ORDER
K.S. Venkataramani, Member (T)
1. The Collector of Customs, Madras, has preferred this appeal against the order dated 22-9-1988 passed by the Collector of Customs (Appeals), Madras. The facts in brief are that the respondents, herein, imported a consignment of projection lens for which a Bill of Entry was filed in December, 1987. The goods were classified under Heading 9806 CTA & 9001.00 CET Act and charged to duty at 100% + 45% + 15% in terms of Notification 68/87. Subsequently, the respondents preferred a refund claim seeking exemption from Additional Customs Duty (CVD) which was levied at 15% in terms of Central Excise Notification 71/86. The Assistant Collector of Customs, Air Cargo, Madras, rejected the refund claim. He held that under Notification 68/87, already extended to the goods, exemption is granted to goods falling under Heading 9806 CTA from so much of that portion of the duty of customs, as is in excess of the 100% and also from so much of that portion of the additional duty of customs leviable thereon under Section 3 of the CTA as is in excess of 15%. The Asstt. Collector found that Notification 71/86, claimed by the respondents, grants nil Central Excise Duty exemption and that this was a Notification issued with reference to Central Excise Tariff. The Assistant Collector took the view that once the rate of CVD is fixed already by Notification 68/87 and goods assessed to duty thereunder, only that notification will apply and exemption as in Central Excise Notification is not applicable. When there are two notifications, one specifically for CVD and another on the excise side, then, according to the Assistant Collector, only notification, which has specific reference to CVD, will prevail for charging CVD. The Collector (Appeals), however, set aside this order of the Assistant Collector holding that the exemption available under the Central Excise Notification 71/86 has to be extended to the goods.
2. Arguing for the Appellant Collector, Shri J.N. Nair, the Ld. DR, pointed out that the Collector (Appeals) was factually incorrect when he observed, in his order, that Notification 68/87 does not make any reference to CVD. The Ld. DR referred to the notification and pointed out that it specifically exempts the goods from duty in excess of 15% where such duty is leviable under Section 3 of the Customs Tariff Act. He also reiterated the department’s contention that where there is a specific exemption notification for CVD, in respect of any imported goods, only that notification has to be applied for CVD purposes.
3. The Ld. Consultant, Shri N.C. Sogani, appearing for the respondents, contended that exemption Notification 68/87 cannot be equated to a charging section and it cannot be construed to mean that goods thereunder should be charged to 15%. When nil duty exemption is available under Central Excise Notification, that should be applied. The Ld. Consultant, further, pointed out that Notification 71/86 exempts parts of cinematograph projectors other than projector heads; arc lamps & sound heads from duty totally which are falling under Chapter 85 or 90. When Central Excise Duty is nil on the goods, which have been assessed under Chapter 90 for Central Excise purposes, no CVD can be levied thereon by invoking Notification 68/87.
4. Submissions made by both sides have been carefully considered. Section 3(1) of the Customs Tariff Act, 1975 is the authority for levying additional duty of customs and it lays down that any article which is imported into India shall, in addition, be liable to duty equal to the excise duty for the time being leviable on a like article if produced or manufactured in India. The Explanation to that Section lays down that 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. This Section of the CTA came in interpretation by the Supreme Court in the case of Khandelwal Metal & I-ngg. Works v. Union of India -1985 (20) E.L.T. 222 (SC). The Supreme Court observed that the levy specified in Section 3(1) of the Tariff Act is a supplementary levy, in enhancement of the levy charged under Section 12 of the Customs Act and with a ‘different base constituting the measure of the impost. In other words, the scheme embodied in Section 12 Customs Act, 1962 is amplified by what is provided in Section 3(1) CTA. The Customs Duty charged under Section 12 is extended by an additional duty confined to imported articles in the measure set forth in Section 3(1). In the Century Enka Limited v. Union of India – 1982 (10) E.L.T. 64 (Bom.), the Bombay High Court held that Section 3 of the Customs Tariff Act, 1975 has to be read with that of Central Excise Act and the liability to levy the countervailing duty depends upon the fact as to whether such article is liable to pay excise duty. The Court also held that no countervailing duty can be levied on an article, if such an article manufactured in India is exempt from the payment of excise duty. Thus, it is clear from the above that for determining the measure of additional duty what is required to be found out is the excise duty for the time being leviable on a like article which can only be found under the Central Excise Tariff read with relevant Notification issued thereunder and not with reference to Notification under Section 25 of the Customs Act. Viewed in this light, the Notification 68/87 can be construed as setting the outer limit to CVD, where such article is leviable to Central Excise Duty. In such a view of the matter, in the present case, the department has classified the goods for CVD purposes under Chapter 90 and the goods imported are covered by Sl. No. 1 relating to parts of cinematograph projectors contained in Notification 71/86, which grants nil duty exemption. It is also to be noted that there is no condition attached to this exemption. Therefore, it was not possible to sustain the view taken by the department in the facts of this case that when there are two notifications, one specifically for CVD and another on the excise side, then only the notification, which is specifically for CVD will prevail. In the result, there is no reason to interfere with the order passed by the Collector (Appeals) and the appeal is, accordingly, rejected.
