TMI Blog1981 (8) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... nexed as Ex. `I' to the petition, are as follows : The Petitioner No. 1 is a Company incorporated under the Companies Act and has its registered office at Calcutta, while the petitioners Nos. 2 and 3 are the President and Secretary respectively of the Company. The Company manufactures at its factory at Bhosari, Pune, nylon/ Yarn and Polyester yarn. For the purpose of manufacture of nylon yarn, the petitioners imported between May 23, 1978 and September, 1978 polyamide chips of spinning grade. The dispute involved in this petition is whether the petitioners are liable to pay countervailing duty in respect of the polyamide chips. 3. A large correspondence took place between the petitioners and the Officers of the Central Excise and ultimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have not chosen to file any return opposing the claim of the petitioners. Shri Taraporewala urged that the proposed recovery of countervailing duty is totally unsupportable in view of the exemption notification dated March 1, 1973 and modified later on September 8, 1973 issued by the Central Government in exercise of the power conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944. The submission of the learned Counsel deserves acceptance. The respondents proposed to levy the countervailing duty in exercise of the powers under Section 3 of the Customs Tariff Act, 1975. It is necessary to quote Section 3(1) along with the Explanation to appreciate the submission of the learned Counsel : "3. Levy of additional duty equal to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to excise duty if manufactured in India. Shri Taraporewala is right in relying upon the exemption notification which specifically provides that the polyamide chips, if used in manufacture of nylon yarn and if such use is only in the factory of production, then manufacture of such polyamide chips is exempted from the payment of excise duty. It is clear that the polyamide chips are totally exempted from the duty of excise leviable thereon by the notification. Shri Taraporewala, therefore, is right in his submission that as the polyamide chips are exempted from the levy of the excise duty, it is not permissible to levy countervailing duty with reference to Section 3 of the Customs Tariff Act, 1975. 6. Shri Govilkar, the learned Counsel app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons only deserve to be stated to be rejected. The learned Counsel then argued that the exemption notification on which reliance is placed by the petitioners was issued under the provisions of the Central Excise Rules, 1944 and that cannot be used for claiming the advantage under the provisions of the Customs Tariff Act. The submission is totally devoid of merits. Section 3 enables the department to levy countervailing duty provided the excise duty is leviable on article if manufactured in India. The plain reading of Section 3 makes it clear that countervailing duty under Section 3 cannot be levied on an article imported into India if such article manufactured in India is exempted from the payment of excise duty. The provisions of Section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice dated March 15, 1979 annexed as Ex. I to the Petition and based on letter Ex. G from the Assistant Collector, Central Excise, Pune is quashed and the respondents are restrained from proceeding to levy countervailing duty in respect of import of polyamide chips for the period commencing from May 23, 1978 to September 4, 1978. The petitioners have furnished Bank Guarantee and executed a bond in respect of the amount of countervailing duty mentioned in Ex. I. That Bank Guarantee and bond stand discharged. The Petitioners are at liberty to adopt proper proceedings to recover the alleged excess Customs duty paid on the said import. That question in not considered in this Petition. The rule is made absolute accordingly. In the circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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