Judgment:
1. These three appeals have been filed by Collector of Customs, Bombay against the orders passed by the Collector of Customs (Appeals), Bombay. As the issue involved in the three appeals is the same, they are being disposed of by this common order.
2. The appellants imported second hand intersecting gill boxes. The Custom House charged additional duty of customs equivalent to the Central Excise duty under Item 68 of the Central Excise Tariff. The appellants claimed for refund of duty on the ground that countervailing duty was not chargeable on the second hand machines imported by them.
The refund claims were rejected by the Assistant Collector of Customs (Refund department), Bombay. The Assistant Collector, while rejecting the refund claims, held that Section 12 of the Customs Act, 1962 does not make any distinction, whether the goods imported were new and old.Appeals filed by the respondents against the orders of the Assistant Collector were allowed by the Collector of Customs (Appeals) by the impugned orders. The Collector of Customs (Appeals) held that the Explanation under Section 3(1) of the Customs Tariff Act, 1975 did not include in its ambit the imported second hand goods. According to him, it cannot be said that second hand goods could have been manufactured or were capable of being manufactured in India. The present appeals are against the said order of the Collector of Customs (Appeals), Bombay.
3. We have heard the arguments of Shri H. Gopinath, learned S.D.R. for the appellants and Shri C.L. Beri, learned advocate for the respondents. Shri Gopinath has argued that additional duty of customs collected on the second hand machines imported by the respondents is fully covered by the judgment of the Hon'ble Supreme Court in the case of Khandelwal Metal & Engineering Works and Anr. etc. v. Union of India and Ors. 1985 (20) ELT 222 (SC). Shri Gopinath has also cited a judgment of Delhi High Court in the case of Super Traders and Anr. v.Union of India and Ors. reported in 1983 ELT 258 (Del.) in which it was held that there would be no difference in the classification whether the quality of stainless steel sheets was prime or defective. He has stated that goods covered by the above judgment of Supreme Court were old brass scraps. He has particularly drawn out attention to paragraphs 4, 6 to 10 and 37 (i to vi) of the judgment. He has stated that levy of additional duty of customs equivalent to the Central Excise duty under item 68 of the Central Excise Tariff was in order and according to law and the respondents have no case on merits.
4. Shri C.L. Beri, learned advocate for the respondent has stated that he does not dispute the fact that charging section for additional duty under Section 3(1) of the Customs Tariff Act, 1975 is Section 12 of the Customs Act, 1962, but he has challenged the scope for collecting such additional duty on the second hand goods imported by the appellants. He has argued that it is not the intention of ' Section 3(1) of C.T.A., 1975 to charge additional duty on second hand goods. He has further argued that in the statement of objects and reasons of the Customs Tariff Act, clause 3 provided for levy of additional duty on imported articles to countervail excise duty levied on the goods manufactured indigenously. The object of Section 3(1) of the said Act is not to levy additional duty on second hand goods because on second hand goods Central Excise duty is not chargeable. In support of his argument, learned advocate has cited the judgment of Hon'ble Supreme Court in the case of Motor Owners' Insurance Co. Ltd. v. Jadavji Keshavji Modi and Ors.,Katawar Singh and Ors. v. The Delhi Administration 5. The second point of the arguments of Shri Beri is that in the judgment of Hon'ble Supreme Court in the case of Khandelwal Metal & Engineering Works and Anr. etc. v. Union of India and Ors., the imported brass scraps find place in the Central Excise Tariff, but second hand machines, as in the present case, does not figure in the Tariff. On this point he tried to distinguish the present case from the case covered by the Supreme Court's latest judgment in Khandelwal.
Metal's case.
6. As rejoinder to the arguments of Shri Beri, Shri Gopinath has stated that the judgment of Delhi High Court reported in 1983 ELT 258 (Del) covered the defective articles and hence the second hand machines will also be covered by Section 3(1) of C.T.A., 1975.
7. We have carefully considered the submissions of both side. Scope of levy of additional duty under Section 3(1) of the Customs Tariff Act, 1975, has been clearly defined in the said Section and the Explanation below it. For proper appreciation of the provisions of this Section we consider it worthwhile to reproduce the same hereunder:- "3.(0 Any articles which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article.
Explanation:- In this section, 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, or, if a like article is not so produced or manufactured, which would be leviable on the class or description of article to which the imported article belongs, and where such duty is leviable at different rates, the highest duty." It has been clarified in the "Explanation" that the additional duty mentioned in Section 3(1) of the Act means the Excise duty for the time being in force which would be leviable on like article if produced or manufactured in India, or, if like article is not so produced or manufactured, which would be leviable on the class or description of article to which imported article belongs..." (Emphasis supplied by us). Machines imported in these consignments, if manufactured in India, would attract the Central Excise duty under item 68 of the Central Excise Tariff. Therefore, according to the provisions of Section 3(1) of the Customs Tariff Act, 1975 read with the Explanation below this section, the imported machines would attract additional duty of Customs under Section 3(1) of the Customs Tariff Act, 1975 of equivalent to the Central excise duty under item 68 of Central Excise Tariff.
8. A similar point, as raised by the learned advocate, regarding the scope of levy of additional duty under Section 3(1) and the object of that section was raised before the Hon'ble Supreme Court in the case of Khandelwal Metal & Engineering Works, reported in 1985 (20) ELT 222 (SC). After examining the object and reason of Section 3(1) of the Act, the Hon'ble Supreme Court held that "in the absence of any ambiguity in the wording of Section 3(1) the additional duty referred to in that section could not be treated as countervailing duty." The Supreme Court further held as follows:- "Section 2 and 3(1) of the Tariff Act are not charging Sections. The charging section is Section 12 of the Customs Act under which duty is leviable on the taxable event of export of goods from India or the import of goods into India, which is relatable to Entry No. 83 in "List I of the Seventh Schedule of the Constitution: "Duties of Customs including export duties". The taxable event is not the manufacture of the goods. Under Section 3(1) of the Tariff Act, "the excise duty for the time being leviable on a like article if produced or manufactured in India" is only the measure of the duty leviable on the imported article. Section 3(1) does not require that the imported article should be such as to be capable of being produced or manufactured in India. The assumption has to be that an article imported into India can be produced or manufactured in India and upon the basis, the duty has to be determined under Section 3(1).
Any doubt on this point is resolved by the Explanation to Section 3(1) of the Tariff Act. The Explanation furnishes a dictionary for the interpretation of Section 3(1) and provides a clue to its understanding. The Explanation provides in so many words that the expression "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 (emphasis supplied).
The Explanation even goes further and provides that if a like article is not so produced or manufactured, then, the duty leviable means the duty which would be leviable on the class or description of articles to which the imported article belongs. These provisions leave no doubt that the duty referred to in Section 3(1) of the Tariff Act does not bear any nexus with the nature and quality of the goods imported into India." 9. The imported second hand machines fall under the class of "machines". Machines, if produced in India, would attract Central Excise duty under Item 68 of Central Excise Tariff. Therefore, although the imported goods are second hand, being of the same class as "machines" which, if manufactured, are liable to Excise duty under item 68 C.E.T., would correctly attract additional duty of customs under Section 3(1) of the Customs Tariff Act. In the aforesaid judgment Hon'ble Supreme Court laid down that the Explanation under Section 3(1) of the Tariff Act leaves no doubt that the duty referred to in the said section does not bear any nexus with the nature and quality of the goods imported into India. The goods involved in the case covered by the Supreme Court's judgment (Supra) were old brass scraps and the Hon'ble Supreme Court held the additional duty of customs under Section 3(1) was leviable thereon. Shri Gopinath has cited one judgment of Delhi High Court reported in 1983 ELT 228 (Super Traders and Anr. v.Union of India and Ors.) which also is on the above line. The judgment in Khandelwal Metal Works' case 1985 (20) ELT 222 (SC) supersedes the earlier judgments reported in AIR 1981 SC 2059 and AIR 1965 SC 871.
Hence we do not consider it necessary to discuss them further.
10. The second point of the learned advocate that the imported second hand machines do not figure in the Central Excise Tariff is not tenable. The goods which do not figure in any of the first 67 items of the Central Excise Tariff would fall under item "68-A11 other goods not elsewhere specified". Machines, when manufactured in India, fall under Tariff Item 68. Second hand machines do fall under Tariff Item 68 for the purpose of additional duty of Customs under Section 3(1) of the Customs Tariff Act. Therefore, this argument of the learned advocate is also rejected.
11. In view of the above discussions, we hold that there is no doubt about the liability of the imported second hand machines to additional duty of Customs under Section 3(1) of the Customs Tariff Act, 1975. The cases before us are fully and squarely covered by the Supreme Court's judgment in the case of Khandelwal Metal & Engineering Works and Anr.
etc. v. Union of India and Ors. (Supra.) 12. In the result, we allow these appeals, and set aside the impugned orders.