Shakti Metal Industries vs The Union of India (UOI) and Another

R.A. Jahagirdar, J.—A notice dated 3rd June, 1982 issued to the petitioners by the Superintendent of Central Excise, Range 11, Bombay Division ''R'', requiring them to obtain Central Excise licence is challenged in this petition under Article 226 of the Constitution of India. The petitioners'' case is that under a notification issued under Rule 174A of the Central Excise Rules, they are exempted from taking a licence as required under Rule 174 read with Section 6 of the Central Excises and Salt Act. The foundation of this argument of the petitioners is a notification bearing No. 119/66-C.E. dated 16th July, 1966, as amended by subsequent notifications. This notification exempts from the whole of the duty of excise leviable on certain items mentioned therein, two of them being copper or copper alloys, if the same are manufactured out of the materials mentioned in the said notification. It is the petitioners'' case that they are manufacturing copper casted wires which are embraced by the phrase "copper and copper alloys" out of scrap obtained from copper or copper alloys where the prescribed amount of duty of excise, or, as the case may be, the additional duty leviable u/s 2A of the Indian Tariff Act has been paid on the copper or the copper content of alloys. The latter duty is known in common parlance as the countervailing duty. These are the facts which have been mentioned before me by Mr. Bhandare, the learned Advocate appearing for the petitioners.

At one time Mr. Bhandare himself was under the impression that the countervailing duty is paid or will be paid by the importers and since the payment of the countervailing duty is unavoidable the notification must be deemed to apply to the petitioners who are manufacturing their products out of copper and copper alloys on which countervailing duty would have necessarily been paid. It was also mentioned by Mr. Bhandare that the scrap obtained from the copper and copper alloys is imported by the importers from whom the petitioners obtain the same for manufacturing their products, namely copper casted wires. It was also argued that there are certain petitions pending in the High Court wherein the levy of countervailing duty on some of the products referred to in the exemption notification has been challenged. It has been mentioned in the petition, and also repeated before me by Mr. Bhandare, that those importers have given personal bonds and in some cases Bank guarantees for securing the payment of countervailing duty, if their contentions in the High Court fail. This itself shows that the countervailing duty has not yet been paid on the goods imported by them. It has not been argued before me that countervailing duty is not payable on the scrap obtained from copper or copper alloys mentioned in the exemption notification.

In the impugned notice, the petitioners are told that they are manufacturing copper ingots from imported scrap on which countervailing duty is not paid. It is for this reason that the petitioners were called upon by the said notice to obtain the Central Excise licence. I have said enough to indicate that countervailing duty has not been paid at least on the date on which the notice was issued. Mr. Parekh, the learned Advocate appearing for the respondents, has also pointed out an averment, which is almost in the nature of a confession on the part of the petitioners, which shows that the petitioners themselves import copper scrap for the manufacture of their products. In sub-paragraph (k) of paragraph 9 of the petition it has been stated as follows:

The petitioners say that whatever copper scrap they have imported prior to 1.3.1981 they have executed personal bonds in favour of the customs authorities undertaking to pay the duty, if at all it is found due and payable by them. As regards the copper scrap imported after 1.3.1981 they have deposited either cash security or given bank guarantee in favour of the customs authorities to secure the payment of the said additional duty if at all due. The petitioners say that the additional duty, if any on the import of copper scrap is payable to the customs authorities and the same has been well secured pending determination of the petitioners'' liability.

As a matter of fact, therefore, one must proceed on the basis that countervailing duty has not been paid at least on the entire raw-material, namely scrap obtained from copper or copper alloys used by the petitioners in the manufacture of their products. If this is so, I do not see how the petitioners can contend that the notice dated 3rd June, 1982 issued by the Superintendent of Central Excise can be said to be without jurisdiction. It has not been demonstrated before me, therefore, that the petitioners are covered by the exemption notification on which great reliance has been placed by Mr. Bhandare.