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TMI Blog1999 (5) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997 taking the view that asbestos fibre as processed and graded had a distinct character differing from asbestos rock and the said Item was covered within Tariff Item 22(F) of the Excise Act and on the same there was a liability to pay the duty of excise. The Government of India and the Ministry of Finance also informed the appellants, namely, Hyderabad Asbestos Cement Products vide Ministry of Finance's letter, dated 17th August, 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 1st 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. 3.The appellants then filed various writ petitions before the High Court of Delhi. 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 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of the Union of India to the effect that the asbestos fibre imported by the appellant was exigible to additional duty regardless of the fact that it was not produced as a result of manu- facture and, therefore, not exigible to excise duty. In support of this contention reliance was placed on this Court's judgment in Khandelwal Metal & Engineering Works v. Union of India [1985 (20) E.L.T. 222 (S.C.) = (1985) 3 SCC 620]. After discussing the said judgment the Bench was of the view that the decision in the case of Khandelwal Metal & Engg. Works required consideration by a Larger Bench. It is pursuant to this direction that this Bench has been constituted. 7.Shri C.S. Vaidyanathan, the learned Additional Solicitor General, sought to contend that the High Court was right in coming to the conclusion that the separation of asbestos fibre from the parent rock was as a result of pro- cess of manufacture and, therefore, excise duty was leviable and even if it was not manufactured or produced excise duty was leviable under Tariff Item 22F. 8.The aforesaid question had been considered at length and decided against the revenue in this very case when it was heard by the Three Judge Bench in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. For the purpose of calculating under this section the(2) additional duty on any imported article, where such duty is leviable at any percentage of its value, the value of the imported article shall, notwithstanding anything contained in Section 14 of the Customs Act, 1962 (52 of 1962), be the aggregate of - the value of the imported article determined under sub-section(i) (1) of the said Section 14 or the tariff value of such article fixed under sub-section (2) of that Section, as the case may be; and any duty of customs chargeable on that article under Section(ii) 12 of the Customs Act, 1962 (52 of 1962), and any sum chargea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty 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 manufactured in India. 11.The words "if produced of 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 article the actual manufacture or production of a like article in India is not necessary. As observed by this Court in Thermax Private Limited v. Colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly stated that the duty chargeable under Section 3 shall be in addition to any other duty imposed under this Act or under any other law for the time being in force. 14.There are different types of customs duty levied under different acts or rules. Some of them are; (a) a duty of customs the duty in question,chargeable under Section 12 of the Customs Act, 1962 : (b) namely, under Section 3(1) of the Customs Tariff Act; (c) additional duty levied on raw-materials, components and ingredients under Section 3(3) of the Customs Tariff Act; and (d) duty chargeable under Section 9A of the Customs Tariff Act, 1975. Customs Act, 1962 and the Customs Tariff Act, 1975 are two separate independent statutes. Merely because the incidence of tax under Section 3 of the Customs Tariff Act, 1975 arises on the import of the articles into India it does not necessarily mean that the Customs Tariff Act cannot provide for the charging of a duty which is independent of the customs duty leviable under the Customs Act. 15.The Customs Tariff Act, 1975 was preceded by the Indian Tariff Act, 1934. Section 2A of the Tariff Act, 1934 provided for levy of countervailing duty. This section stipulated that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms Act and with a different base constituting the measure of the impost. In other words, the scheme embodied in Section 12 is amplified by what is provided in Section 3(1). The customs duty charged under Section 12 is extended by an additional duty confined to imported articles in the measure set forth in Section 3(1). Thus, the additional duty which is mentioned in Section 3(1) of the Tariff Act is not in the nature of the countervailing duty". At page 628 it held that "We are unable to accept the argument of the appellants that Section 3(1) of the Tariff Act is an in independent, charging section or that, the `additional duty' which it speaks of is not a duty of customs but is a countervailing duty." After referring to the explanation to Section 3(1) the Bench at page 630 held that "These provisions leave no doubt that the duty referred to in Section 3(1) of the Tariff Act does not bear any nexus with the nature and quality of the goods imported into India". On this aspect the Court then concluded by observing at page 630 that "For these reasons, we must reject the argument of Mr. Sorabjee and of the other learned counsel for the appellants that Section 3(1) of the Tariff Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only if on a like article excise duty could be levied. The decision in Khandelwal Engineering Works case to the extent it takes a contrary view, does not appear to lay down the correct law. Shri Vaidyanathan contended that this Court should be reluctant to reconsider a judgment which has held the field for a long time, but in our opinion public interest requires that law be correctly interpreted more so in a taxing statute where the ultimate burden may fall on the common man. We hasten to add that we are not over-ruling the Khandelwal Metal & Engineering Works case in its entirety because the Court also held in that case that brass scrap was in any case an item which was manufactured and, therefore, excise duty was leviable. We have not examined, in the present cases, whether brass scrap can or cannot be regarded as a manufactured item for that question does not arise in the present cases. 18.As a result of the aforesaid discussion it follows that on the asbestos fibre imported into India the appellants were not liable to pay any duty under Section 3 of the Customs Tariff Act. The High Court, therefore, erred in discussing the writ petitions filed by the appellants. 19.What relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the view expressed that separation of asbestos fibre from parent rock was not the result of process of manufacture, not a new commercial article liable to excise duty under Tariff Item 22F in the order of reference is conclusive and that aspect cannot be re-agitated. 23.The question to be decided is whether additional duty was attracted to the article in question, and answer to that question depends upon its nature as well. The issue to be decided could not be thus separated into two different aspects so that on one aspect of the matter has reached finality. As a matter of law, no doubt, if a cause or proceeding is dealt with at different stages by different Benches composed of different number of judges and any order has been made which has attained finality or which has got a decisive character then such order could operate res judicata between parties so as not to be re-opened at later stages of the same case. In a case where a decision is dependent upon several factors as in the present case as to whether the additional duty of excise is attracted to the article in question, one aspect of the matter cannot be stated to have been decided by a bench while other aspects have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned brother Kirpal J., subject, however, to the reservation stated above. 26.[Judgment per : Shah, J.]. - I had the advantage of going through the judgment rendered by learned brother Kirpal J. as well as short judgment by learned brother Rajendra Babu J. in the above matters. 27.I agree with the reasons recorded for holding that the ratio laid down in the case of Khandelwal Metal and Engineering Works v. Union of India [1985 (20) E.L.T. 222 (S.C.) = (1985) 3 SCC 620] 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 and also with the proposed final order. 28.However, it is clarified that the question whether separation of asbestos fibre from the parent rock excavated from the mines is a manufacturing process within the meaning of Section 2(f) read with Tariff Item 22F of the First Schedule to the Excise Act is not dealt with in this Reference. Asbestos fibre is brought out by various processes including mechanical process after using power and is a different substance (goods) known to the market from the `raw rock'. Hence, I have serious reservation on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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