Customs, Excise and Gold Tribunal - Delhi
Ashish Steel Pvt. Ltd. vs Collector Of Central Excise on 30 October, 1998
Equivalent citations: 1999(106)ELT269(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. These are three Appeals filed by the above appellants against three different orders of the Collector of Central Excise, Goa imposing various amounts of penalties on the three appellants.
2. Ld. Counsel appearing for all the three appellants submits that the issue dealt with in the three Appeals related to duty demand on goods obtained by the breaking of "barges". The demand had been made on the basis of Tariff sub-heading 72.15. The contention of the appellants is that barges are not "ships or boats or other floating structures". They have specifically drawn attention to Chapter sub-heading 89.01 which refers to "barges" as distinct from cruise ships, excursion boats, ferry-boats, cargo ships, and similar vessels for the transport of persons or goods. Ld. Counsel contended that if the intention of the legislature was to include the goods and materials obtained by breaking up of barges also in Heading 72.15 it would have been specifically so provided in that Heading. In view of the clear distinction made between ships/boats on the one hand and barges on the other, any intention to include 'barges' also in the category of "ships, boats and other floating structures" cannot be inferred as no intendment can be read into any piece of legislation. In this connection, he referred to a number of decisions of the various Courts and this Tribunal in support. He referred to Cibatul Ltd. v. U.O.I. [1979 (4) E.L.T. (J407)] in which the Hon'ble Gujarat High Court followed the decision in Ram Narain v. The State of Uttar Pradesh and Ors., AIR 1957 SC 18, which had laid down that the meanings of words and expressions used in an Act must take their colour from the context in which they appear. He also referred to the Apex Court decision in Smt. Lila Vati Rai v. State of Bombay, AIR 1957 SC 521 in which it was held that observations made by a Court with reference to the construction of one statute cannot be applied with reference to the provisions of another statute which is not pari materia with the statute which formed the subject matter of the previous decision. He also relied on another decision of the Supreme Court in MSCO Pvt. Ltd. v. Union of India and Ors. [1985 (19) E.L.T 15] in which the Apex Court had observed that while construing a word which occurs in a statute or a statutory instrument, in the absence of any definition in that very document, it must be given the same meaning which it receives in ordinary parlance or understood in the sense in which people conversant with the subject matter of the statute or statutory instrument understand it. He further referred to another judgment of the Supreme Court in the case of Indian Aluminium Cables Ltd. v. U.O.I. and Ors. [1985 (21) E.L.T. 3 (S.C.)] in which the Apex Court had observed that in determining the meaning or connotation of words and expressions describing an article in a Tariff Schedule, one principle which was fairly well settled was that those words and expressions should be construed in the sense in which they are understood in the trade, by the dealers and the consumers. Reliance was also placed on the Tribunal judgment in Sociedade De Fomento and Ors. v. Collector of Customs, Bombay [1987 (27) E.L.T. 620], in which this Tribunal had held that in construing a taxing statute, one has to look merely at what is clearly stated and that there is no room for intend-ment. There is no equity about a tax or any presumption as to a tax. "Nothing is to be read in. Nothing is to be implied. One can only look fairly at the language used", as observed by Rowlatt J. in (1921) 1 K.B. 71 in Cape Brandy Syndicate v. IRC.
3. Ld. Counsel further urged that cutting and breaking do not amount to manufacture as no new product emerges. He submitted that the Department had invoked the extended period of limitation under proviso to Section 11A(1) of the Central Excise Act, 1944 which could not be sustained since the appellants were under bona fide belief that the breaking up of barges was not manufacture and they were not liable to pay any excise duty thereon. He submitted that there was no evidence of any fraud, collusion, wilful mis-statement or suppression of facts on the part of the appellants though the Department had alleged suppression of facts against the appellants while raising the duty demand. Ld. Counsel submitted that mere failure on the part of the manufacturer to take out a licence or to pay duty when an act of suppression of facts. He relied on the following case law in support of his contention:
1. Padmini Products v. Collector of Central Excise -1989 (43) E.L.T. 195.
2. Tribrewal Industries v. Collector of Central Excise -1991 (55) E.L.T. 130.
He also submitted that the activity of breaking of sheets by way of cutting has not been included as a manufacturing activity in any of the Chapter Notes or Section Notes. In this connection, he referred to the Tribunal decision in SAIL v. Collector of Customs as reported in 1991 (54) E.L.T. 414 in wich the question whether the crushing of lime stone was considered in the context of Section2(f) of the Central Excise Act. Ld. Counsel referred to paragraphs 23 to 26 of the said judgment in which the Tribunal had listed out Chapter Notes under various chapters in the Central Excise Tariff in which various activities which amount to manufacture had been clearly spelt out. This was done obviously for the reason that the definition of Section 2(f) would not fully cover said activities. If the intention of the legislature was to include ship breaking also as a manufacturing activity, a similar Note would have been added to Chapter 72 or Section XV as had been done in similar cases referred to above.
4. Ld. SDR defending the impugned order submitted that it would be quite obvious from a reading of Chapter Heading 72.15 that goods and materials obtained by breaking up of "ships, boats and other floating structures" had been included as a manufacturing activity and liable to excise duty as per the entry shown under Col. 4 of the Schedule. Referring to the submissions made by ld. Counsel for the appellants he submitted that the fact "barges" have not been specifically included in Chapter sub-heading 7215.00 does not in any way exclude the activity of breaking up of barges from duty liability since the words used in 7215.00 fully covered barges. Further, Chapter sub-heading 8901.00 was the first Chapter sub-heading in Chapter 89 which included, apart from cruise ships, excursion boats, ferry-boats and cargo ships, "barges and similar vessels for the transport of persons or goods". This clearly indicates that barges would come within the category of ships, boats and floating structures covered by Chapter 89. As regards the point relating to limitation raised by the appellants, ld. SDR submitted that ship breaking became excisable only with the introduction of the Central Excise Tariff Act, 1985. Every person engaged in the activity of ship breaking including breaking up of barges was thereafter liable to observe the necessary procedure under the Central Excise Act by way of obtaining licence, filing of returns and other procedures. There was no question of any person entertaining any bonafide belief about the duty liability in relation to the activity of breaking up of ships/barges after the enactment of Central Excise Tarrif Act. Therefore, the appellants were under law required to obtain the necessary licence and inform the authorities about their activity of breaking of barges. In failing to do so, they have suppressed the information from the Department and the extended period of limitation for demanding duty under Section 11A had been rightly invoked.
5. As regards the submission made by ld. Counsel for the appellant that the activity of ship breaking cannot be considered to be an activity of 'manufacture' coming within the definition of 'manufacture' under Section 2(f) of the Central Excise Act, ld. DR submitted that once the legislature has identified certain goods as excisable, there was no question whether the goods so identified were manufactured goods or not. He relied on the Delhi High Court decision in Hyderabad Asbestos Cement Products and Anr. v. C.C. - 1980 (6) E.L.T. 735 (Del.). As to the question of including a separate Chapter Note/Section Note for explaining ship breaking as amounting to manufacture also, ld. DR submitted that it was not necessary to add any Chapter Note/Section Note when the tariff itself made the position clear by identifying certain goods as subject to levy.
6. We have considered the submissions made by both the sides. For purpose of appreciating the arguments, it would be necessary to read the relevant headings. We reproduce the relevant tariff headings as under :
72.15 - Goods and materials of heading Nos. 72.03, 72.06, 72.07,72.08, 72.09, 72.10, 72.11, 72.12 and 72.13 obtained by breaking up of ships, boats and other floating structures.
89.01 - Cruise ships, excursion boats, ferry-boats, cargo ships, barges and similar vessels for the transport of persons or goods.
89.08 - Other floating structures (for example, rafts, tanks, coffer-dams, land ing stages, buoys and beacons).
As would be observed from the above extracts, Tariff sub-heading 7215.00 clearly identifies goods and materials obtained by breaking up of ships, boats and other floating structures as leviable to duty at the rate of Rs. 1,800/- per tonne. The words "ships and boats and other floating structures" are almost entirely a repetition of the heading given under Chapter 89 which reads as "ships, boats and other floating structures". Further, Chapter sub-heading 8901.00 includes cruise ships, excursion boats, ferry-boats, cargo ships, barges and similar vessels for transport of persons or goods. Ld. Counsel had sumitted that since "barges" have been separately mentioned side by side with cruise ships, excursion boats etc., this would clearly show the intention of the legislature to treat "ships" and "barges" as two different and distinct items. As regards "floating structures" Chapter sub-heading 89.07 had given various types of such floating structures. A combined reading of Chapter sub-headings 72.15, 89.01 and 89.07 would thus clearly show that if there was any intention to include barges within the category of ships, boats, and other floating structures, the legislature would have done so having regard to the clear distinction made between the "ships" and "barges" in Chapter sub-heading 8901.00
7. We find that this argument cannot be accepted since Chapter 89 starts with the words "ships, boats and floating structures". Chapter sub-heading 8901.00 is covered by the Chapter heading "ships, boats and floating structures". It cannot, therefore, be argued that barges will not come within the generic description of ships, boats and floating structures covered in Chapter 89. It follows that sub-heading 7215.00 when it talks of "ships, boats and other floating structures" it refers to the generic meaning of "ships, boats and other floating structures" including barges mentioned in 8901.00.
8. As regards the point of limitation urged by ld. Counsel we find that his submissions are not sustainable since after the introduction of Central Excise Tariff Act, 1985, ship breaking had been included as a manufacturing activity and has become excisable. Failure to comply with the necessary formalities under the Central Excise law in the face of the said provision cannot be taken as a bonafide belief. As regards the submission made by ld. Counsel that if the activity of breaking up of ships were to be considered a manufacturing activity, a separate Chapter Note/Section Note on the lines of such clarificatory notes in various other Chapters/Sections should have been given, we are of the view that the entries against Chapter sub-heading 7215.00 does not give rise to any scope for doubt as to whether the said acitivity was an excisable activity or not. When Tariff sub-heading 72.15 clearly speaks of breaking up of ships as an excisable event, no argument that the said activity is not a 'manufacture' in terms of Section 2(f) of the Act can be accepted.
9. As regards the penalty imposed under the three impunged orders, we find that penalities imposed are not excessive, being roughly 10% of the duty demand. We see no reason to interfere with the said amounts of penaly.
10. In the light of the observations made above, we reject the three Appeals and confirm the impugned order.