Mahavir Metal Works Ltd. and Another vs Union of India and Others

The prayer in W.P. No. 11316 of 1981 runs as follows :-

For the reasons stated in the accompanying affidavit, it is respectfully prayed that this Hon''ble Court may be pleased to issue a Writ of Certiorari-fied-Mandamus, calling for the

records, ending with the order of the Appellate Collector No. C3/2209/81 dated 9.9.1981, quashing the same and direct the refund of duty of Rs. 2,69,404.20 paid in excess of

the customs duty and additional duty at the rate of 8% and pass such further or other orders as this Hon''ble Court may deem fit and proper in the interests of justice.

The prayer in W.P. No. 11317 of 1981 runs as follows :-

For the reasons stated in the accompanying affidavit, it is respectfully prayed that this Hon''ble Court may be pleased to issue a writ to certiorari-fied-Mandamus calling for the

records ending with the order of the Appellate Collector C.3/2209/81 dated 9.9.1981 quashing the same and direct the refund of duty of Rs. 89,349 paid in excess of the

customs duty and additional duty at the rate of 8% and pass such further or other orders as this Hon''ble Court may deem fit and proper in the interests of justice.

The customs duty and additional duty referred to in the prayers in the writ petitions were in respect of brass scraps imported by the petitioners. The authorities went to bring

the brass scraps imported by the petitioners for purposes of additional duty under the heading ''copper'' - item 26A(i) of the Central Excise Tariff. Though a contention has been

raised by the petitioners in the writ petitions that ''brass scraps'' could not come within the category of ''copper'', yet in view of the pronouncement of the Supreme Court in

Khandelwal Metal and Engineering Works and Another Vs. Union of India (UOI) and Others, discountenancing such a theory, this contention has not been pressed forth by Mr.

Habibullah Badsha, learned counsel for the petitioners. Learned counsel is more on the question of the levy of additional duty, invoking item 26-A(1) of the Central Excise Tariff.

Clause 1(b) of Item 26-A of the Central Excise Tariff bringing in ""waste and scrap"", was introduced with effect from 1.3.1981 and its vires has been upheld by the Supreme

Court in the above pronouncement. But the imports made by the petitioners in the present cases were anterior to the introduction of clause 1(b) of item 26-A. Hence, learned

counsel for the petitioners, submits that the levy of additional duty invoking clause of item 26A cannot be sustained in the instant case. Item 26-A prior to the introduction of

clause 1(b) as well as Explanation II read as follows :-

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Item Tariff Description Rate of duty.

No.

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25-A 1. In any crude form including ingots, bars,

blocks, slabs, billets, shots and pillets. Rs. 5,600 per MT

1A. Wire bars, wire rods and castings, not

otherwise specified Rs. 5,600 per MT

Manufacturers, the following viz. plates,

sheets, circles strips and foils in any

form or size. Rs. 6.300 per MT

Pipes and tubes. 28% ad valorem

Explanation :- ''Copper'' shall include any alloy in which

copper predominates by weight over each of the other metals"" ------------------------------------------------------------------------

After 1.3.1981, by virtue of the introduction referred to above, item 26-A reads as follows :-

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Item Tariff Description Rate of duty

No.

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26-A Copper 1. In any crude form including ingots,

bars, blocks, slabs, billets shots

and pellets. Rs. 5,600 per MT

1(a) Wire bars, wire rods and castings,

not otherwise specified Rs. 5,600 per MT

1(b) Waste and scrap Rs. 5,600 per MT

Manufacturers, the following,

namely - plates, sheets, circles,

strips and foils in any form

or size. Rs. 6,300 per MT

26-A Copper 3. Pipes and tubes, excluding shells and

blanks therefor. 28% ad valorem.

Shells and bleaks, for pipes and tubes.

Explanation I : ''Copper'' shall include any alloy in which

copper predominates by weight over each of the other metals.

Explanation II : ""Waste and scrap"" means waste and scrap of

copper fit only for the recovery of metal or for use in the

manufacture of chemicals. But does not include slag, dross, scalings,

ash and other coprous residues"".

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Hence, apparently, only on and after the introduction of clause 1(b) in item 26-A, ''waste and scrap'' become liable to additional duty under the formula of item 26-A and not

anterior to that. But, Mr. P. Narasimhan, learned Senior Government Standing Counsel, representing the respondents, would submit that ''scrap'' would certainly come within the

ambit of ''crude'', occurring in clause 1 of item 26-A.

It is impossible to equate ''scrap'' with ''crude''. ''Scrap'' is something which gets eliminated in the course of and after the completion of a product. The raw material for the

product could not be a crude. The raw material for the product must have got crystalised into the ultimate substance, after the crude gets processed for that purpose. In contrasts,

crude is a substance in its natural unprocessed state, not altered or prepared for direct use in the making of any product by any process. Out of the crude, the raw material must

come, which go to make up the product and in the course of making up of the product out of that raw material fragments discarded and left over things are called ''scrap''. Hence,

it is not possible to state that scrap would fall within ''crude'' envisaged in clause 1 of item 26-A. Hence, the arguments of the learned counsel for the petitioners that since the

imports in the present case of brass scraps were anterior to the introduction of clause 1(b) into item 26-A, the brass scraps imported by the petitioners could not suffer any

additional duty relatable to item 26-A(1) of the Central Excise Tariff has got to be accepted. Yet, as rightly contended by Mr. P. Narasimhans, learned Senior Government

Standing Counsel, the residuary item 68 of the Central Excise Tariff may be attracted. This stand is not being disputed by the learned counsel for the petitioners. In the said

circumstances, the levy of the basic customs duty has got to be upheld and only the levy of the additional duty relatable to item 26-A(1) of the Central Excise Tariff has got to be

discountenanced, and since additional duty could be levied, invoking the residuary item 68 of the Central Excise Tariff, the matter requires re-examination by the first authority,

who is the third respondent in both the writ petitions. Accordingly, both the writ petitions are allowed and the matter will stand remitted to the file of the third respondent, to

quantify the additional duty relatable to item 68 of the Central Excise Tariff and refund the excess duty, if any, after such quantification. The third respondent is directed to do so

within a period of three months from the date of the receipt of copy of this order. No costs.