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Bombay High Court
Indian Lead Private Limited … vs Union Of India And Others on 1 January, 1800
Equivalent citations: 1987 (32) ELT 708 Bom
Bench: S Bharucha


JUDGMENT

1. The 1st petitioners manufacture lead and lead alloys for which purposes the import lead scrap. Prior to 1st March, 1981 their imports were liable to countervailing duty under Item 68 of the First Schedule to the Central Excises and Salt Act, 1944. On 1st March, 1981 the said Act was amended and Item 27A was introduced which prescribed a rate for, inter alia, waste and scrap lead.

2. On 1st March, 19811 a notification was issued under sub – rule (1) of Rule 8 of the Central Excises Rules whereby the Central Government exempted “waste and scrap of copper, zinc, aluminium and lead, falling under Item No. 26A,26B,27 and 27A respectively of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) from the whole of the duty of excise leviable thereon subject to condition that – (a) such waste and scrap are manufactured from copper, zinc, aluminium or lead falling under Item Nos. 26A, 26B, 27 and 27A respectively of the said First Schedule on which appropriate amount of duty of excise or, as the case may be, the additional duty leviable under Section 3 of the Customs Tariff Act, 1975 (51 of 1975) has already been paid; or (b) such waste and scrap arise from products falling under any Item Number of the said First Schedule other than Item Nos. 26A, 26B, 27 and 27A manufactured from the said copper, zinc, aluminium or lead.

3. On 9th July, 1981 the 1st petitioners wrote to the Assistant Collector of Customs stating that since 1st April, 1979 they had been paying countervailing duty on imported scrap under protest. Subsequent to the passing of an order dated 23rd October, 1981 they had been permitted to clear lead scrap upon the tendering of a bond. After 1st March, 1981, however, cash payment prior to clearance was being, insisted upon and it was being made. The 1st petitioner were advises that the categories of lead scrap imported by them were exempt from countervailing duty by reason of the said notification dated 1st March, 1981. They imported whole drained scrap batteries and battery plate scrap and these did not fall under Item 27A and were,e therefore, exempt. The letter stated that the 1st petitioners were taking steps for applications for refund in regard to duty paid on consignments imported between 1st March, 1981 and the date of the letter.

4. The 1st petitioners, accordingly, made refund applications. The applications were rejected but upon the consideration of some other notification. The 1st petitioners filed appeals. These were dismissed. Against the orders of dismissal of the appeals this petition is filed.

5. The first aspect to be considered is the interpretation of the said notification. Waste and scrap lead is exempted form the Excise duty leviable thereon under sub – clause (b) of the said notification if it arises from products falling under any item of the First Schedule to the said Act, other than the specified Items 26A, 26B, 27 and 27A, manufactured from “the said….lead”. The use of the words “the said” indicats reference to lead of the sort already refereed to in the said notification. The reference is to the sort of lead referred to in Clause (a) thereof. This is lead which falls under the specified items of the First Schedule and on which the appropriate amount of duty of excise, or as the case may be the additional duty leviable under Section 3 of the Customs Tariff Act, 1975 (51 of 1975) has already been paid.

6. The lead scrap which is imported by the petitioner does not arise from lead products upon which Excise duty or Additional duty has been paid. It does not, therefore, qualify for exemption under the said notification.

7. Mr. Taleyarkhan, learned counsel for the petitioners, was not, I think, right in suggesting that “the said….lead” mentioned in Clause (b) of the said notification was only lead that fell under the items of the First Schedule specified in Clause (a) thereof. Clause (a) provides two requirements : one regarding the specified items ands the other regarding the payment of excises or additional duty. Both requirements must be complied with before lead can be “the said lead” under the said notification.

8. Mr. Taleyarkhan submitted that the lead scrap imported by the 1st petitioners was material that had become obsolete. It consisted of batteries, lead pipes and cable sheathings which had been discarded after their utility had ceased and had been sold as scrap. In Mr. Taleyarkhan’s submission such lead scrap was not manufactured or produced and, therefore, the question of any Excise duty or additional duty being levied or collected thereon did not arise.

9. This argument is advanced for the first time in this petition. Not having been raised before the authorities there has been no decision by them as to the nature of the lead scrap imported by the petitioners.

10. In any event, the judgment of the Supreme Court in Khandelwal Metal and Engineering Works v. Union of India – , squarely applies. The Supreme Court was considering the contention that “the `additional duty’ of Customs, which is in the nature of countervailing duty, cannot be levied on brass scrap because, such scrap which consists of damaged brass articled like taps and pipes, is not manufactured in India ( or elsewhere), as indeed it cannot be”. Putting it in one sentence, the Supreme Court said, the argument was that if indigenous goods, similar to those which were imported, did not suffer Excise duty for the reason that they were not manufactured, the charge leviable under Section 3(1) of the said Act was not attracted. The Supreme Court found no substance in the argument for duty was leviable on the taxable event of the export of goods from India or the import of the goods into India. The taxable event was not the manufacture of the goods. Section 3(1) of the said Act did not require that the imported article should be such as to be capable of doing produced or manufactured in India. The assumption had to be that an article imported into India could be produced or manufactured in India and upon that basis duty had to be determined under Section 3(1).

11. Mr. Taleyarkhan drew my attention to the observations of the Supreme Court, inter alia in paragraph 42, that the brass scrap or waste was a by – product of manufacture and was an integral part of an inevitable incident of the manufacturing process. In Mr. Taleyarkhan’s submission, therefore, the judgment of the Supreme Court could not apply to the lead scrap imported by the 1st petitioner because it had not come into existence by reason of manufacture. As has been noticed, the Supreme Court said that the brass scrap which it was concerned with, and which consisted of damaged brass articles like taps and pipes, was also “not manufactured”. The distinction Mr. Taleyarkhan seeks to draw has no application.

12. In the result, the petition must fail and is dismissed with costs.

13. Rule discharged.


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