VIZAG SHIPPING AND METAL Vs. COMMISSIONER OF CC

JUDGEMENT

(1.) ALL these appeals arise from common Order -in -Appeal No. V. Cus. 82 to 86/89 dated 28.7.89 passed by Commissioner of Customs, Madras holding that the four vessels which were finally assessed in their respective Bills of Entry were not entitled to the benefit of Notification No. 234/82 -CE which grants exemption to "Ocean going vessels" for Central Excise duty purposes as the imported vessels were not Ocean going vessels but were brought into the country for the purpose of breaking the ships. There is no dispute regarding the levy of Customs duty and auxiliary duty. It is only the Counterveiling duty which is disputed in the appeals.

(2.) THE question pertaining to ship breaking being a process of manufacture and whether counterveiling duty can be levied thereon has not been considered by both the authorities.

(3.) ARGUING for the appellants Shri A.S. Sunderrajan, Ld. Advocate submits that the Apex Court in a Constitutional judgment comprising of 5 -Judges have held in the case of Hyderabad Industries Ltd. v. UOI as that CVD shall be levied only if the imported goods are manufactured or produced in India. If the same is not manufactured and produced, then question of levy of counteiveiling duty does not arise. He submitted that Calcutta High Court in the case of M/s. S.S. Jain and Co. and Another as categorically held that breaking of ships does not amount to a process of manufacture and therefore counterveiling duty is not leviable. He pointed out from the said judgment that if the High Court took the view that scrap which arose after the breaking of the ships were classifiable under respective headings of Chapter 72. However, the breaking/dismantling of ships by itself cannot be considered as a process of manufacture. Therefore, he submits that in view of these two judgments, the levy of counterveiling duty is required to be set aside and appeals allowed.