Collector
of Central Excise Vs. Calcutta Steel Industries & Ors [1988] INSC
330 (27 October 1988)
Thakkar,
M.P. (J) Thakkar, M.P. (J) Ray, B.C. (J)
CITATION:
1987 AIR 1353 1987 SCR (2) 387 1987 SCC (2) 107 JT 1987 (1) 537 1987 SCALE
(1)413
CITATOR
INFO : R 1988 SC 897 (7)
ACT:
Central
Excises and Salt Act, 1944-Central Excise Tariff Items 26AA(ia) and
26AA(ii)--Hoop and Strip whether assessable to duty.
HEAD NOTE:
The
respondent company filed revised classification lists classifying all
rectangular products of thickness below 3.0 mm manufactured by them as bars
covered by Tariff Item 26AA(ia) of the Central Excise Tariff. The Asstt.
Collector, Central Excise took the view that rectangular products of thickness
less than 3.0 mm and of width less than 75 mm fell under the definition of
'Hoops' and merit classification under Tariff Item 26AA(ii) and exigible to the
appropriate duty. The respondent preferred an appeal before the Collector of
Central Excise who held that the product fell within the definition of 'Hoops'
and upheld the order of the Asstt. Collector.
The
respondent appealed to the Tribunal which held that the flat product of
thickness less than 3.0 mm and a width of less than 75 mm was classifiable as
'bars' as claimed by the respondent company and not as 'Hoops' and allowed the
appeals.
The
Department therefore filed the appeals under Section 35L(b) of the Central
Excises & Salt Act, 1944 before this Court.
Dismissing
the appeals, this Court,
HELD:
If the revenue wants to tax a particular goods known as such then the onus is
on the Revenue. [600F] 'Hoop' is made either by slitting coiled strip rolled in
multiple width, into narrow coiled strip of the desired width, or from narrow
coiled strip with a hot-rolled or mill edge and the type and width of hoop
being produced influences the choice of the method used. [599B] Curled hoop is
made by a pinch-roll and curved guide- shoe arrangement that permits the hoop
to take a circular form. A straight length hoop is produced merely by removing
the curved guide-shoe.1599D] PG NO 597 PG NO 598 Straight length is not a short
length, it is long.
[599E]
The fact is that they were produced in a mill that could produce hoops and
strips. Their lengths are not such as to place them in the same class as hoops.
Having, therefore, regard to this and the relevant tariff item, the Tribunal
came to the conclusion that it will be more appropriate to assess them under
Item 26AA(ia) than Item 26AA(ii). [599(G- H; 600A] South Bihar Sugar Mills Ltd.
v. Union of India & Ors., [1968] 3 S.C.R. 21, referred to.
In an
appeal under Section 35L(b) this Court has to see the propriety and the
correctness of adjudication. There was no misdirection in law nor any
non-consideration of facts.
There
is no exclusion from consideration of legitimate proper materials. [600F-G]
CIVIL
APPELLATE JURISDICTION: Civil Appeals Nos. 1671- 87 of 1987.
From
the Judgment and order dated 22.4.1987 of the Customs, Excise and Gold
(Control) Appellate Tribunal, New Delhi in Appeal No. 1546, 1547 etc. in Order
No. 267 to 283 of 1987 B I.
M.K. Banerjee,
Solicitor General, R.P. Srivastava and P. Parmeswarn for the Appellants.
Soli
J. Sorabji, K.K. Patel, Rajiv Dutta and R.S. Sodhi for the Respondents .
The
Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. These are
appeals from the decision of the Customs, Excise & Gold (Control) Appellate
Tribunal, New Delhi (hereinafter referred to as
'CEGAT') under Section 35L(b) of the Central Excises & Salt Act, 1944
(hereinafter called 'the Act ). The respondent Calcutta Steel Industries filed
revised classification lists wherein they had classified all rectangular
products of thickness below 3.0 mm manufactured by them as bars covered by
Tariff item 26AA(ia) of the Central Excise Tariff. The Assistant Collector,
Central Excise was of the tentative view that rectangular products of thickness
less than 3.0 mm and of width less than 75 mm conform to the definition of
Hoops and merit classification under item (ii) of Tariff Item 26AA attracting
effective rate of duty of Rs.450 per MT less the PG NO 597 reduction provided
for under Notification No. 55/80 dated 13th May, 1980. The respondents were,
therefore, called upon to show cause as to why the classification list should
not be amended and duty charged accordingly. The respondents submitted their
written statement and requested for a personal hearing. The matter came up for
adjudication before the Assistant Collector, Central Excise. He held inter alia
that the type of Mills used for the manufacture was irrelevant. He relied on
the definition of "Hoops" evolved in consultation with the Ministry
of Steel and the Indian Standard Institution. The revised definition was as
follows:
"The
finished product, generally of cross-section with edges of controlled contour
and of thickness 3.0 mm and over width 400 mm and below and supplied in
straight lenths. The product shall have rolled edges only (square or slightly
rounded). This group also includes flat bars with bulb that has swelling on one
or two phases of the same edge under width of less than 400 mm.
The
Assistant Collector, Central Excise on the basis of certain discussion, in his
order, was of the view that rectangular products of thickness less than 3.0 mm
and of width less than 75 mm were hoops and were correctly classified under
sub-item (ii) of Tariff item 26AA of the Central Excise Tariff and accordingly exigible
to the appropriate duty. The revised classification list was accordingly
modified and approved. The respondents preferred appeals to the Collector of
Central Excise (Appeals). The Collector considered the Indian Standard 1956-62
(2nd reprint May 1975) which defined "Hoops" as follows:
"5.54
HOOP (bailing, hoop iron)-a Hot Rolled Flat Product, rolled in rectangular
section of thickness less than 3.0 mm and width less than 75.0 mm." He
held that according to the specifications the product in question sequarely
fell within the above definition particularly when the description of the
Tariff Items covered "Hoops, all sorts". The Appellate Collector also
considered the definition of "Hoop and Strips" in the Brussels Tariff
Nomenclature which described these as follows:
"Hoop
and Strip (heading No. 73. 12) rolled products with sheared or unsheared edges
of rectangular section, of a thickness set exceeding 6 milli- PG NO 598 metres,
of width not exceeding 500 millimetres and of such dimension that the thickness
does not exceed one-tenth of the width, in straight strips, coils or flattened
coils." He accordingly held that this definition showed that the edges of
the product in question might be sheared or unsheared and the products might be
in straight lengths or in coils. He also held that the nature or type of mill
cannot by itself be the determining factor of the issue in dispute which has to
be determined taking into account all relevant considerations, viz., the
phraseology and the scope of the Tariff Entry, the trade practice terminology,
well- recognised standard national and international technical literature. In
the result, the Appellate Collector of Central Excise inter alia for the
reasons stated above, found no reason to interfere with the order of the
Assistant Collector, Central Excise which was accordingly upheld.
The
respondents preferred appeals to the Tribunal. The Tribunal allowed the appeals
and held that the flat product of thickness less than 3.0 mm and a width of
less than 75 mm is classifiable as bars as claimed by the respondents herein
and not as hoops as held by the Assistant Collector, Central Excise and upheld
by the Appellate Collector of Central Excise. in allowing the appeals, the
Tribunal referred to U.S. Steel Publications (The shaping and treating of
steel) wherein it is stated as follows:
"goods
have been rolled in a bar mill and have not been subjected to the process mentioned
by the book for producing hoops and that they were not meant for bailing or
packaging which a hoop is meant for.'' The Tribunal in its order discussed
various aspects of the matter. The Tribunal noted that the Collector had stated
and what are the different categories. In U.S. Steel Publication (The Making,
Shaping and Treating of Steels) edited by Herald E. Mc. Gannon 9th Edition whom
the Tribunal has described as an authority on the Steel and we presume he is,
there are some observations at page 808 under the heading "Narrow
Flat--rolled products" which are relevant.
There,
"Hoops" have been described as follows:
"Hoop--There
are four general classification of this type of products:
1.
Tight cooperage hoop for barrels to hold liquid.
PG NO
599
2.
Slack barrell hoop for barrels to hold dry products.
3.
Tobacco barrel hogshead hoop, and
4.
Special hoop for special packages."
It has
further to be noted that "hoop" is made either by slitting coiled
strip rolled in multiple width, into narrow coiled strip of the desired width,
or from narrow coiled strip with a not-rolled or mill edge and the type and
width of hoop being produced influences the choice of the method used. It
further appears that the method of the products in question is not one of the
methods listed in this authoritative work for hoops. The so called hoops were
not produced by slitting coiled strip nor rolled from narrow coiled strip, with
hot rolled or mill edge. The article, as has been noted, says that
"hoop" is produced as' curled hoop' or 'a straight length'. Curled
hoop is made by a pinchroll and curved guide-shoe arrangement that permits the
hoop to take a circular form. A straight length hoop is produced merely by
removing the curved guide shoe.
The
Tribunal was conscious that the goods in question were neither curled hoops nor
straight length. In those circumstances, it was necessary to understand clearly
that the "straight length" used in this book is not the straight
length understood by the department which seems to think that any short
straight length is the straight length signified by the term for these
products. It is nothing of the kind as can be seen from the above passage
quoted from the authority. Straight length is not a short length, it is long.
The means of producing the goods is completely different from what is generally
written. The Tribunal was justified in holding that it is not possible to agree
with the department that the manner of production of the goods can be taken
into account.
It has
also to be borne in mind that the very nature of the mill was a criteria to
decide the nature of the product manufactured. Further, however, taking into
account the nature and type of the mill cannot itself be the determining factor
in the issue in dispute. The Tribunal also took into account that these are
produced in a mill which cannot produce hoops or strips. The Tribunal found the
fact that they were produced in a mill that could produce hoops and strips.
Their lengths are not such as to place them in the same class as hoops. Having,
therefore, regard to this and the relevant tariff item, the Tribunal came to
the conclusion that it will be more appropriate to assess them PG NO 600 under
item 26AA(ia) than under Item 26AA(ii). The Tribunal has considered all the
relevant facts. There was no misdirection on the facts. All proper and relevant
materials relevant for the determination of the question before the Tribunal
have been applied to. Reliance was placed on certain observations of this Court
in South Bihar Sugar Mills Ltd. v. Union of India & Ors., [1968] 3 SCR 21.
There, this Court was dealing with Item 14A and the appellants' manufacturing
mixture of gases containing carbon dioxide by burning lime-stone with coke in
using only the carbon dioxide from the mixture for refining sugarcane juice and
for producing soda ash by solvay ammonia soda process- Whether the mixture of
gases was kiln gas or compressed carbon dioxide covered by Item 14-H in
Schedule I to the Act. It was held by this Court that the gas generated by the
appellant companies was kiln gas and not carbon as known to the trade, i.e., to
those who deal in it or who use it. The kiln gas in question therefore is
neither carbon dioxide nor compressed carbon dioxide known as such to the
commercial community and therefore cannot attract Item 14-H in the First
Schedule. It was held that it was incorrect to say that because the sugar
manufacturer wants carbon dioxide for carbonisation purposes and sets up a kiln
for it that he produces carbon dioxide and not kiln gas. In fact what he
produces is a mixture known both to trade and science as kiln gas one of the
constituents of which is no doubt, carbon dioxide. The kiln gas which is
generated in these cases is admittedly never liquified nor solidified and is
therefore neither liquified nor solidified carbon dioxide, assuming that it can
be termed carbon dioxide. It cannot be called compressed carbon dioxide as
understood in the market among those who deal in compressed carbon dioxide. If
the Revenue wants to tax a particular goods known as such then the onus is on
the Revenue. That they have failed. The Tribunal has analysed all the aspects.
In appeal, we have to see the propriety and the correctness of adjudication.
Having
examined the aspects from all angles, we find that there was no misdirection in
law nor any non-consideration of facts. There is no exclusion from
consideration of legitimate and proper materials. In the premises, we have also
examined the ultimate conclusion of the Tribunal. That conclusion appeals to
us. It follows irresistibly from the other premises as indicated hereinbefore.
In the premises, the appeals fail and are accordingly dismissed.
S.K.A.
Appeals dismissed.
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