Case: TATA IRON AND STEEL CO. LTD Vs. UNION OF INDIA (UOI)

1. The demand which is in dispute in this case was raised under the Central Excises and Salt Act, 1944 (referred to hereafter as the Act) for the period September, 1968 to January, 1969. The assessee in respect of which the demand was raised was the Indian Tube Company (referred to hereafter as ITCO). During the relevant period ITCO had purchased hot rolled strips from the appellant for the purpose of processing them into cold rolled strips. It is not in dispute that the hot rolled strips had borne excise duty. The cold rolled strips, according to ITCO were only those strips which emerged after the hot rolled strips had been processed and the edges sheared and slit according to the specifications of the customer. ITCO, therefore, paid the excise duty on cold rolled strips according to its definition. 2. The Revenue, however, raised the demand on ITCO on the basis that cold rolled strips meant and included unshared and unlit strips. The demand was challenged by ITCO by way of revision under the Act as it then stood. ITCO raised the issue that cold rolled strip should be understood as an item which is saleable and treated as completed manufactured product. According to the appellant what came out from the mill were not cold rolled strips until they were trimmed/sheared and cut to proper length according to the customers requirement. The residue was scrap which were of three kinds : viz., side trimmings, crop ends and reversible mill ends and could not be treated as cold rolled strips. There is some controversy as to whether duty had been paid by ITCO on the residue treating the same as scrap. The revisional application was however rejected on the ground that the Indian Standard Specification Nos. 1956 to 1962 specified that a strip is supplied in straight length or in coil with mill, trimmed or sheared edges. From this definition the Revisional Authority came to the conclusion that the strips were marketable with mill edges. However, as far as reversible mill ends were concerned it was held to be not cold rolled strips and it was directed that they should be correctly treated a scrap for the purposes of the tariff. 3. ITCO filed a writ petition challenging the revisional order. In the Writ Petition, ITCO again raised the issue that the process of manufacture was not complete until the process of slitting and cutting had been carried out. In its writ petition, ITCO also claimed a refund of Rs. 1,69,508.31 on account of the excise duty paid by it on reversible mill ends which had not been granted by the Revenue. 4. Before the High Court ITCO argued that cold rolled strips were marketable only after shearing. It was also submitted that the process of manufacture was not complete until the process of slitting and cutting had been carried out and accordingly until that stage the goods were not manufactured and were not excisable. The learned Single Judge rejected the submission of the appellant by holding that there was no specific definition of strip in the relevant tariff heading in the Schedule to the Act as it then stood. Therefore, the moment the strips as known in the commercial world came into existence, duty was leviable. The Court was of the view that it could not be said that the strips had come into existence only after the same had been trimmed and sheared to the required length. The reasoning of the Revisional Authority on the issue of marketability was also held to be correct. The writ petition was accordingly rejected on 11th February, 1976 but the respondents were directed to refund the amount as claimed by ITCO in accordance with the revisional order. 5. In 1985, ITCO was amalgamated with the appellant. The appellant challenged the order of the Single judge before the Division Bench. The Division Bench rejected the appeal in July, 1986 by the order which has been impugned before us. Although, the appeal was dismissed unfortunately the appellant court also set aside the revisional order insofar as it held that the reversible mill ends were not cold rolled strips and that these were to be treated as scrap and consequently the direction of the Single Judge directing refund. 6. The matter has been pending before this Court since 1986. The appellant has filed an interlocutory application seeking to urge a fresh point of law. The point which is sought to be urged is based on the decision of this Court in Collector of Central Excise, Chandigarh v. Steel Strips reported in Collector of Central Excise, Chandigrah Vs. M/s. Steel Strips Ltd., Sangrur, . In that decision, this Court has come to the conclusion that the excise authorities had not been able to prove that hot rolled strips undergo a process of manufacture when they become cold rolled strips. Treating this decision as an authority for the proposition that cold rolled strips are not manufactured out of the hot rolled strips, the Tribunal has, in a series of decisions, come to the conclusion that the processing of cold rolled strips out of hot rolled strips did not amount to manufacture and that there was no new commodity which could be subjected to excise. The appellant is allowed to raise this additional point in view of the fact that the decision of this Court in Steel Strips (supra) as well as the decisions of the Tribunal reported in 1998 (99) ELT 120; 2001 (96) ECR 585 and 2002 (81) ECC 618 were all subsequent to the impugned decision of the High Court. Besides, the demand relates to 1968 and 1969 since no facts which are not on record are sought to be urged by the appellant, it would be appropriate to dispose of the matter once and for all at this stage. 7. The tariff item at the relevant time was as follows:- 26AA: Iron or Steel products the following, namely, (III) flats, skips and strips 8. It is to be noted that there was no separate heading in respect of cold rolled strips and hot rolled strips. It is not in dispute that the duty was paid on the hot rolled strips treating the same as assessable under 26AA(III). The strips having already been subjected to excise under the tariff heading, it was open to the assessee to have argued that no further duty was payable on the strips in any subsequent form. On the other hand, the assessee has also paid duty on the strips after shearing and slitting. However, the assessee does not claim any refund. Apart from the consistent view taken by the Tribunal as noted, we are also of the view that this case is squarely covered by the decision of this Court in Steel Strips (supra) in that there was no proof whatsoever of the marketability of the cold rolled strips which is an essential item of manufacture for the purposes of the Act. Marketability is a question of fact and does not follow from the mere mention of the item in the ISI.

Decision:
1[ds]in Collector of Central Excise, Chandigarh v. Steel Strips reported in Collector of Central Excise, Chandigrah Vs. M/s. Steel Strips Ltd., Sangrur, .In that decision, this Court has come to the conclusion that the excise authorities had not been able to prove that hot rolled strips undergo a process of manufacture when they become cold rolled strips. Treating this decision as an authority for the proposition that cold rolled strips are not manufactured out of the hot rolled strips, the Tribunal has, in a series of decisions, come to the conclusion that the processing of cold rolled strips out of hot rolled strips did not amount to manufacture and that there was no new commodity which could be subjected to excise. The appellant is allowed to raise this additional point in view of the fact that the decision of this Court in Steel Strips (supra) as well as the decisions of the Tribunal reported in 1998 (99) ELT 120; 2001 (96) ECR 585 and 2002 (81) ECC 618  were all subsequent to the impugned decision of the High Court. Besides, the demand relates to 1968 and 1969 since no facts which are not on record are sought to be urged by the appellant, it would be appropriate to dispose of the matter once and for all at this stage.8. It is to be noted that there was no separate heading in respect of cold rolled strips and hot rolled strips. It is not in dispute that the duty was paid on the hot rolled strips treating the same as assessable under 26AA(III). The strips having already been subjected to excise under the tariff heading, it was open to the assessee to have argued that no further duty was payable on the strips in any subsequent form. On the other hand, the assessee has also paid duty on the strips after shearing and slitting. However, the assessee does not claim any refund. Apart from the consistent view taken by the Tribunal as noted, we are also of the view that this case is squarely covered by the decision of this Court in Steel Strips (supra) in that there was no proof whatsoever of the marketability of the cold rolled strips which is an essential item of manufacture for the purposes of the Act. Marketability is a question of fact and does not follow from the mere mention of the item in the ISI.