Metals and Ferro Alloys Ltd. Cuttack Vs.
Collector of Central Excise, Bhubaneshwar  INSC 367 (22 November 1990)
S. Rangnathan, S. Ramaswamy, K.
1991 AIR 1028 1990 SCR Supl. (3) 329 1991 SCC Supl. (1) 125 JT 1990 (4) 763
1990 SCALE (2)1109
Excises and Salt Act, 1944--Section 3 and First Schedule Item Nos. 26AA and
68--Assessee--Manufacturer of pipes, tubes and poles of iron and steel--assessability
to excise duty--Whether under Item 26AA or 68.
appellant is a manufacturer of pipes, tubes and poles made of iron and steel.
Tariff Item No. 26AA was introduced w.e.f. 24.4.1962 in the First Schedule to
the Central Excises and Salt Act, according to which, the appel- lant paid the
excise duty. Thereafter the Government issued a notification dated 1.3.1963,
whereby 'telegraph, telephone and electric lighting and transmission poles
falling under Item 26AA" were exempted from payment of duty subject to
certain conditions. The appellant having paid the duty earlier, applied for the
refund on 10.5.1963 and sought permission to clear the goods without payment of
duty. The Assistant Collector rejected the said request on the ground that
conditions prescribed in the notification had not been ï7 3 before the
Collector of Central Excise who held that the goods in question were eligible
for the exemption contained in the notification. As a consequence thereof, the
appellant paid no duty on the goods and cleared the goods from 1962 till 1975.
On 1.3.1975, the Legislature introduced Tariff Item No. 68 in the First
Schedule to the' Act covering goods not elsewhere prescribed. Even thereafter
the appellant filed classification lists showing the poles as falling under
Item 26AA and those lists were duly approved and the appellant cleared its
goods without paying duty till August 1982. Earlier on 8.12.1977, the
Superintendent of Central Excise had taken a view that the transmission and
lighting poles were classifiable not under Item 26AA but under Item
The appellant was accordingly asked to furnish a state- ment of the goods
manufactured and sold earlier and to file a classified list. The appellant
objected contending that the poles were covered by Tariff 26AA and it was
entitled to exemption. The Revenue did not accept that contention where- upon
the appellant filed a writ petition before the High Court challenging the
communication dated 26.12.1977. The appellant received a further letter on
6.11.1981 whereby it was required to pay duty under Item No. 68 in regard to
330 'swaged poles" also. The appellant challenged this letter also by
means of a writ petition before the High Court. The High Court declined to
interfere with the adjudication proceedings and dismissed the writ petitions by
directing that the adjudication be made within three months. On 31.3.83 the
Assistant Collector passed an order holding the goods classifiable under Item
68. The Appellate Collector affirmed the order of the Assistant Collector. Both
parties preferred appeals before the Central Excise and Gold (Con- trol)
Appellate Tribunal. The Tribunal lid not agree with the contention of the
Appellant that the goods were dutiable under Tariff Item No. 26AA. It however
gave certain direc- tions restricting the levy of excise duty periodwise. Hence
these appeals by the appellant under Section 35L of the Act.
the appeals, this Court,
There is some difference in the description of the goods. While item 26AA
covers only pipes and tubes, the goods manufactured by the assessee are called poles.
It is also true that the poles have to be manufactured by applying certain
processes of heating and forging to pipes or tubes.
all this does not so change the commercial character of the goods as to take
them away from the scope of item No. 26AA. [336C-D] The language of tariff item
No. 26AA is very wide. It covers iron and steel products of the description set
out ï7 3 Unless the department can establish that the goods in question can, by
no conceivable process of reasoning, be brought under any of the specific items
mentioned in the tariff, resort cannot be had to the residuary item. [339E] The
appellant's contention that the goods in question fall under Item 26AA is well
rounded and the Revenue was not justified in attempting to levy duty on the
basis that the goods fall under Tariff Item No. 68. [334G-H] Indian Aluminium
Cables Ltd. v. Union,  3 SCC 284; Bharat Forge and Press Industries v. C.C.E.,
 1 SCC 532; Varghese v. I.T.O.,  1 SCR 629; State of Tamil Nadu v. Mahi Traders,  1 SCR 445;
C.C.E. v. Andhra Sugar Ltd.,  (Supp.) 1, SCC 144 and Collector of Central
Excise v. Parle Exports P. Ltd.,  1 SCC 345, referred to.