Cus - As additional duty is to counterbalance and safeguard interests of Indian manufacturers, if no duty payable on like goods, then on import no CVD: HC
By TIOL News Service
MUMBAI, OCT 16, 2017: WRIT Petition filed by the company in the year 1989 was decided recently.
The petitioner is carrying on business of manufacturing and distribution of transformers which are used in distribution of electricity.
They imported transformer oil is used as raw material in the manufacture of transformers.
An order was placed by the first petitioner for supply of 1,000 MT of transformer oil.
The first petitioner paid basic custom duty and auxiliary duty. In addition, additional duty under subsection (1) of section 3 of the Customs Tariff Act, 1975 was assessed at Rs.1,000/per KL and additional duty under subsection (3) of section 3 of the said Act of 1975 was assessed at Rs.900/- per KL. The contention is that the petitioners are liable to pay additional duty leviable under subsection (1) of section 3.
Reliance is placed by the petitioners on the notification no.75/84 C.E. dated 1st March 1984.
The submission of the petitioner is that the transformer oil has been exempted under the said notification and, therefore, the additional duty under subsection (1) of section 3 of the said Act of 1975 is not payable.
The prayer in this petition under Article 226 of the Constitution of India is for quashing and setting aside the order of assessment to the extent to which the additional duty is made payable under subsection (1) of section 3 of the said Act of 1975.
It is contended in the said affidavit-in-replyfiled by the Deputy Collector of Customs that the first petitioner is not entitled to seek benefits of the impugned notification as the first petitioner is not involved in manufacture of transformer oil. It is contended that the first petitioner can have the benefit of the said notification only if it is a manufacturer of transformer oil.
The High Court extracted section 3 of the said CTA, 1975 and after adverting to the apex court decision in the case of Khandelwal Metal & Engineering Works v. Union of India = 2002-TIOL-372-SC-CUS-LBobserved thus –
++ What is important is that the Apex Court has held that sub-section (1) of section 3 of the said Act of 1975 does not require that the imported article should be such which is capable of being produced or manufactured in India. The assumption has to be that the article imported into India can be manufactured in India and upon that basis, the duty has to be determined under subsection (1) of section 3 of the said Act of 1975. If like article is not produced or manufactured in India, the duty levied within the meaning of subsection (1) of section 3 would mean the duty which would be leviable on the class or description of the articles to which the imported article belongs. The levy under subsection (1) of section 3 is permissible, provided the imported article is liable to excise duty if manufactured in India.
++ Therefore, if goods of class-A are imported and if excise duty is not payable on the goods manufactured in India of that class, there is no question of levy of additional duty under subsection (1) of section 3.
++ Additional duty under subsection (1) of section 3 is payable on the imported article provided the article of that category manufactured in India attracts payment of excise duty. By reason of exemption, if the like article manufactured in India is not liable for levy of excise duty, additional duty under subsection (1) of section 3 will not be payable on import of such article.
++ The provision of section 3 is basically enacted to safeguard the interests of the manufactures in India. In fact, the provision for levy of additional duty on the imported articles is to counterbalance the excise duty leviable on like articles made indigenously. As the additional duty is to counterbalance and to safeguard the interests of the manufacturers in India, if the manufacturers in India are not liable to pay duty on the goods of the like category, then on import of such goods the additional duty under subsection (1) of section 3 of the said Act of 1975 cannot be levied for the reason that so far as Indian manufacturers are concerned, the goods are exempted.
Ordered accordingly.
(See 2017-TIOL-2167-HC-MUM-CUS)
