CC (PREVENTIVE) AMRITSAR versus M/S. MALWA INDUSTRIES LTD

Citation: [2009] 2 S.C.R. 120 · Decided: 12-02-2009 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed

Judgment (excerpt)

(2009] 2 S.C.R. 120 
A 
CC (PREVENTIVE) AMRITSAR 
y 
V. 
M/S. MALWA INDUSTRIES LTD 
Civil Appeal Nos. 7076-7080 Of 2008 
FEBRUARY 12, 2009 
B 
(S.8. SINHA AND DR. MUKUNDKAM SHARMA, JJ) 
CUSTOMS TARIFF ACT, 1975: 
s. 3(1) - Additional duty - Exemption under notification 
+-
c dated 1. 3. 2006 to goods falling under Tariff Heading 3204 -
Assessee claiming exemption in respect of goods imported 
and captively consumed - HELD : If excise duty is not levi-
able on manufacture of goods, no additional duty for import of 
like goods would be leviable - Judgment of CESTAT holding 
0 
assessee entitled to benefit of exemption notification upheld 
- Interpretation of statutes - Notification No. 412006- CE dated 
.. _ 
1. 3. 2006 - Interpretation of 
The respondent Industry was engaged in manufac-
E 
turing textile goods. It imported certain items falling un-
der Tariff Heading 32041559, for captive consumption. Ad-
ditional duty in terms of s. 3 of Customs Tariff Act, 1975 
was charged on the assessable value of the imported 
items. The appeals of the assessee contending that in view 
J. 
F 
of exemption Notification No. 4/2006-CE dated 1.3.2006 
no excise duty was payable, were allowed. The Customs 
Excise and Service Tax Appellate Tribunal upheld the or-
der. 
' 
In the appeals filed by the Revenue the question for 
G consideration before the Court was: "Does the 'nil' rate 
of duty, as provided for in the Notification No. 4/2006-CE 
; 
dated 1.03.2006, subject to the condition that the same 
are used in the same factory would mean that the goods 
H 
120 
CC (PREVENTIVE) AMRITSAR V. 
121 
M/S. MALWA INDUSTRIES LTD 
which were to be used must be manufactured in the same 
A 
): 
factory?" 
Dismissing the appeals, the Court 
HELD: 1.1 A notification like any other provision of a 
statute must be construed having regard to the purpose 
B 
and object it seeks to achieve. For this purpose, the statu-
tory scheme in terms whereof the notification has been 
issued should also be taken into consideration. [para 12] 
-· 
[ 127-D, E] 
1.2 Section 3 of the Customs Tariff Act, 1975 on its c 
plain reading, provides that the goods imported into In-
dia would be liable to additional duty. The object of levy 
of the said duty is that an importer should not be placed 
at some more advantageous position vis-a-vis the pur-
chasers/ manufacturers of similar goods in India. [para 
11] [ 127-C, D] 
D 
J 
1.3 Where literal meaning leads to an anomaly and 
absurdity, it should be avoided. When tha goods are im-
ported, evidently, the same would not be manufactured 
in the same factory. It would, therefore, be impossible to 
apply the provisions of s. 3(1) of the Act vis-a-vis the noti-
E 
fication issued in the case of imported goods. [para 13] 
(127-E, F] 
.l 
1.4 The expression "same factory", therefore, would 
mean the factory where the goods are actually manufac-
tured. It only means that the imported goods are required F 
to be used in the factory belonging to the importer where 
the manufacturing activity takes place. There is nothing 
in s.3 of the Act and in particular the explanation appended 
to Sub-section (1) thereof mandating actual production 
or manufacture in the said factory itself. There cannot be G 
any doubt -whatsoever that if excise duty is not leviable 
on manufacture of goods, the question of the importer 
paying any additional duty for import of like goods would 
not arise. The instant case is covered by Thermax Private 
Ltd and the point on which the matter has been referred H 
122 
SUPREME COURT REPORTS 
[2009] 2 S.C.R. 
A to a larger Bench does not arise for consideration horeln. 
[para 14 and 21] [127·G, H; 128·A, B; 137·C] 
x 
Thermax PrlvtJ_te Ltd. v. Collector of Customs 1992 (61) 
E.L. T. 3!52 (SC) ..: (1992) 4 SCC 440; Hyderabadlndustrles 
B 
Ltd. v. Union of lndltJ 1999 (1 OB) fEL T 321 (SC): (1999) 5 SCC 
15 Loh/a Sheet Products v. Commr. Of Customs, New Delhi 
2008 (224) EL T 349 (SC); and Tata OJI Miiis Co. Ltd. v. Co/ .. 
Jector of Central /Excise (1989) 4 SCC 541 • relled on. 
Central Excise, Triohy v. Rukmanl Pakt<well Trti ~t1Jrs 2004 
,I-
c (166) ELT 481=(2004) 11 SCC 801; Nations/ Aluminium Co. 
Ltd. v. Commissioner of Central Excise, Bhubaneswar 2000 
(125) ELT 519; Sarsbhal M. Chemicals v. Commissioner of 
Central Excise, Vadodara (2005) 2 SCC 188 : (200!5) 179 EL T 
3; Plastic Processors v. Union of Ind/a 2002 (143) F.L r 521; 
D Commissioner of Central Excise, New Delhi v. Harl Chand 
Shrl Gopal 2005 (

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