional/countervailing duty on the import of goods under Section 3 of the Customs Tariff Act. 13. The order in Hari Chand Shri Gopal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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