Appeal No 1527 of 1974
Appeal by Special Leave from the Judgment  Order dated the 14th December 1973 of the Delhi High Court in Civil Writ No 1678 of 1967
F section Nariman Addl
Gen of India D N Mukherjee and R N Sahthey for the Appellants
N A Palkhiala Ravinder Narain J B Dadachanji O C Mathur K J John and K R Jhaveri for the Respondent
419 The Judgment of the Court was delivered by Goswami J
This appeal is by special leave from the judgment of the Delhi High Court in a writ application there under article 226 of the Constitution
The respondent manufactures various other items hot rolled finished steel products in rectangular cross section of thickness varying between 17 mm and 655 mm and width varying between 162 mm and 3112 mm and rolled in coils which it supplies to the Indian Tube Company Limited at Jamshedpur for making tubes and also to others
This article is subjected to Central Excise Duty under the hereinafter called the Act
The dispute between the respondent and the appellants is that while the former describes the said manufactured product as strip the appellants classify it as skelp
This difference in classifying the product differently results in fiscal misfortune to the respondent since skelp is subjected to a higher Central Excise Duty than strip
It may be stated that during the period from April 24 1962 to February 28 1964 the respondent described its product as skelp and it was subjected then to a lower rate ofduty From February 19 1964 the respondent claimed that the aforesaid product be classified as strip since there
had been a levy of higher duty for skelp
The Assistant Collector Central Excise Jamshedpur who is the primary taxing authority the Collector of Central Excise Patna in appeal and the Central Government in revision rejected the contention of the respondent by successive orders each authority upon its own test of the definition of the product as skelp
That led to the successful writ application of the respondent in the High Court resulting in this appeal
In the forefront of his argument the learned Additional Solicitor General for the appellants relying upon two decisions of this Court namely The Collector of Customs Madras vs K Ganga Setty1 and V V Iyer of Bombay vs Jasjit Singh Collector of Customs and Another2 submitted that it is primarily for the taxing authorities to determine the heads or entry under which any particular commodity fell but that if in doing so these authorities adopted a construction which no reasonable person could adopt ie if the construction was preverse then it was a case in which the Court was competent to interfere
In other worlds if there were two constructions which an entry could reasonably bear and one of them which was in favour of Revenue was adopted the Court has no jurisdiction to interfere merely because the other interpretation favourable to the subject appeals to the Court as the better one to adopt 
On the other hand with equal emphasis Mr Palkhivala for the respondent submitted that an assessment without the application of an identifiable test is nothing but perverse and arbitrary
He submits that in the present case there was no identifiable test before the taxing authorities by which the 1  2 420 product of the respondent could be held to be skelp and not strip subjecting the respondent to a heavier duty
According to the learned counsel there is no difference
between sklep and strip the two items being interchangeable
It may be noted for our purpose that under section 3 of the Act Central excise Duties are leviable on all excisable goods which are produced or manufactured in India at the rates set out in the First Schedule
Item No 26AA in that Schedule relates to iron and steel products and mentions in sub item iii therein flats skelp and strips showing the rate of duty in the third column
Under rule 8 of the Central Excise Rules 1944 made under section 37 of the Act the Central Government may from time to time by notification in the official gazette exempt subject to such conditions as may be specified in the notification any excisable goods from whole or any part of the duty leviable on such goods
In exercise of the power under this rule the Central Government has made such exemptions in the rates of duty as have made it higher on skelp than on strip
Before we proceed further we may notice how the various Excise authorities dealt with the matter at differentstages
The first order is that of the Assistant Collector of Central Excise Jamshedpur which was on June 17 1964
According to him skelp is the name used in reference to a plate of wrought iron or steel used for making pipe or tubing by rolling the skelp into shape and lap welding or brevetting edges together and strip is a term used to describe a flat rolled product of smaller cross section than sheet or bar He accordingly adopted the definition given in Marymen s Dictionary of Metallurgy
The order of the Collector of Central Excise in appeal made on October 2429 1964 shows that the authority noted the definition of strip as follows  Hot or cold rolled finished steel product in rectangular cross section of thickness below 5 mm and of width below 800 mm and supplied in straight length
This definition is substantially in
conformity with the one given by the Indian Standards Institution ISI
The appellate authority held that since the products have not satisfied the above specifications they have been correctly classified as skelp  by
the Assistant Collec tor
Then comes the order in revision of the Central Government of August 18 1967
Inter alia it was held that the product does have bevel edge  peculiar to skelp and not found in strips
Under the circumstances there is no doubt whatever that the product in question is correctly classified as skelp
From the above three orders it is clear that the authorities were not at all certain about a uniform definition of skelp  distinguishing it from strip
Extensive arguments were advanced at the bar with regard to the definitions of there two words
We may therefore look 421 at the various definitions to which our attention has been drawn
Since the appellants largely upon the definitions given by the Indian Standards Institution an expert body we will first note these definitions
The ISI s definitions of strip and skelp as given in IS 1956 1962 amended upto July 1968 are as follows Upto 1965 the ISI gave no description of strip
It had defined skelp in 1962 as follows Skelp
Hot rolled narrow strip with rolled square slightly round or beveled edge
Strip 
A hot or cold rolled flat product rolled in rectangular cross section of thickness 10 mm and below and supplied with mill trimmed or sheared edge
a Narrow strip strip other than hoop of width below 600 mm and supplied in straight length or in coil form
b Wide Strip Strip of width 600 mm above and supplied in coil form only
 Upto 1965 the ISI gave no description of strip
It had defined skelp in 1962 as follows Hot rolled
strip with square or slightly beveled edges used for making welded tubes
In 1968 the ISI s definition of skelp stands as follows Hot rolled narrow strip with rolled square slightly round or beveled edge
 Strip was defined by the ISI for the first time in 1965 as follows Coiled Strip A hot or cold rolled flat product rolled in rectangular cross section and supplied in coil form
Strip A hot or cold rolled flat product rolled in rectangular cross section thickness below 5 mm and of width below 600mm and supplied in straight lengths
The ISI s definition of strip given in 1968 is as follows A hot or cold rolled flat product rolled in rectangular cross section of thickness 10 mm and below and supplied with mill trimmed or sheared edges
a Narrow strip Strip other than hoop of width below 600 mm and supplied in straight length or in coil form
b Wide strip Strip of width 600 mm and above and supplied in coil form only
Annexure J  submitted by the respondent along with its rejoinder affidavit in the High Court at page 101 of the record gives various 422 definitions of skelp taken
from various dictionaries and treatises such as Hornor J G Dictionary of Terms page 323 year 1952 Brandt DJC Manufacture of Iron  Steel pages 318 and 319 year 1953 Henderson JC Metallurgical Dictionary page 192 year 1953 Backert AOL ABC of Iron  Steel page 1912 year 1925 5th edition Chamber s Technical Dictionary year 1967
Similarly definition of strip is also given from these Dictionaries and books
It is also pointed out that there is no category of skelp mentioned in Brussels Nomenclature
British Standards 2094 Part 4 1954 defines skelp as follows  Hot rolled strip with square or slightly bevelled edges used for making welded tubes
Chamber s Technical Dictionary Revised Edition Reprinted 1954 defines skelp as follows Skelp P 775 Mild steel strip from which tubes are made by drawing through a bell at welding temperature to produce lap welded or butt welded tubes
We may not add to the list but are satisfied that there are a large number of definitions out of which one can be picked up to satisfy the definition of skelp according to some authority and another definition to fit in with the concept of strip according to another authority Since the duties on strip and skelp are not the same it is absolutely necessary to define the word skelp so that there can be no doubt or confusion in the mind of either of the taxing authority or of the tax payer with regard to the tax liability qua skelp as opposed to strip
Since however
there is no statutory definition of this controversial item different tests have naturally been resorted to by the different authorities and the same variation is discernible even in the affidavits of the appellants submitted before the High Court
The short question therefore that arises for consideration is whether in the above background the High Court was right in interfering with the orders under article 226 of the Constitution
It is not for the High Court nor for this Court to come to a conclusion on facts as to whether the product can truly come under the description of skelp
That undoubtedly would require some evidence be taken at the level of the taxing authority provided however there is an identifiable uniform and determinate test by which skelp can be properly distinguished from strip
In the mass of documents filed before us and the extensive arguments addressed at the bar with regard to the definitions culled from various dictionaries handbooks and authorities we are not at all surprised that the three authorities came to the same conclusion by depending upon their own chosen tests
A particular type of strip may according to certain definitions
be skelp and according to others not Skelp
however cannot be permitted in a fiscal legislation which by all standards should adopt a clear definition of an excisable item which is incapable of giving rise to a confounding contro 423 versy as in this case unless the matter is beyond doubt in view of the popular meaning or meaning ascribed to the term in commercial parlance
In absence of any clear criterion to determine what is skelp
and not strip no useful purpose would be served by even remanding the matter to the Excise authorities for a decision after taking necessary evidence
It is only when a taxing law provides for a clear and unequivocal test for determination as to whether a particular product would fall under strip of skelp it may be possible for the authorities
to address itself to the evidence submitted by the parties in order to come to a decision on the basis of the test
This is however not possible in this  case in view of the fact that there is no identifiable standard
The best way is to define the product for the purpose of excise duty in approximate terms demarcating clearly the distinction between
the two terms
The absence of any identifiable standard would therefore naturally give rise to the scope for arbitrary assessment at the hands of different authorities
Whether this has happened in this case as  complained by the respondent citing the instance of the Hindustan Steel Company Rourkela it is not necessary for us to pursue in this appeal
We are therefore unable to hold that the High Court has
gone wrong in granting the reliefs prayed for
The appellants strenuously emphasized upon the test relied upon in the Revisional order as to skelp having bevelled edges which according to them is peculiar to skelp and not to strip
But this does not bear scrutiny as on the counter affidavit of the Union of India in the High Court at page 57 of this record it shows that as regards tested Hot rolled Strips the edges are never looked into they can be bevelled square or have Mill edge emphasis added
This is an admission of the appellants that strips may also have bevelled edges
The two decisions relied upon by the appellants do not come to their aid in this case since there is no identifiable standard or test to determine clearly which product can be skelp and not strip
In Ganga Setty s case supra the controversy arose with regard to whether feed oats fell within item 42 fodder or within item 32 grain of parti cular circular
Dealing with the matter this Court observed as follows  any particular species of grain cannot be excluded merely because it is capable of being used as cattle or horse feeds
The decision of the Customs authorities therefore this Court held could not be characterized as Perverse or mala fide calling for interference
Similarly following Ganga Setty s case supra in Jasjit Singh s case supra the conclusion and findings of the Customs authorities were accepted a reasonable
In both the above cases there were definite tests by which the particular article could be held to fall under one item and not under the other and the construction of the authorities 424 with regard to the scope of the particular entries was therefore held to be reasonable and not calling for interference by the court
The question that arises in the instant case is of a completely different nature as pointed out above there being no identifiable test reasonably capable of distinguishing skelp from strip
In the result the appeal fails and is dismissed with costs
PHP Appeal dismissed


Summary:
The respondent manufactures hot rolled finished steel products in rectangular cross section of thickness varying between 162 mm and 3112 mm in coils hereinafter a referred to as the Product product as Strip whereas the appellant classifies it as a skelp
to higher excise duty than Strip
The Assistant Collector the product as Skelp
On appeal to the Collector of and rolled The respondent describes the Sklip is subject Central Excise treated Central Excise he confirmed it and in revision the Central Government also approved
The respondent filed a Writ Petition in the High Court
The High Court accepted the contention of the respondent
On appeal by Special Leave the appellant contended before this Court  i That it is primarily for the Taxing Authorities to determine the head or nature under which any particular commodity fell
ii The Court can interfere with the decision only if it is perverse
if there were two constructions possible and if the Taxing Authority accepts one of them the Court cannot interfere
The respondent submitted 
i Assessment without application of an identifiable test is perverse and arbitrary
ii In the present case
there was no iden tifiable test before the Taxing Authorities
There is no difference between Skelp and Strip
Dismissing the appeal Held  There are large number of definitions out of which one can be picked up to satisfy the definition of Skelp according to some
authority and another definition to fit in with the concept of strip according to another authority
Since there is no statutory definition for Skelp and Strip different tests have been resorted to by the different authorities
The question arises whether the High Court was right in interfering with the orders under article 226 of the Constitution
It is not for this Court to come to the conclusion on facts
The absence of any identifiable standard naturally gives rise to the scope for arbitrary assessment at the hands of different authorities
It is not possible to hold that the High Court has gone wrong in granting the reliefs prayed for
422D F 423C