Case: Union Of India &amp; Ors Vs. Tata Iron &amp; Steel Co. Ltd

The respondent manufactures amongst various other items hot rolled finished steel products in rectangular cross-section of thickness varying between 1.7 mm and 6.55 mm and width varying between 16.2 mm and 311.2 mm and rolled in coils which it supplies to the Indian Tube Company Ltd. at Jamshedpur for making tubes and also to others. This article is subjected to Central Excise Duty underthe Central Excises and Salt Act, 1944 (hereinafter called the Act. The dispute between the respondent and the appellants is that while the farmer 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.2. It may be stated that during the period from April 24, 1962 to February 28, 1962, the respondent described its product as skelp and it was subjected then to a lower rate of duty. From February 29, 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.

Reasoning: 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.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 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 Highis 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. This, 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 controversy 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 or 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 appropriate terms demarcating clearly the distinction between the two terms.10. 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 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 notdecision of the Customs authorities, therefore, this Court held, could not be characterised as perverse or male fide calling for interference. Similarly follow ing Ganga Settys case (1963) 2 SCR 277   = (AIR 1963 SC 1319  ) (supra) in Jasjit Singhs case (1973) 1 SCC 148   = (AIR 1973 SC 194  ) (supra) the conclusion and findings of the Customs authorities were accepted as 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 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.