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PETITIONER: M/S. CHHEDA INDUSTRIES

       Vs.

RESPONDENT: COLLECTOR OF CUSTOMS, MADRAS(WITH CIVIL APPEAL NOS. 10334-10

DATE OF JUDGMENT:       25/03/1997

BENCH: S.C. SEN, SUJATA V. MANOHAR

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T Mrs. Sujata V.Manohar, J.      The appellants in Civil Appeal Nos. 1744-45 of 1988 are importers of  stainless steel  circles. The  appellants have filed the  present appeals  against an order of the Customs, Excise, and  Gold (control)  Appellate Tribunal holding that stainless steel  circles  imported  by  the  appellants  are classifiable under  Customs Tariff  Entry  73.15(2)  instead under Tariff  Entry 73.15(1)  as contended by the importers. The appellants  in Civil  Appeal Nos.10334-36  of  1995  are Union of  India. They  have challenged  a  decision  of  the Madras High  Court holding  that the stainless steel circles imported by  the respondents  therein are classifiable under Customs Tariff  Entry 73.15(1)  an not  under Customs Tariff Entry 73.15(2)  as contended  by the appellants therein. The Madras High  court has  followed an  earlier decision of the Division   Bench of  that court  in Venkateshwara  Stainless Steel &  Wire Industries V. Union of India  [1991 (53) E.L.T 312 (Mad.)] in so holding.      All these appeals raise a common question regarding the classification of  stainless steel  circles imported  by the assessees. For  the sake of convenience, we are referring to the facts in Civil Appeal Nos. 1744-45 of 1988.      In  or  about  October  1980  the  appellants  imported stainless steel  circles. The Customs authorities levied and collected duty  on stainless steel circles so imported under Customs  Tariff  Heading  73.15(2).  The  standard  duty  of customs under  that Heading  was 300%  which was  reduced by notification dated 15.7.1977 and the effective duty was 220% which was levied and collected. The importers contended that the correct  classification of  the goods  so  imported  was under   Customs Tariff Heading 73.15(1) and the rate of duty was 60%  which, by  reason of a notification dated 18.6.1978 was  reduced   to  35%.   The  appellant  has  lost  in  the departmental proceedings and hence the present appeals .      The relevant  Tariff Entry  , at  material time  was as follows:- ------------------------------------------------------------ Heading   sub-heading    Rate  of  duty     other   Duration No.       No. & descrip- stan-     UK       prefer-when rate

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         tion of        ard              ential of duty are           articles.                      areas.   protected. ------------------------------------------------------------ 73.15   Alloy steel and         high   carbon         steel in the         forms mentioned         in   heading         Nos.73.06/07 to         73.14         (1)         Not         elsewhere         specified.    60%   ...        ...    ...         (2)    Coils for         re-rolling,         bars (including         bright  bars)         rods, wire         rods,  strips,         sheets and         plates   of         stainless         steel.   300%   ....          ...       ... ------------------------------------------------------------      Entry 73.15  sets out  that it  will cover, inter alia, stainless  steel   in  the   forms  mentioned   in   Heading Nos.73.06/07 to  73.14. These  earlier Headings  73.06/07 to 73.14 deal  with iron  and steel products. The forms of iron and steel  items which are mentioned in these entries, inter alia ,  are puddled  bars, pilings,  ingots, blocks,  lumps, coils for  re-rolling, bars  and rods,  angles,  shapes  and sections, hoops  and strips,  sheets and  plates and  so on. Heading 73.13 deals with sheets and plates of iron or steel, hot-rolled or  cold-rolled. it  is divided  into two parts : (1) Not  elsewhere  specified  and  (2)  Tinned  sheets  and plates. Circles  are not expressly mentioned in any of these entries. Entry 73.15 which deals, inter alia, with stainless steel. is  also divided  into two  parts: (1)  Not elsewhere specified and  (2) Coils  for re-rolling,  bars, rods,  wire rods, strips,  sheets and  plates   of stainless steel. Sub- heading (2)  clearly refers  too certain  specific forms  of stainless steel  which are mentioned therein, namely, coils, bars, rods,  wire rods,  strips ,  sheets and  plates.  From which are not expressly dealt with in the second sub-heading will fall under the first sub-heading covering all types and forms of  stainless steel material which does not fall under sub-heading.(2)      It is  the contention  of the  department  that  sheets which are  expressly covered  by sub-heading  (2) of Heading 73.15   would cover  circles will  not fall in the residuary sub-heading(1) of  Heading 73.15. The department relies upon Note 1(n)  of the  chapter Notes  of Chapter 73 dealing with iron and  steel and  articles thereof  . Entry 73.15 forms a part of  this chapter. Note 1(n) which relates to sheets and plates in an earlier Heading 73.13, is as follows:      "(n):     ‘sheets and plates’      (Heading No.73.13):      rolled products  [other than  coils      for  re-rolling   as   defined   in      paragraph   (k)   above]   of   any      thickness and, if in rectangles, of      a width exceeding 500 milimetres.      Heading No.73.13  is to be taken to      apply, inter  alia,  to  sheets  or      plates which  have been cut to non-

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    rectangular   shape,    perforated,      corrugated,   channelled,    ribbed      polished or  coated, provided  that      they  do  not  thereby  assume  the      character   of   articles   or   of      products   falling   within   other      Headings;"      The  second part of Note 1(n) states that Heading 73.13 will apply,  inter alia, to sheets or plates which have been cut to  non-rectangular shapes.  The department,  therefore, contends that  a circle  is nothing but a sheet which is cut to a  non-rectangular shape.  It will, therefore, be covered by the  term "sheet". Hence in Heading 73.15 also "sheet" in sub-heading 73.15(2) will cover a circle.      Webster’s Comprehensive  Dictionary defines  a  "sheet" as: (1)  a very  thin and broad piece of any substance; that which is or can be spread, as upon a surface, or can be laid in broad  folds; anything having a considerable expanse with very little  thickness. (2)  A large  rectangular  piece  of linen or  cotton cloth, used in making up a bed. (3) A piece of  paper,   especially  one   of  regular  size;  hence,  a newspaper, or  leaf of a book. (4) A piece of metal or other substance hammered,  rolled, fused or cut very thin: a sheet of glass.  (5) A  broad flat surface; superficial expanse: a sheet of  water;, a  sheet of flame etc. A sheet, therefore, is basically  a very  thin and  broad piece of any substance normally of  a regular  shape.  Hence  Note  1(n)  expressly includes  a  sheet  cut  into  a  non-rectangular  shape.  A stainless steel circle has  a distinct shape and form of its own  quite   different  from   a  sheet.   In  the  case  of Venkateshwara  Stainless   Steel  &   Wire  Industries  case (supra),  after   referring  to      the   Indian   standard pecifications for  stainless steel sheets, coils and circles for utensils  and hospital  ware, the Madras High  Court has pointed out  that in  commercial  parlance  stainless  steel sheets. Their pricing is also on a different basis (diameter length). The  High Court  has also  referred to  atleast two notifications  under  the  Central  Excise  Tariff  where  a distinction is  made between  sheets and  circles. The first notification is  in respect  of partial exemption to plates, sheets, circles,  strips and foils produced from old or duty paid scrap.  While the  second notification is in respect of aluminiun. It  grants exemption  to  aluminium  manufactures containing more  than 97%  of  aluminium.  The  notification refers to  plates, sheets,  circles, strips  and foils.   of course these  are notifications under a completely different tariff. We  are referring  to them  only for  the purpose of showing that sheets and circles  have been considered as two different forms  in which  a metal  can be  manufactured  or sold.      Since forms  which are  not  specifically  set  out  in Tariff Heading  73.15(2) will  have to  be classified  under 73.15(1),  circles  of  stainless  steel  will  have  to  be classified  under  Heading  73.15(1).  Note  1(n)  does  not provide much  assistance in  this connection.  In respect of Heading 73.13  which deals  with sheets and plates, the note says that  sheets or  plates which  have   been cut  to non- rectangular shapes  will also  be classified  as  sheets  or plates. But  when stainless  steel in the form and it cannot be treated  merely as a stainless steel sheet which has been cut to   a  non-rectangular shape. It has a specific form of its own.      Tariff Heading  73.15 has  been subsequently amended by Customs Tariff  Amendment Act  of 1982 by which Tariff Entry 73.15(2) has  been amended  to  include    circles,  angles,

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sheets and  sections in  addition to  sheets and  plates  of stainless steel.  The statement  of objects and Reasons sets out, "Stainless steel articles not elsewhere specified other than those  falling under  sub-heading (2)  fall under  sub- heading (1)  of Heading  73.15 ...... The difference in duty under the  two Sub-headings  is so  large that attempts have been made  by some importers to manipulate to description or form of  the articles in such a way as to claim a lower rate of duty  as has  recently happened  in the case of stainless steel sheets  imported in  the guise  of folded  angles  and circles......"  The   amendment  whereby   angles,   shapes, sections and  circles of stainless steel are added to Tariff Heading 73.15(2)  is given  retrospective effect from 1st of January ,1981.  Therefore, prior  to 1st  of  January  ,1981 angles, shapes  section and  circles of stainless steel were not covered  under sub-heading  (2)   of Heading 73.15. They have been  so included  with effect  from 1.1.1981.  It is a well-established  principle   of  interpretation  of  taking statutes  that    the  benefit  of  any  doubt  relating  to interpretation must go to  the tax-payer.      The contention  of the  department that  prior  to  the amendment,  sheets  included  angles,  shapes,  sections  or circles is  difficult to accept for reasons we have set out. We are,  therefore, inclined to agree with the view taken by the Madras  High Court  in Venkateshwara  Stainless Steel  & Wire Industries’s  case(supra). The  Delhi High  Court  has, however, in  the case  of Super Traders and Anr. V. Union of India and  Ors. [1983  E.L.T. 258  (Del.)] taken an contrary view holding  that stainless  steel circles  are nothing but stainless steel  sheets and  are classifiable  under Heading 73.15(2). It  has relied upon Chapter Note 1(n) and has held that stainless  steel circles are stainless steel sheets cut to non rectangular shape. In our view, this is not a correct reading of  Note 1(n)  . A circle is a very specific from in which stainless steel is marketed. It cannot be treated as a sheet cut  to a  non- rectangular shape. Its pricing is also different from that of a sheet. It has a separate form and a commercial identity  of its own. It would, therefore, not be covered by  the term‘sheet’ in Tariff Heading 73.15(2) prior to 1.1.1981.      All these  appeals deal  with Tariff  Entry 73.15 as it stood prior  to its  amendment with  effect  from  1.1.1981. Therefore, stainless steel circles imported by the importers in all  these appeals  are classifiable under Tariff Heading 73.15(1) and  not under Tariff Heading 73.15(2).      Civil Appeal  Nos. 1744-5  of  1988  are  ,  therefore, allowed while  Civil Appeal  Nos. 10334-10336  of  1995  are dismissed. Refund applications by the assessees will have to be processed in accordance with the ratio of the judgment of this Court  in Mafatlal  Industries Ltd..V.  Union of  India [1996 (9) SCALE 457]. There will, however, be no order as to costs.