SooperKanoon Citation | sooperkanoon.com/30081 |
Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai |
Decided On | Feb-18-2003 |
Judge | J T J.H., J Balasundaram |
Reported in | (2003)(154)ELT472Tri(Mum.)bai |
Appellant | Mustan Teherbhai |
Respondent | Commissioner of C. Ex. and Customs |
Notification No. 118/59-Cus., dated 13-6-1959 exempted from customs duty vessels manufactured M/s. Hindustan Shipyard Ltd., under Customs Bond. As per the records said ship was cleared under the said notification. The present appellants are in possession of a letter dated 21-12-98 from M/s. Hindustan Shipyard Ltd., to this effect. The ship was initially purchased by M/s. Dempo Steamships Ltd., who plied it for some years. The ship was then auctioned and was purchased by the present appellant M/s. Mustan Taherbhai in February, 1993. A bill of entry was filed by them claiming the vessel to be an Indian built vessel. The Customs assessed the vessel provisionally seeking payment of 5% customs duty. The appellants then went to the High Court of Gujarat. The High Court directed a bond to be filed with security deposit and exempted the appellants from the provisionally assessed duty of Rs. 75,89,375/-. Under the instructions of the High Court, an appeal was filed. The Collector (Appeals), Ahmedabad vide his order dated 29-4-1994, Commissioner examined the question whether the ship was required to pay duty in terms of Notification 133/87, which notification permitted duty free importation of foreign going vessels, but prescribed that where the ship was being brought for being broken, duty would be attracted. He observed that where the vessel was an ocean going vessel, a bill of entry had to be filed on its arrival and also another bill of entry had to be filed when it was to be broken up. The Collector (Appeals) held that in the situation given the ship was required to suffer duty in terms of Notification 133/87. On confirming the lower order, the appellants have filed this appeal before the Tribunal.
2. The Tribunal in their Final Order No. 491/B-2, dated 10-7-98 observed that the vessel was constructed in India in a Customs Bonded Warehouse. Reading the provisions of Sections 68 & 69, the Tribunal held as followed.
"This provision clearly establishes that the manufacture of the goods in the Customs Licensed Shipyard of Hindustan Shipyard Limited under Customs Warehousing Bond was the same as a vessel had been manufactured in a foreign country".
3. The Tribunal observed that Notification 133/87-Cus. was issued subsequent to Notification 262/58-Cus. which had identical provisions.
The Tribunal referred to the judgment of the Supreme Court in the case of Union of India v. Jalyan Udyog [1993 (68) E.L.T. 9 (S.C.)]. The Tribunal noted the claim of the appellants that since the ship had been cleared in terms of Notification 118/59-Cus., no further duty was chargeable even at the time of its being broken up. The Tribunal observed that a ship cleared in terms of Notification 118/59-Cus.
covered its initial clearance, but when it was to be broken up, the provisions of Notification 262/58-Cus. or of the later Notification 113/87-Cus. would apply. The Tribunal accordingly dismissed the appeal filed by the present appellant.
4. Against the judgment, an appeal was filed in the Supreme Court. The Supreme Court remanded the matter to the Tribunal directing the Tribunal to take note of the judgment of Bombay High Court in the case of Baijnath Melaram v. Union of India and Ors. [1998 (97) E.L.T. 27 (S.C)].
5. The Supreme Court noted that the jurisdiction to hear the appeal vested with the Mumbai Bench. In terms of that order, the appeal was heard by this Bench.
6. We have heard Shri Doiphode, Advocate for the appellant and Shri S.P.S Pundir, Jt. C.D.R for the Revenue.
7. Shri Doiphode maintained that the ship was cleared by Hindustan Shipyard Ltd., without payment of Customs duty in terms of Notification 118/59-Cus. and the same time excise duty of 1% ad valorem was paid on the ship. It is claimed that the ship was thus made in India and the law given by the Hon'ble Bombay High Court in the case of Baijnath Melaram (supra) would apply. In this judgment later upheld by the Supreme Court, it was observed that the ship was originally manufactured in India and, therefore, the ship brought in for breaking operations could not be called to be imported. Shri Doiphode claimed that the ship before the Hon'ble High Court in that case was built by a Shipyard in India. He maintained that since the ship has suffered a duty of excise of 1%, it was clearly manufactured in India. Shri Doiphode stated that the ship was manufactured using certain parts imported and deposited in the warehouse without payment of duty as also using very substantial portion of indigenously manufactured parts. If customs duty was sought to be charged then its coverage would be limited only to duty calculable on the imported parts and components and not on the entirety of the goods manufactured in bond. He submitted that this position was well established and accepted in practice by the Customs authorities. In support of his statement he placed on record a bill of entry for clearance of a ship similarly manufactured where the duty was paid only on the imported portions of the vessel. He also placed on records, the extract from the Customs (Preventive) Manual (Central) relating to warehousing operations and specifically relating to manufacture in bond.
8. Shri Pundir claimed that the entire case of the appellant was based on the presumption that the ship was cleared in terms of Notification 118/59-Cus. The claim that it was manufactured in India is also based thereupon. It was his submission that on the date of clearance i.e. on 30-11-1975, of the vessel from M/s. Hindustan Shipyard Ltd. Notification No. 118/59-Cus. was not in existence having been rescinded vide Notification 163/65-Cus. He claimed that this notification had conditions that if the ship was later broken up, appropriate duty would be charged. He place on records a photocopy of the C.B.R. Bulletin (Customs Technical) for October-December, 1965. The text of the Notification was as below :- "In exercise of the powers conferred by Sub-section (1) of Section 25, read with Sub-section (3) of Section 160 of the Customs Act, 1962 (52 of 1962), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 118 dated the 13th June 1959, the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts any ocean going vessel manufactured in a warehouse in accordance with provisions of Section 65 of the said Act from the duty of customs leviable thereon when cleared from the warehouse : Provided that the duty of customs shall be levied on the vessel if it is broken up as if it were then imported to be broken".
9. Shri Doiphode contested this and submitted that the C.B.R. bulletin was not the authority but that the Gazette of India alone could establish the veracity of a notification. Shri Pundir then produced a certified photocopy of the Gazette of India, dated 16th October, 1965 in which vide S.O. 3183 Notification No. 163/65-Cus. has been re-produced. It was pointed out by Shri Doiphode that the date thereupon was printed as "19th October, 1965". But since the Gazette was dated 16th October, 1965, it was accepted to be a printing error.
10. Shri Doiphode in his rebuttal submitted that the contention that the subject ship had been initially cleared under Notification No.118/59 had been made right from the beginning and it was carried up to Supreme Court where the remand order was made. He submitted that there was a certificate to this effect by M/s. Hindustan Shipyard Ltd., and also there was a letter from the jurisdictional officers certifying this fact. Reliance was again placed on the judgment of the High Court in the case of Baijnath Melaram. It was claimed that since the ship was manufactured in India as evidenced by the fact of excise duty payment, the ratio of the judgment would apply. Citing the judgment of the Supreme Court in the case of Reckitt & Colman of India Ltd. v. CCE [1996 (88) E.L.T. 641]. Shri Doiphode claimed that the Revenue had attempted to make an entirely new case at the present stage which was not permissible in terms of the cited judgment.
11. Reiterating his earlier arguments, Shri Doiphode claimed that the provisions of Chapter IX of the Customs Act, 1962 did not provide for duty to be levied upon goods manufactured in bond but that duty could be charged only on the imported components in the goods so manufactured in bond. He stated that in the construction of the ship, the bulk of the components were indigenously made and charge of customs duty thereupon would neither be equitable nor legal. This position according to him remains valid even in the light of Notification 163/65.
13. The fact that Notification No. 118/59-Cus. was not in existence at the date on which the vessel was cleared by HSL having been superseded by Notification No. 163/65-Cus. came to light only on the submissions made by Shri Pundir. It would appear that at all times it was wrongly presumed that the earlier Notification was in existence. We do not see the revelation as bringing on record new facts. We see it as correction of the factual error, which had existed in the record at all times. We find no substance in the submissions of Shri Doiphode, that a new case is being made out by the Revenue at the present stage.
14. It has been held by the Hon'ble Supreme Court that as far as facts are concerned, the Tribunal is the final authority and the Court would go into only the questions of the law at the appeal stage. Therefore, the Tribunal would first record the correct facts and then in the factual perspective would locate and apply the relevant law.
15. When the fact is accepted that Notification 118/59-Cus. did not exist at the time of clearance of the vessel from the Shipyard, the persistent plea that the ship was manufactured in the warehouse and that it was manufactured in India and that it attracted excise duty alone need not be considered at all. Since on the date of such clearance, the notification in force was 113/83-Cus., the provisions thereof would apply and the duty would be payable in terms of the conditions in the said notification.
16. Since we have so held the question of the applicability of the High Court judgment in the case of Baijnath Melaram does not arise.
17. We have examined the proviso of Section IX of the Customs Act, 1962. The provisions permit deposit of imported goods and their retention in the warehousing premises without payment of duty for a specified period. Such goods can be cleared for home consumption on payment of duty (Section 68) or for export without payment of duty (Section 69). Although, Section 65 permits carrying of manufacturing activity in relation to the warehousing goods, it merely provides for disposal of the waste arising in the process of manufacture but does not state as to how the final goods so manufactured are to be cleared.
18. Section 66 provides for full or partial exemption for the imported goods used in such manufacture where the rate of duty on such goods could exceed the rate on the duty on the final goods. Section 66 is reproduced below :- "Power to exempt imported materials used in the manufacture of goods in warehouse. - If any imported materials are used in accordance with the provisions of Section 65 for the manufacture of any goods and the rate of duty leviable on the imported materials exceeds the rate of duty leviable on such goods, the Central Government, if satisfied that in the interests of the establishment or development of any domestic industry it is necessary so to do, may, by notification in the Official Gazette, exempt the imported materials from the whole or part of the excess rate of duty".
19. The rate of duty referred in the above section would necessarily mean rate of customs duty. Wording of the section would indicate both components and the goods manufactured therefrom would be subject to customs duty. Therefore, on this ground also the argument that any goods made in Customs Bonded Warehouse are deemed to be made in India must be rejected.
20. Shri Doiphode submits that if the duty of customs has to be paid, it has to be limited to that calculated on the value of the imported parts used therein. We find no basis in law as discussed above to support the plea. There are notifications exempting indigenously made inputs from excise duty when used in the manufacture of goods in bond.
Therefore, the plea of double taxation does not have merit. The wrong practice adopted by the department cannot be a ground for moulding of any relief by the Tribunal.