J.K. SYNTHETICS LTD. Vs. CCE

JUDGEMENT

(1.) In this appeal, field by M/s. J.K. Synthetics Ltd., the issue involved is whether the benefit of Notification No. 305/79 -CE dated 4.12.97 is available in respect of Caprolactum imported by the Appellants.

(2.) Shri Ashok Sagar, learned Advocate, submitted that the Appellants manufacture, inter alia, Nylon Filament Yarn for the manufacture of which they imported Caprolactum from abroad; that for the purpose of levying additional customs duty under Section 3 of the Customs Tariff Act they claimed the benefit of Notification No. 305/79 -CE dated 4.12.79 which provided partial exemption from payment of duty, if manufactured from duty paid benzene; that the Asst. Commissioner, under Order -in -Original No. 29/2001 dated 1.8.2001, confirmed the demand of duty holding that the benefit of Notification No. 305/79 was not available to the Caprotactum: that the Commissioner (Appeals) also under the impugned Order has rejected their appeal. The learned Advocate, further, submitted that as per Section 3 of the Customs Tariff Act any article which is imported into India shall, in addition, be liable to duty equal to the excise duty for the time being leviable on like article, if produced or manufactured in India; that during the relevant time Caprolactum was manufactured in India only by M/s Gujarat State Fertilizers Corporation of India Ltd. (in short GSFC) by using duty paid Benzene; that M/s GSFC was availing the benefit of Notification No. 305/79 while discharging the duty of excise; that the additional duty of customs is equal to the duty of excise leviable on like article manufactured in India and as the only manufacturer of Caprolactum in India M/s GSFC were discharging duty liability availing the benefit of Notification No. 305/79 they should also be charged to duty to that extent only under Section 3 of the Customs Tariff Act. He also submitted that no penalty is imposable on them under Rule 173Q of the Central Excise Rules, 1944 as there was no proposal in the show cause notice dated 23.5.80 to impose penalty on them. Finally he submitted that interest under Section 28 AA of the Customs Act could not be demanded as the said Section was not on statute book at the time Caprolactum was cleared by them.

(3.) Countering the submission, Shri Vivek Kumar, learned SDR, submitted that Section 3 of the Customs Tariff Act provides for the levy of Additional Customs duty equal to the excise duty for the time being leviable on like article, if produced or manufactured in India and not at the rate on which the duty is paid by a particular manufacturer; that the Appellants is contending that the rate of duty at which GSFC pays duty in respect of Caprolactum should be made available to the Caprolactum imported by them; that in terms of Notification No. 305/79 -CE the Central Government has exempted Caprolactum manufactured form Benzene (derived from raw naphtha) on which appropriate amount of duty of excise has already been paid from so much of the duty of excise leviable thereon as is in excess of 23% advalorem; that the benefit of the said notification was available subject to the condition that Caprolactum has been manufactured out Benzene which has suffered excise duty; that as in the case of Caprolactum imported from abroad no central excise duty on Benzene had been paid question of extending the benefit of the Notification does not arise. He relied upon the decision of the Bombay High Court in the case of Ashok Traders v. UOI, 1988 (15) ECC 372 (Bom) : 1987 (32) ELT 272 (Bom) wherein it has been held that "it is impossible to imagine a case where -in respect of raw naphtha used for manufacture of HDP in a foreign country excise duty payable under the Indian Law could have been levied and paid." The Bombay High Court did not extend the benefit of notification to the Petitioner. Reliance has also been placed on the decision of the Larger Bench in the case of Priyesh Chemicals and Metals v. CCE, Bangalore, 2000 (120) ELT 249 (T -LB) wherein the benefit of Notification No. 19/88 -CE was denied for levy of Additional Excise duty in respect of Zinc Ash imported by the Appellants on the ground that the consignment did not fulfil the requirement of the Notification which stipulated "that no credit of duty paid on inputs used in the manufacture of goods have been taken under Rule 56A or 57A of Central Excise Rules, 1944." In reply the learned Advocate referred to the decision in the case of Hyderabad Industries Ltd. v. UOI, 1999 (64) ECC 153 (SC) : 1999 (108) ELT 321 (SC) in support of his contention that the Appellants should be given level playing field.