Customs, Excise and Gold Tribunal - Delhi
Collector Of Customs vs Im Kemex India Ltd. on 9 November, 1995
Equivalent citations: 1996(86)ELT95(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. This is an appeal filed by the department against the order-in-appeal dated 28-2-1985 passed by the Collector (Appeals), Customs House, Madras.
2. The respondents have claimed refund of additional duty paid on the ground that as per Notifications 33/81 and 35/81, dated 1-3-1981, Copper scrap produced in India has been exempted from payment of duty arid no additional duty is leviable on the imported goods. This claim has been rejected by the Asstt. Collector. On appeal filed by the party, the Collector (Appeals) has accepted the contentions of the party while allowing the appeal. The main plea put forth by the appellants before the Collector (Appeals) is that these types of scraps are not manufactured articles and therefore did not come within the purview of the Central Excise duty. It was also explained by them that persons who are gathering, sorting and grading worn out used materials such as these do not require Central Excise Licence and their product cannot attract Central Excise duty.
3. Shri G.D. Sharma, ld. JDR appearing for the Revenue while explaining the scope of Section 3 with reference to levy of Customs duty submitted that in the Explanation to Section 3 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. Referring to the decision of the Hon'ble Supreme Court in the case of Khandehval Metal and Engineering Works v. UOI and Ors. reported in 1985 (26) E.L.T. 222 (S.C.), he submitted that the additional duty of customs as referred to in the Sections 2 and 3 of the Customs Tariff Act is not a countervailing duty and for the purpose of levy of additional duty of customs, the concept of manufacture is irrelevant and accordingly the levy of additional duty of customs on the brass scrap cannot be questioned on this ground.
4. The party remained absent in spite of the fact that notice of hearing has been issued to them. Since the matter is an old one, we have proceeded to pass this order after hearing Shri Sharma, ld. JDR for the Revenue. The Collector (Appeals) in the impugned order has clearly held that goods namely brass waste/scrap are mere collections of used, worn out, obsolete and scrap items. Thus they cannot be held as goods manufactured as a result of transformation which means that the resultant product emerges from a raw material into an intermediate or finished product. This finding at page 4 of the impugned order is relevant and the same is reproduced under :
In the present case, goods namely brass waste/scrap are mere collections of used, worn-out, obsolete and scrap items. Thus they cannot be held as goods manufactured as a result of transformation which means that the resultant product emerges from a raw material into an intermediate or finished product. Further there is no deliberate effort resulting in generation of these scrap by way of treatment of labour, capital or manipulation. Though such 'scrap' have a distinct name, character and commercial understanding, they do not satisfy the 'test' of 'production' and 'manufacture' in the economic sense in which the product directly results out of certain tangible operations. A study of submissions made by the appellants themselves clearly indicates that the worn out, used, obsolete materials are collected, grouped and classified with code name and traded either in the internal market or international market as per specifications such as NARI's. Thus, the test of distinct name and character among the 3 tests is satisfied while 2 other tests, i.e., transformation and emergence of an article as a result of treatment, labour, and manipulation resulting in 'a new and distinct article' fails."
5. Further, in the order he observed that till 1-3-1981, in the relevant Central Excise Tariff heading 'Waste and Scrap' did not exist and therefore there could be an impression that no scope exists for levy of Additional duty during such period on scrap (imported) for levy of Additional duty under Item 26A or residuary Item 68 CET. With effect from 1-3-1981, the sub-heading 'waste and scrap' has been introduced in respect of non-ferrous items. Such an introduction, in no way, affects the levy of additional duty on such imported (used and second-hand) scrap under 26A CET as the critical test of 'manufacture' continues to be not answered in respect of these products either before 1-3-1981 or after 1-3-1981. In the case of Khandelwal Metals referred to by the ld. DR, it was observed that such goods can and do come into existence as 'waste articles' or 'rejected articles' during the process of manufacturing that class of article. In the instant case it is clear from the facts and findings by the Collector (Appeals ) that the waste/scraps cannot be held as goods since they were not manufactured as a result of transformation and it was not a resultant product emergent from the raw material into an intermediate or finished product. In view of these findings, we hold that the scope of entry would be limited to such waste and scrap which arises out of part of manufacture of prime product as it was rightly observed by the Collector (Appeals) in his order and since we do not find any infirmity in the impugned order, we uphold the impugned order and accordingly the appeal filed by the department is hereby rejected.