Case: Tata Iron and Steel Company Limited Vs. Collector of Central Excise

2. Since facts are not in dispute, and the duty is sought to be levied on scrap obtained by the appellant in course of manufacture of iron and steel products and supplied by it t o M/s. Tata Yodogawa Ltd on payment of duty for conversion of scrap into ingots after re-melting which was actually re-melted and re-used by the appellant as ingot, it is appropriate to extract the two entries relating to steel ingots and iron or steel products:"26.- Steel Ingots including - Rs. 100 per Steel Melting Scrap. metric tonne." "26AA.- Iron or steel products, the following namely:- (i) Semi-finished Rs. Three hund- steel including red and fifty blooms, billets, per metric slabs, sheet tome bars, tin bars and hoe bars. (ii) ............................. (iii) ............................. (iv) ...................... ....... (v) .............................  Item 26 levies duty on raw material. In commercial parlance steel ingots are used for producing steel products. Raw melting scrap serves the same purpose. Item 26AA deals with iron and steel product s. What are those products is mentioned in clauses (i) to (v) of the item. These appeals are concerned with the scope of clause (i). It deals with semi-finished steel. A semi-finished product is one which requires some/further work or treatment to become serviceable. But it cannot apply to scrap as it is normally understood as something which is not serviceable. Even the Tribunal held that scrap produced by appellant, did not strictly answer to the description but they can resemble or closely resemble them, qualifying to be called substandard blooms or slabs or bars or channels. But a sub-standard article is not scrap as understood in commercial parlance or trade circle. Two reasons have been given by the Tribunal for including scrap of iron and steel in Item 26AA one, price circular issued by Controller of Iron and Steel classifying scrap into industrial, re-rolling and melting scrap and fixing different rate for each and other the size of scrap. T he Tribunal held that even though scrap sold by the appellant to M/s. Tata Yodogawa Ltd. was melted to produce ingots but that was not determinative of its character as what was melted was not melting scrap because of its size, therefore, it did not attract levy under Item 26 but under Item 26AA being something like sub-standard goods.

Court's reasoning:
6. Neither reason given by the Tribunal, therefore, appears to be sound. Price fixation by Controller of Iron and Steel could not furnish basis for interpreting the entry, for levying duty under the Central Excise &Salt Act, 1944. The Controller might have classified scrap depending on size and terming it as rolling, melting and industrial scrap but that could not render it as semi-finished steel products. Size of scrap may be relevant for fixation of price but it could not reflect on the nature of scrap.