VAZIR POLYMERS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) In this petition under Article 226 of the Constitution, the petitioners have challenged the judgment and order dated 28.10.2003/12.11.2003 (Annexure "I") of the Customs, Excise & Service Tax Appellate Tribunal (hereinafter referred to as "the Tribunal") dismissing the petitioners' appeal and confirming the order dated 21.4.2003 (Annexure "G") of the Commissioner of Customs, Kandla and holding that the additional duty of customs is payable by the petitioner-unit.

(2.) Petitioner No.1 is a unit in Kandla Special Economic Zone. The petitioner-unit manufactures regenerated polymers out of scrap or waste of goods falling within various Chapters including Chapter 39 of the Central Excise Tariff. Ordinarily, the units permitted to be set up in Kandla Special Economic Zone like the other Special Economic Zones in the country are to import raw materials without payment of customs duty, then manufacture finished products out of the raw material and export them out of the country. Under such scheme, such units are given special incentives and concessions so that they do not have to pay any import duty or excise duty and would, therefore, be in a position to compete with the manufacturers in other countries for exporting goods. However, when such units are not in a position to export the goods manufactured by them within the special economic zone from out of the raw materials imported without payment of customs duty, such units are required to take permission of the Development Commissioner of the Special Economic Zone for sale of their finished products in Domestic Tariff Area (DTA) and such DTA sales are to be made on payment of customs duties and excise duties in accordance with the provisions of law.

(3.) Section 3 of the Central Excise Act, 1944 (hereinafter referred to as "the Act") provides for levy and collection of duties of excise on goods produced or manufactured in India. The proviso to sub-section (1) of Section 3 of the Act stipulates that duties of excise on any excisable goods produced or manufactured in a Free Trade Done or a Special Economic Zone and brought to any other place in India shall be an amount equal to the aggregate of the duties of customs which could be leviable under the Customs Act, 1962 or any other law for the time being in force on like goods produced or manufactured outside India, if imported into India. Accordingly, when the petitioner-unit sold the goods manufactured by it from imported raw materials in the DTA, the petitioner was required to pay excise duty as per the rates of basic customs duty leviable under the Customs Act for the like goods imported into India and also the Additional Customs Duty (CVD - Countervailing Duty) under the Customs Tariff Act, 1975 leviable on like goods imported into India. Such Additional Customs Duty is leviable at the rates applicable on like goods produced in India. The Additional Customs Duty is leviable under Section 3 of the Customs Tariff Act, 1975.