Customs, Excise and Gold Tribunal - Delhi
Hyderabad Asbestos Cement Products vs Collector Of Customs on 23 October, 1989
Equivalent citations: 1990(26)ECC90, 1990ECR574(TRI.-DELHI), 1990(46)ELT453(TRI-DEL)
ORDER D.M. Vasavada, Member (J)
1. As stated in the appeal memo, the appellants are manufacturers of asbestos cement products and asbestos raw serves as a bonding agent for production of these goods. They imported 'asbestos raw' which is not a manufactured product, but is a product of mining and hence not leviable to any excise duty or C.V. duty. This issue is, at present, pending before the Hon'ble Supreme Court. Since the goods are 'asbestos raw' and not 'asbestos fibre or yarn', same cannot be covered under Tariff Item 22F of the C.E.T. Hence, no C.V. duty is leviable. The appellants had imported 4 consignments of asbestos raw from foreign countries and additional duty (i.e. C.V. duty) under T.I. 22F of CET was levied upon the said consignments. So, the appellants preferred refund claim which was rejected by the Asstt. Collector and the appeal preferred by the appellants was also rejected by the Collr. of Customs (Appeals) vide order dated 13-9-1986. This impugned order has given rise to this appeal.
2. We heard Shri R.S. Bajoria L.A. for the appellant and Shri A.S. Sunder Rajan, Ld. J.D.R. for the department.
3. It was contended by the appellant before the Collector (Appeals) that the imported material is not liable to duty and that is why not liable to C.V. Duty because it is a product of mining and not "manufacture". Now, this question was also under issue in the case of Hyderabad Asbestos Cement & Others and UOI -1980 (6) E.L.T. 735 (Del.) and as per submission of the Ld. advocate, the question has been answered against the appellant and in favour of the Revenue and the appellant has taken the matter to the Hon'ble Superme Court where that appeal is pending. So, as far as this appeal is concerned, he does not press that point further and would confine his arguments to another contention.
4. So, now the question that arises for determination in this appeal is whether the material imported by the appellant can be termed as "asbestoes fibre" and can be held excisable under Tariff Item 22F of the CET as it stood at the releveant time. The month of importation is January, 1985.
5. It is not in dispute that as per the bills of entry on record at pages 24 to 27 in the paper book, of Pleadings, the material imported is described as "asbestoes raw" of different grades. The appellant has produced glossory of terms relating to asbestos, published by Indian Standards Institution and therein in Foreward at internal page 3, it has been stated as under:
"In the formulation of this standard, due weightage has been given to international coordination among the standards and practices prevailing in different countries in addition to relating it to the practices in the field in this country. This has been met by basing the standard on:
Chrysotile asbestos test manual 1974 (revised 1978). Asbestos Textile Institute. Inc. and Quebec Asbestos Mining Association."
Therein terms, relevant for our purpose are defined as under:
2.6 "Crude Asbestos - Hand cobbed (released from its ore by manual hammer (impact) cross-vein asbestos in its natural or unfiberized form."
2.10 "Fibre - Any material in a form such that it has a minimum length to average maximum transverse dimension of 10 to 1, maximum cross-sectional area of 5.06 x 10-2 mm2 (corresponding to circular cross-section of 0.254 mm in diameter) and a maximum transverse dimension of 0.254 mm."
2.22 "Milled Asbestos - It is the primary consumer derivative of asbestos ore which has been treated by operations like beating and washing (whether graded to length or not by sieving). This is also known as raw asbestos."
2.25 "Open - The quality of asbestos fibre with relatively high specific surface area and degree of fiberisation, and free from a significant portion of unifiberized agglomerates."
In CCCN at Section V heading 25.24, Asbestos is defined as under :
"Asbestos is a natural mineral substance produced by the decomposition of certain rocks. It has a very characteristic fibruous texture; it is sometimes silky in appearance and the colour varies greatly, being usually white, but sometimes grey, greenish, blue or dark brown. Its main property is its resistance to fire and acids.
The heading applies to crude asbestos in rock form, to raw, beaten or washed fibres, whether graded to length or not, to asbestos in flakes or powder and also to asbestos waste. The heading excluded fibre which has been further processed (carded, dyed, etc.) and finished articles of asbestos." (Heading 68.12) Heading 68.12 defines Fabricated Asbestos as under:
"Fabricated asbestos fibres; Mixtures with a basis of asbestos or with a basis of asbestos and magnesium carbonate; Articles of such mixtures or of asbestos (for example, Thread, Woven Fabric, Clothing, Headgear, Footwear, Gaskets), whether or not reinforced, other than goods of heading No. 68.11 or 68.13".
This heading covers asbestos fibres further worked than beaten, cleaned, sorted or graded (e.g., carded fibres and dyed fibres). They may be for any purpose (e.g., for spinning, felting, etc., or for use as filtering, insulating, packing, etc. materials). Crude asbestos fibres or those simply graded according to length, beaten or cleaned are excluded." (Heading 25.24)
6. The appellant has also produced extracts from Import and Export Policy of the Government of India for the period from April, 1985 to March, 1988 and therein at appendix 5 is a list of item, import of which is canalised through public sector agencies and therein under section, Minerals and Metals Trading Corporation of India, is listed "Asbestos Raw".
7. There is appendix 17, at internal page 253 (page 15 of the Paper Book of the Documents), which lays down norms for import replenishment for registered exporters and therein Section X, which is for Asbestos and Cement Products reads as under:
Asbestos and Cement Products -
S.No. Export Product Import Materials permitted Remarks
replenishment for import
percentage
1. 2. 3. 4. 5.
B.60 Asbestos Products & 30% (a) Raw asbestos (1) Additional import
Asbestos Cement (b) Phosphorus replenishment at
Products bronze wire (5%) 20% of the f.o.b. value
of exports will be allowed
for import of raw asbestos
against exports of asbestos
products.
8. So, according to Ld. Advocate, it is clear that 'asbestos raw' is different from 'asbestos fibre & yarn' as per ISI specification. He, further, submitted that import of 'asbestos raw' is canalised, through MMTC which is a public sector agency and for import replenishment also, for a registered exporter, there is entitlement to import 'asbestos raw' and not 'fibre' or 'yarn'. He drew our attention to CCCN classification of 'asbestos raw' and 'asbestos fibre' and contended that the excise tariff structure of India is based upon CCCN and so, the Legislature has in its wisdom thought it fit not to include 'asbestos raw' in T.I. 22F and so it cannot be brought under purview of Section 22F for levying C.V. duty.
9. Ld. D.R., Shri A.S. Sunder Rajan, contended that this issue is already covered in favour of the Revenue in following cases :
1) Hyderabad Asbestos Cement Products Ltd. & Another (supra).
2) Collector of Central Excise, Jaipur v. Shree Pratap Commercial Co. Pvt. Ltd., Bhilwara - 1987 (31) E.L.T. 603 (Trib.).
3) Collector of Central Excise, Bangalore W.Hindustan Mineral Traders and Another - 1987 (31) E.L.T. 1013 (Trib.).
10. We have carefully perused the literature and citations produced by both sides. It is apperant that what is being allowed to be imported is 'asbestos' in raw form and it is not disputed by the department that what is imported by the appellant is 'asbestos raw'. In the impugned order, the Collector (Appeals) has discussed some technical literature. He has referred to definition of 'asbestos' as stated in Chemical Dictionary by G. Hawley and he has also referred to the definition of the said product in a book by J.H. De Bussi. But from this discussion what can be inferred is that the 'asbestos' has fibrous structure but it is something different from 'fibre'. As rightly stressed by Shri Bajoria, L.A., 'fibre' is not a synonym for fibrous. The Collector has noted the contention of the appellant that imported material is required by the appellant as bonding agent in the asbestos cement product. No evidence is adduced by the department to show that bonding can be done only with fibre of asbestos and not with crude asbestos. Admittedly, what is being imported is asbestos 'raw' and it is not the contention of the department that unless it has quality and character of 'fibre' it cannot be used for bonding purposes.
11. We have carefully perused Delhi High Court Judgment. Therein, in para 7, questions that arose for decision, have been stated and Question No. 3 reads as under :
"Even if duty of excise could not be charged on that quantity of asbestos fibre obtained from the mines will the levy of additional duty of customs under the Customs Tariff Act, 1975 be not sustainable irrespective of the finding whether excise duty is held to have been validly imposed by the Parliament."
In para 31, it has been stated as under:
"If as I have held above that the excise duty on the asbestos fibre was validly imposed, it was not even disputed by the petitioners that they would be liable to pay the additional duty of customs as imposed by Section 3 of the Customs Tariff Act, 1975.I may however mention that assuming if it had been held that levy of excise duty was invalid I am not sure that the levy of additional duty of customs imposed under the Customs Tariff Act would automatically have become inoperable. The reason is that the levy of additional duty under the Customs Tariff Act, 1975 is an independent provision. There was no challenge to the validity of this additional duty under the Customs Tariff Act as such. I do not propose to decide this question because it does not arise in view of my finding given on the question of validity of the excise duty leviable on the asbestos fibre."
12. So, it can be seen from the above excerpt that question whether T.I. 22F would cover 'asbestos raw' also, was not in issue and, in our opinion, the Hon'ble High Court his not given any finding on this point. In that case, the contention raised by the appellant was whether process of obtaining asbestos fibre was a part of mining operation and the mining process and if so whether the process would amount to manufacture as defined under Section 2(f) of the Excise Act. In para 6, it has been stated that the petitioners were importing absestos fibre for their requirement and they were obtaining some asbestos fibre from mines in India also. The main contention raised by the petitioner in that case was that in the asbestos mined by them and the asbestos fibre that they ultimately used, there was no process of manufacture involved and, therefore, no duty was payable under the Excise Act. The further, consequential, argument urged was that if there was no duty under the Excise Act on asbestos fibre, automatically no additional duty of customs can be levied under the Customs Tariff Act. In para 10, process of the petitioner is described from which it can be seen that after extracting asbestos rock from the mine in the shape of large boulders, they were put into jaw crushers and reduced to small size and they were subject to further reduction in a hammer mill so that fibre can be taken away from rock in which it was embedded. So, in that case, the petitioners were, in fact, extracting fibre from asbestos raw. In para 20, there is following discussion:
"Applying that test to the present case it is not open to doubt that asbestos fibre is a marketable commodity and is known to the market and is saleable as such. It is also not disputed that asbestos rock which is mined by the petitioner is as such not saleable in the market. Great and intensive process is required before the asbestos rock which is mined by the petitioner can be converted, transformed and put into market as asbestos fibre."
In para 21, there is following observation:
"Here excise duty is on asbestos fibre which is known to commercial community as a goods."
In the course of arguments, in that case, it was contended by the petitioners that what they take out from the mine was, itself, a finished product and the Hon'ble High Court negatived that contention holding it to be semi-finished goods as can be seen from the following excerpt from para 24:
"It is also significant that the petitioners themselves treated the mined article as a semi-finished goods which had to be gone through the process of manufacture before being put for sale in the market."
13. So, in the case, admittedly, the product, in question, was asbestos fibre. Here we are concerned with asbestos raw which has still not reached the stage of fibre. So, in our opinion, the Delhi High Court has not expressed any opinion on this point and the said decision does not cover the issue in this appeal.
14. In C. C.E. v. Shree Pratap Commercial Co. Pvt. Ltd. (supra), the respondents (as stated in para 4), were mining crude asbestos ore in the form of lumps from their own mines and they were brought to their factory and thereafter crushed and pulverised to produce asbestos powder. The question was whether the process would amount to manufacture and whether asbestos fluff resulting therefrom would be dutiable. The Tribunal held in affirmative holding that fluff would also be asbestos fibre irrespective of the fact of the length of fibre. So, here also, the dutiability of asbestos raw was not in question.
15. In the case of Hindustan Mineral Traders (supra), the identical question was involved and it was held, relying upon the decision in Shree Pratap Commercial Co. Pvt. Ltd. (supra), that process amounted to manufacture. So, this case also does not help the Revenue.
16. It is contended by the appellant that asbestos fibre is a different commodity having different use and character and is also known differently in commercial parlance. This aspect is not disputed by the Revenue.
17. Moreover, as pointed out by L.A., Shri Bajoria, Item No. 25.01/32 of the Customs Tariff Act, mentions "asbestos raw including fibre", while there is no such mention in Central Excise Tariff Item.
18. The Ld. Collector has, in his impugned order, held that "the concept of Central Excise Tariff Heading and sub-headings of 22F, is to include all the mineral fibres and yarn, as well as manufacture therefrom irrespective of whether these mineral fibres are raw/crude/manufacture". The Collector has proceeded on the basis that crude asbestos is also asbestos fibre but there is no basis for such assumption as can be seen from the technical literature discussed above. So, the contention of the appellant that asbestos raw is not covered by T.I. 22F, is correct.
19. The question may arise that if the 'goods', in question, do not fall under T.I. 22F, then, under which T.I., they can be covered? T.I. 68 is the residuary entry and any goods which are not classifiable under any entry are, in normal course, to be classified under T.I. 68. But, neither side has advanced any arguments on this point. The Revenue has also not sought classification under this entry. So, we refrain from expressing any final opinion regarding correct classification. However authorities may take their own view and resort to legal course open to them, if any. So, we pass the following final order:
20. The appeal is allowed and impugned order is set aside with consequential relief to the appellants.