Gujarat Plastic Industries, A ... vs Union Of India (Uoi), Through Its ...
2003 Latest Caselaw 386 Bom

JUDGMENT

J.P. Devadhar, J.

1. The issue raised in these two petitions are common and hence both the petitions are disposed of by a common judgment.

2. The short question that arise for consideration in these petitioners are that, whether the additional duty of customs is leviable on acrylic sheets imported by the Petitioners. According to the Petitioners, in view of Notification No. 53/88 CE dated 1st March, 1988, there being total exemption on payment of central excise duty on manufacture of acrylic sheets falling under the Chapter heading 39.20 subject to the fulfillment of the conditions set out therein, no additional duty under Section 3(1) of the Customs Tariff Act is leviable on the goods imported by the Petitioners. On the other hand, the contention of the revenue is that the Notification No. 53/88 CE dated 1.3.1988 being a conditional notification and since the conditions attached to the said Notification are not satisfied, the Petitioners are not entitled to seek exemption from payment of additional duty.

3. In these two petitions, the Petitioners have, on importation of acrylic sheets, filed Bills of Entry seeking clearance of the goods without payment of the additional duty in the light of the Notification No. 53/88-CE dated 1.3.1988. Since the Customs authorities declined to grant the benefit of the said Notification No. 53/88, the Petitioners have approached this Court by filing these Writ Petitions.

4. While admitting these petitions, this Court permitted clearance of goods without any security. Accordingly, the goods have been cleared in the year 1989-90 without payment any security regarding the additional duty payable on the goods.

5. Mr. Kantawala, the learned Counsel appearing on behalf of the Petitioners submitted that under the Exemption Notification No. 53/88, acrylic sheets manufactured out of scrap of plastic are wholly exempted from payment of duty. In the present case, the Petitioners have a certificate to show that the acrylic sheets imported by the Petitioners were manufactured out of plastic scraps and hence under Section 3(1) of the Central Tariff Act, no additional duty can be levied on acrylic sheets manufactured from plastic scrap. In other words, the submission is that when there is total exemption of excise duty on acrylic manufactured out of plastic scrap, there can be no additional duty on imported acrylic sheets manufactured out of plastic scraps. It was submitted that additional duty under Section 3(1) of the Customs Tariff Act is to be leviable at the rate applicable to a like article manufactured or capable of being manufactured in India under the Central excise Act. In the instant case, since the excise duty on acrylic sheet manufactured from plastic scrap being totally exempted, no additional duty could be levied on acrylic sheet imported by the Petitioners.

6. Mr. Kantawala relied upon the decision of this Court in the case of Century Enka Limited and Ors. v. Union of India and two Ors. reported in 1982 E.L.T. 64 (Bom), the decision of the Apex Court in the case of Thermax Pvt. Ltd. v. Collector of Customs and also the decision of the Apex Court in the case of Hyderabad Industries Ltd. v. Union of India and submitted that if the conditions set out in the Exemption Notification are incapable of being satisfied, then the benefit of the Exemption Notification cannot be denied. In other words, the submission was that when the basic requirement of the Notification is satisfied i.e. the manufacture of acrylic sheets is out of plastic scrap, then, the non-fulfillment of other conditions cannot be a ground for denying the benefit of Exemption Notification.

7. Mr. Chaudhari, learned Counsel appearing on behalf of the Respondents, on the other hand submitted that the Government issued Notification No. 53/88 with a view to avoid double Excise duty payment on the final product as well as inputs used in the manufacture of the final product. In other words, the submission was that if excise duty (or additional duty, as the case may be) is paid on the scrap of plastic, which is an input in the manufacture of the acrylic sheets, then the excise duty on acrylic sheets is wholly exempted. In the instant case, since no excise duty (or additional duty) has been paid on the plastic scrap used in the manufacture of acrylic sheets, the Petitioners are not entitled to the benefit of Exemption Notification. Mr. Chaudhari relied upon the decision of this Court in the case of Ashok Traders v. Union of India and Anr. , wherein it is held that where the condition set out in the Notification are not fulfilled, then benefit of such Notification will not be available to the importer.

8. Having heard the Counsel on both sides, we are of the opinion that the issues raised in these petitions are squarely covered by the decision of this Court in the case of Ashok Traders (supra) and the various decisions relied upon by the Petitioners are distinguishable on facts. In the present case, the Exemption Notification clearly provides that no excise duty will be payable on Acrylic sheets if manufactured out of plastic scrap on which appropriate excise duty or additional duty has been paid. In the present case the Acrylic sheets are imported and hence the question of paying Excise duty under Central Excise Act or additional duty under Customs Tariff Act on the inputs i.e. plastic scrap does not arise at all. Therefore, the payment of excise duty or additional duty on inputs is a condition precedent for availing the benefit of Notification No. 53 of 1988. Since the said conditions are not fulfilled the benefit of the Notification is not available to the petitioners. The decision of this Court in the case of Century Enka (supra) is distinguishable on facts because in that case the Notification in question was an unconditional Notification whereas in the present case the Notification in question is a conditional Notification. The decision of the Apex Court in the case Thermax Pvt. Ltd. (supra) which is relied upon by the Petitioners is also distinguishable on facts. In that case, issue before the Apex Court was whether remission of duty could be denied merely because certain procedures prescribed under Chapter X of the Central Excise Rules have not been complied with. In that case after clearing the goods on payment of Customs duty and additional duty, the assessee had sought benefit of Notification No. 63/85 and 93/76 and sought refund of additional duty. The claim was rejected not on the ground that Chapter X of Excise Rules has not been fulfilled but on the ground that Chapter X procedure is designed to facilitate clearances under Central Excise and that procedure cannot be fulfilled at all in the case of an importer. In that context the Apex Court held that what was relevant was the nature and user of the goods and not going through the procedure outlined in Chapter X. It was held that if the person using the goods is entitled to the remission, the importer will be entitled to say that the additional duty should only be the amount of concessional duty and, if the additional duty paid is more than he will be entitled to ask for a refund. In the present case, the Exemption on acrylic sheets is granted only if the excise duty or additional duty is paid on the inputs namely plastic scraps. Admittedly, no such duty has been paid in this case. As held by this Court in the case of Ashok Traders (supra), if the excise duty under the Central Excise and Salt Act, 1944 or additional duty under Customs Tariff Act, 1975 is not paid on the inputs used in the manufacture of acrylic sheets imported, then the benefit of Exemption Notification is not available. Sine the payment of excise duty or additional duty is condition precedent for availing the benefit of Exemption Notification No. 53/88 and admittedly, the said conditions are not satisfied, the Petitioners cannot avail the benefit of the said Notification. The decision of the Apex Court in the case of Hyderabad Industries Ltd. (supra) is also distinguishable on facts. In that case, the Apex Court held that additional duty can not be levied on an article which is not manufactured or capable of being manufactured in India. In the present case, there is no dispute that acrylic sheets is an item which is manufactured out of the plastic scrap and hence the decision of the Apex Court in the case of Hyderabad Industries Ltd. (supra) is not applicable to the facts of the present case. Accordingly, we are of the opinion that the issue raised in the present petitions is squarely covered by the decision of this Court in the case of Ashok Traders (supra) and in this view of the matter the Petitioners are liable to pay additional duty on acrylic sheets imported by them.

9. Since the goods have been cleared under the interim orders of this Court without paying any additional duty and without any security, we direct the Customs authorities to quantify the amount of additional duty payable by the Petitioners in respect of the acrylic sheets, which is the subject matter of these petitions and inform the same to the Petitioners within 4 weeks from the receipt of this order. The Petitioners shall pay the amount of additional duty so quantified by the Customs authorities within 8 weeks from the receipt of communication with interest at the rate of 10% p.a. from the date of clearance of the goods till payment.

10. Petitions are accordingly disposed of in the above terms. However, in the facts of the case, there will be no order as to costs.