BHARUCHA, J. - (1.) THE appeal arises upon a judgment delivered by the Customs. Excise and Gold (Control) Appellate Tribunal. The appellants imported bulked nylon fabric. The bill of entry described the imported goods as being Nylon Woven Dipped Diffusion Resistance Fabric, Goodyear Code E02 NN. The imported goods were cleared upon payment of duty as demanded. The appellants then claimed refund of the additional duty paid by them now stated. The claim having been refused by the authorities below, the Tribunal was moved.
(2.) THE Customs Tariff Act, 1975, prescribes in Section 3 for the levy of additional duty equal to excise duty. Sub-section (I) its Explanation and sub-section (3) of Section 3 are relevant. and they read thus : "3. Levy of Additional duty equal to excise duty - (1) Any article 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 produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where such duty at different rates, the highest duty. xxxxxxxxx (3) If the Central Government is satisfied that it is necessary in the public interest to levy on any imported article [whether on such article duty is leviable under sub-section (1) or not] such additional duty as would counter balance the excise duty leviable on any raw materials, components and ingredients of the same nature as, or similar to those, used in the production or manufacture of such article, it may, by notification in the Official Gazette, direct that such imported article shall, in addition, be liable to an additional duly representing such portion of the excise duty leviable on such raw materials, components and ingredients as, in either case. may be determined by rules made by the Central Government in this behalf." Under the provisions of Section 3(3) of the Customs Tariff Act, the Additional Duty Rules, 1976, have been framed. Rule 2 states that for the purposes of Section 3(3) "the additional duty leviable on any imported article specified in column (2) of the Table annexed hereto shall be equal to the excise duty for the time being leviable on the material specified in the corresponding entry in column (3) of the said Table to the extent that material is used in the manufacture of the imported article".The Table reads thus :TABLE JUDGEMENT_582_2_1997Html1.htm In exercise of the powers conferred by Rule 8 of the Central Excise Rules, 1944, the Central Government, by notification No. 55/78 dated 1/03/1978. (hereinafter called "the said notification") exempted textured yarn of the description specified in column (2) of the Table thereto falling under sub-item II (i)(b) of Item No. 18 of the First Scheme to the Central Excises and Salt Act, 1944, from so much of the excise duty leviable thereon as was in excess of the duty specified in the corresponding entry in column (3) of that Table. The Table read thus :TABLE JUDGEMENT_582_2_1997Html2.htm
(3.) THE Tribunal noted the condition on behalf of the appellant that the yarn in question fell under S. No. 1 aforementioned and not under S. No. 2(a)(v), and the basis for the contention, namely, that the supplier of the imported goods had bought base yarn and subjected it to the process of air bulking to produce the textured yarn that was imported. The Tribunal stated, counsel "contends that the description of the article relevant to the present case is textured yarn produced out of base yarn and not other textured yarn in notification 55/78. This contention has, in our opinion, substance." The Tribunal went on to add, "The description of the article in the First Schedule to the Central Excises and Salt Act is Textured yarn. Textured yarn produced out of base yarn" is merely descriptive of process of manufacture. For duty purposes, notification No. 55/78 describes and fixes a different concessional rate of duty for textured yarn produced out of base yarn separately from other textured yarn. This itself shows that textured yarn is liable to excise duty at different rates, depending on the process of manufacture. The excise leviable on textured polyamide yarn of above 750 deniers would depend on the process of manufacture. It is Rs. 6.50 (Sl. No. 3(b)(vi) of notification No. 28/75 CE) plus Rs. 5.00 per Kg. (Col.3 against Sl. No. 1 of notification 55/78 CE), if such textured yarn is produced out of base yarn. If it is produced otherwise, the rate of duty is Rs. 24.60per Kg. (Sl. No.2(a)(v) of notification 55/ 78). In such a situation, the yarn content of the imported fabrics would attract duty at the higher rate viz., Rs. 24.60 per Kg. (plus special excise duty as may be applicable)". Learned counsel for the appellants submitted that once the Tribunal had come to the conclusion that the imported goods were textured yarn produced out of base yarn., only that amount of additional duty was payable thereon as was specified against the description "textured yarn produced out of base yarn " in the Table of the said notification. There was no question then of requiring the appellants to pay additional duty at a rate specified in the notification for "other textured yarn ".;