Bombay High Court
R.K. Synthetics & Fibres Pvt. Ltd. vs Union Of India on 1 January, 1800
Equivalent citations: 1990ECR41(BOMBAY), 1990(46)ELT214(BOM)
JUDGMENT
1. The only question that falls for my consideration in this Writ Petition under Article 226 of the Constitution of India is whether the synthetics waste imported by the petitioners falls under Item No.18-I-(i) of the Central Excise Tariff 1985-86 or under residuary Item No.68 for the purpose of levy of additional duty equal to excise duty under Section 3(1) of the Customs Tariff Act, 1975, which is called countervailing duty. No dispute save except the countervailing duty is raised in this writ petition. Sometime in the year 1983, the Petitioners imported synthetic waste. The First Petitioner is a registered Company under the provisions of the Companies Act and the Second Petitioner is the Director of the First Petitioner. The First Petitioner is the Union of India. The Second and Third Respondents are the Officers of the 1st Respondent under the Customs Act. On 9th July 1983, the SGS India Private Limited (Government recognised Export Valuer) issued a certificate Exhibit `A' showing that synthetic waste imported by the Petitioners is a waste arising out of top manufacturing or spinning process. On 21-7-1983, the Petitioners filed a Bill of Entry along with the certificate Exhibit `A' and requested the Third Respondent that they be permitted to clear the goods on giving bank guarantee for the full duty on the value of the imported goods as if the same is covered by Item No.18-IV of the Central Excise Tariff 1985-86. He also pointed out that in some other cases same procedure is followed and no exception be made. The proper authority however rejected this request of the Petitioners which has given rise to the filing of this Writ Petition No. 1802 of 1983. As per the minutes of the order dated 2-8-1983, the Petitioners released the goods upon furnishing band guarantee of a nationalised Bank in favour of the Collector of Customs in the amount of Rs.10,00,000/-. Out of this Bank Guarantee to Rs.1,00,000/- the Bank Guarantee in the sum of Rs.7,97,488.87 P. was in respect of countervailing duty and the rest was towards the interest at the rate of 12% per annum.. This order dated August 2, 1983 was however modified by this Court on 28-6-1984 in the Notice of Motion No.1356 of 1984 taken out by the Petitioners for modification of the earlier order to the extent of Bank Guarantee. This Court directed the Petitioners to pay the countervailing duty of Rs.7,97,488.87 P. in cash, and on payment and/or deposit of such cash amount the Bank Guarantee already furnished by the Petitioners to the Customs authorities was to stand discharged and cancelled. The Petitioners were also relieved from the undertaking given by them for payment of interest at the rate of 12% per annum. Certain other directions were also given by the learned Judge while disposing of the Notice of Motion No.1356 of 1984 in regard to the refund in the event of the Petitioners succeeding in the Writ Petition.
2. In this petition, it may be stated that the dispute is in regard to the countervailing duty only. It is not disputed that the synthetic waste imported by the Petitioners is a waste which was accrued after the stage of fibres and before the yarn. Mr. Rana, learned Counsel appearing in support of the Petition, urged that in the absence of specific provision made in any of the Items of Central Excise Tariff 1985-86, the only provision attracted would be the residuary Tariff Item No.68 and therefore, the countervailing duty has to be determined as provided therein i.e. under Item No.68. Imported goods neigher fall under Item No. 18-I(i) or Item No. 18-IV of the Central Excise Tariff 1985-86. As against this, Mr. Rege, learned Counsel appearing for the Respondents, submitted that according to the Petitioners themselves the imported goods is a soft synthetic waste and having regard to the definition of "soft waste" given in Fairchild's Dictionary of Textiles by Stephen S. Marks, it is a by-product created in the Manufacture of fibres, yarns and fabrics, having been obtained preceding spinning, must fall under Item No. 18-I(i) and therefore, the countervailing duty is liable to be assessed under this provision. In the affidavit in reply of Shri Gulshan Rai the Collector of Customs dated 19th November 1985, although he had stated that the imported synthetic waste would fall under Tariff Item No. 18-I(ii), however, Mr. Rege during the course of arguments submitted that this was a bona fide mistake while drafting the affidavit in reply and in fact it should be read as 18-I(i). It is, therefore, not necessary to enlarge the scope of this petition beyond considering as to whether the imported synthetic waste falls under Item No.68 or under Item No. 18-I(i) of the Central Excise Tariff. In order to appreciate the rival contentions it would be relevant to reproduce both the Tariff items :
_____________________________________________________________________________ Item Tariff Description Rate of Duty No. _____________________________________________________________________________
18.I. Man-made fibres, other than mineral fibres:
(i) Non-cellulosic Eighty-
five rupees
per kilogram.
(ii) Cellulosic Ten rupees per
kilogram.
68. All other goods, not elsewhere specified, Twelve per cent
but excluding - ad valorem.
______________________________________________________________________________ As stated earlier, there is no dispute that the waste imported by the Petitioners is non-cellulosic. According to Mr.Rana, the proper Authority has committed a patent error while treating the imported goods as falling under Item 18-IV. According to the learned Counsel, it neither falls under Item 18-IV or under Item No. 18(I)(i). It must fall under residuary item viz. Item No.68 In order to substantiate this submission Mr. Rana urged that a plain reading of the Tariff description given in Item No.18(I)(i) viz. man-made fibres non- cellulosic would clearly show that it does not include the waste which was imported by the Petitioners. The synthetic waste in question is although a non- cellulosic but it has come into existence after its man-made fibre process is completed. At this stage it must be stated that the Respondents do not contend that the waste in question falls in Item No. 18(IV). (See affidavit of Mr. Gulshan Rai dated 19-11-1985 on behalf of Respondents). According to Mr. Rana, whenever the legislature wanted include waste in any particular item of the Central Excise Tariff, they have expressly provided ror. He for instance drew my attention to Item No. 25(3) waste and scrap of iron and steel, Item No. 26-A waste and scrap of copper, Item No. 26-B waste and scrap of zinc, Item No. 27(2) aluminium and products thereof and Item No. 27- A(2) waste and scrap of lead. In absence of any such clear provision contained in Item No. 18- I(i), according to Mr. Rana, the imported goods (synthetic waste) must fall under residuary Item No.68. Mr. Rana also drew my attention to the Judgment and order No. 396/84-D rendered by the Customs, Excise and Gold (Control) Appellate Tribunal New Delhi. A similar question relating to synthetic waste and levy of countervailing duty arose for consideration before the said Appellate Tribunal (hereinafte referred to as "Appellate Tribunal".) Mr. Rana specifically drew my attention to paragraphs 5 and 6 of the said Judgment. Paragraphs 5 and 6 read as under :
"5. As regards the question of countervailing duty, we agree with the appellants that the Explanation below Item No. 18-IV C.E.T. circumscribed the scope of that item and non-cellulosic waste occurring after the fibre/yarn stage could not be classified under the said item. At the same time, the alternative Item 18-B canvassed the appellant is also not correct because this item applies to woollen/acrylic yarn while the goods, on test, were found to be "of a heterogeneous nature of cut lengths of yarns of different colours in tangleed mass and mass of different coloured fibres". Since the goods were not classifiable under Item 18 or 18-B, the exemption under Notification No.172/72-CE, which was applicable to hard waste falling under Item 18, 18-B etc. also did not apply to the appellants' goods. As there is no other appropriate item in the Central Excise Tariff to cover the goods, they naturally fell under the residuary Item No.68. The exemption under the aforesaid notification was not applicable to the goods falling under Item 68.
6. In the light of what we have stated above, we allow the appeal partially to the extent that we order re-classification of the goods under Item No.68 C.E.T. for the purpose of countervailing duty. But for this relief, the appeal is rejected."
Mr. Rana then drew my attention to the order passed by the appellate authority under the Customs Act (in another case of similar importation) which had followed the judgment rendered by the Customs, Excise and Gold(Control) Appellate Tribunal. Learned Counsel submitted that consistent with this interpretation, it be held that the imported goods fall under residuary Item No.68 and not under Item No. 18-IV as classified by the Customs department and consequently an amount of Rs.7,24,189.27 P. being excess countervailing duty recovered by the Customs department be ordered to be refunded. It was conversely contended by Mr. Rege that the department does not agree with the interpretation given by the Appellate Tribunal and department has sent a proposal to move the higher court. Learned Counsel, however, was unable to make a statement as to whether any appeal has been filed.
3. Mr. Rege could not and has rightly not disputed that tariff description given in Item No. 18-I(i) does not expressly refer to the waste. He however, relies upon the notifications issued by the Central Government from time to time, first being of 1972 and last of 1977, under Item No.18 under which certain exemptions were granted. Heading reads as under :
"MAN-MADE FIBRES, FILAMENT YARNS AND CELLULOSIC SUPUN YARN - 18 EXEMPTIONS"
Sub-entry (4) relied upon by Mr. Rege reads as under :-
"(4) Man-made fibre and filament yarn wastes of the description specified in column (1) of the Table hereto annexed are exempt from so much of the duty of excise leviable thereon as is in excess of the duty mentioned in the correspondence entry in column (2) thereof.
______________________________________________________________________________ Description Rate of duty ______________________________________________________________________________ (1) (2) ______________________________________________________________________________ Godet waste, under size cakes waste and reeling and Rs. per kg.
coning waste wet waste, hand waste, winder cut waste, cut waste and other wastes -
(i) Of cellulosic origin 1.00 (ii) Others 9.00
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This notification has been subsequently amended in 1977 by adding sub- clause (6) exempting certain other items. This amendment again refers to cellulosic spun yarn falling under Item No. 18-III and cotton yarn falling under Item No.18A. Since this amendment is inapplicable, reproduction is irrelevant. According to Mr. Rege, the description of waste and other wastes used in this exemption notification was understood in the trade to mean and include the waste in question and therefore since then the wastes covered by this notification (including the waste in question) were granted exemption. Mr. Rege then urged that Item No.68 was for the first time introduced in the Central Excise Tariff on 1-3-1975. According to learned Counsel since 1972, the waste in question was classified under Item No. 18-I and therefore, it would be fair to construe the provisions of 18-I(i) to include the synthetic waste in question under this item. When the synthetic waste in question falls under specific item then residuary item cannot be invoked, Mr. Rege contends. It is no doubt true that in the year 1972 the Central Government has issued the notification, but in my opinion in the first instance there is no reference to non- cellulosic waste in the description. Inferentially Mr. Rege wants me to cover non-cellulosic waste in the description of "and others". In a fiscal stature like this such inferential inclusion is not possible. In addition to this, the notification cannot be read for the purposes of interpretation of th substantive provision viz., Item No. 18-I(i). Item No.i8-I(i) has got to be interpreted on the language used therein. On a plain reading of Item No.18-I(i) I am of the opinion that it includes only man-made fibre non-cellulosic as well as cellulosic but does not include waste. Mr. Rege inspite of his best efforts was also unablt to point out the definition and/or precise meaning of man-made fibre. Mr. Rege strongly relied upon the definition of "soft waste" given in Fairchild's Dictionary of Textiles by Mr. Isablel B. Wingate III Printing Edition 1974 on page 544. It defines "soft waste" as follows :
"Soft waste-yarn waste without any twist or with the soft waste produced by roving frame as distinguished from hard waste which contains spinning twist. Obtained during yarn manufacturing operations preceding spinning."
Relying upon the admission of the Petitioners that the imported goods was of a soft waste (synthetic) Mr. Rege pressed into service the above definition to contend that the synthetic waste imported by the Petitioners being a soft waste which according to the aforesaid dictionary meaning having been obtained preceding spinning though is not covered by Tariff Entry Item No. 18-IV but would fall under Item No. 18- I(i) wherein other waste is included. This argument is again based on the two notifications referred to hereinabove. In my opinion, it would not be possible to accept this contention. Mr.Rege although he relied upon a circumstance that the importers in this line have accepted the inclusion of the wastes in Item No.18-I(i) of the Central Excise Tariff, but no material has been placed before me to support this contention. In the absence of such material, it is not possible for me in this case to hold that the synthetic waste imported by the Petitioners would fall in Item No. 18-I(i). Since the Respondents did not contend before me that the imported waste would fall under Item No. IV, it is needless to consider that controversy, although duty equal to excise duty i.e. countervailing duty has been recovered as if the imported synthetic waste falls under Item No. 18-IV. If the synthetic waste which was imported by the Petitioners does not fall under Item No. 18-I(i) then the residuary Item No. 68 of the Central Excise Tariff would be attracted and the Petitioners will have to pay the countervailing duty accordingly.
4. In the result, the Petition succeeds and the Respondents are directed to classify the imported waste i.e. the synthetic waste under Item No. 68 of the Central Excise Tariff of India 1985-86 and levy the countervailing duty accordingly. As a necessary consequence thereof, the Respondents must refund the amount of Rs.7,24,189.27p. being the excess additional countervailing duty which the Respondents have recovered from them on the basis that the imported synthetic waste is classifiable under Tariff Entry Item No. 18-IV, provided that the Petitioners make good the countervailing duty under Item No. 68. Respondents are further directed to refund this amount of Rs.7,24,189.27P. and or balance as indicated above to the Petitioners on or before 31st January 1986. If the Respondents fail to refund this amount on or before the due date, the Respondents shall pay interest at 12% per annum from the date of payment and/or deposit with them. The Petition is accordingly disposed of. In the circumstances of the case, there shall be no order as to costs.