HYDERABAD INDUSTRIES LTD. AND ANR. versus UNION OF INDIA AND ORS.

Citation: [1999] 3 S.C.R. 471 · Decided: 11-05-1999 · Supreme Court of India · Bench: S.P. BHARUCHA, B.N. KIRPAL, S. RAJENDRA BABU, S.S.M. QUADRI, M.B. SHAH · Disposal: Disposed off

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

HYDERABAD INDUSTRIES LTD. AND ANR. 
v. 
UNION OF INDIA AND ORS. 
MAY 11, l/J~9 
[S.P. BHARUCHA, B.N. KIRPAL, S. RAJENDRA BABU, 
S.S. MOHAMMED QUADRI AND M.B. SHAH, JJ.] 
Customs Tariff Act, 1975 : Section 3(1) and Explanation ands. 9A. 
Customs Act, 1962 : Section 12. 
Central Excises and Salt Act, 1944 : Section 2(/)-First Schedule-
Tariff Item 22 F. 
A 
B 
c 
Additional duty of customs,-Levy of-Asbestos fibre-Import made D 
prior to the year 1986-Held not liable to additional Customs duty-Held 
additional duty can be levied only if on a like article excise duty could be 
levied-Charging section for levy of additional duty is not section 12 of 
Customs Act but section 3(1) of the Customs Tariff Act-Extraction of asbestos 
fibre from parent rock-Not manufacture-For levy of additional duty on 
import of a manufactured or produced article the actual manufacture or E 
production of a like article in India is not necessary. 
Additional customs duty-Levy held invalid-Refund to assessee-
Consequent to interim order passed by Supreme Court assessee paid fifty 
percent additional duty-Consequently case decided in favour of assessee- p 
Held in such circumstances refund of duty already paid not desirable-But 
assessee held not liable to pay additional amount. 
Supreme Court Rules, 1966: Order VII-Rule 2. 
Decision-Reference to a larger Bench-Compartmentallization of G 
decision-Permissibility of 
Precedent-Judgment-Reconsideration of-Judgment holding the field 
for a long time-Can be reconsidered if public interest requires that law be 
interpreted correctly. 
H 
471 
472 
SUPREME COURT REPORTS 
[1999] 3 S.C.R. 
A 
The appellants, who use asbestos fibre as a raw material, imported the 
sanie into India. The import was made prior to the year 1986. On the import 
so made the Customs Department raised a demand of additional duty of 
customs under section 3(1) of the Customs Tariff Act, 1975. The assessee-
"': 
appellants filed various writ petitions before the High Court of Delhi 
B 
challenging levy of additional duty of customs. The contention of the appellants 
were that (1) the asbestos fibre which was imported had not been manufactured 
or produced and, under section 3(1) additional duty of customs could be levied 
only if the article which was imported was one which was produced and 
manufactured in India and liable to payment of excise duty, (2) the asbestos 
fibre had not undergone any manufacturing or other process and, therefore, 
'" 
c no additional duty could be charged. The High Court dismissed the petitions. 
It came to the conclusion that separation of asbestos fibre from the parent 
rock was as a result of process of manufacture and therefore, excise duty 
was leviable; even if it was not manufactured. or produced excise duty was 
leviable under Tariff Item 22F. 
D 
Appeals against the judgment of the High Court were heard by a Bench 
of three Judges. By its judgment reported in Hyderabad Industries Ltd. & 
·-
Anr. v. Union of India & Ors., [1995) 5 SCC 338, this Bench held, even 
' 
assuming that asbestos fibre were covered by Item 22F of the First Schedule 
to the Central Excises and Salt Act, 1994, the separation of asbestos fibre 
E from the parent rock was not the result of process of manufacture and was 
not a new and commercially viable article and was not, therefore, liable to 
excise duty. 
Relying on the decision of this Court in Khandelwal Metal and 
Engineering Works v. Union of India, (1985] 3 SCC 620, an argument was 
F raised on behalf of the Union of India to the effect that the asbestos fibre 
imported by the appellant was exigible to additional duty regardless of the 
fact that it was not produced as a result of manufacture and, therefore, not 
exigible to excise duty. The Bench of three Judges was of the view that the 
decision inthe case of Khandelwal Metal and Engineering Works requires 
G 
consideration by a larger Bench. Consequently these appeals were heard by 
a larger Bench of five judges. 
Disposing the appeals, the Court 
..: 
HELD : Per Kirpal. J. (For Himself. and Bharucha J. & Quadri. JJ). 
H 
1. The appellants are not liable to pay any duty under section 3 of the 
-
HYDERABAD INDUSTRIES LTD. v. U.0.1. 
473 
Customs Tariff Act. The High Court, therefore, erred in dismissing the writ ,A 
petitions filed by the appellants. (487-EJ 
2. The conclusion which was arrived at by the three-Judge Bench was 
that separation of asbestos fibre from the parent rock was not the result of 
process 

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