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PETITIONER: COLLECTOR OF CENTRAL EXCISE

       Vs.

RESPONDENT: CALCUTTA STEEL INDUSTRIES AND ORS.

DATE OF JUDGMENT27/10/1988

BENCH: THAKKAR, M.P. (J) BENCH: THAKKAR, M.P. (J) RAY, B.C. (J)

CITATION:  1987 AIR 1353            1987 SCR  (2) 387  1987 SCC  (2) 107        JT 1987 (1)   537  1987 SCALE  (1)413  CITATOR INFO :  R          1988 SC 897  (7)

ACT:     Central Excises and Salt Act, 1944-Central Excise Tariff Items   26AA(ia)  and  26AA(ii)--Hoop  and   Strip   whether assessable to duty.

HEADNOTE:     The  respondent  company  filed  revised  classification lists  classifying  all rectangular  products  of  thickness below 3.0 mm manufactured by them as bars covered by  Tariff Item  26AA(ia)  of  the Central Excise  Tariff.  The  Asstt. Collector,  Central  Excise took the view  that  rectangular products  of  thickness less than 3.0 mm and of  width  less than  75 mm fell under the definition of ’Hoops’  and  merit classification  under Tariff Item 26AA(ii) and  exigible  to the  appropriate  duty. The respondent preferred  an  appeal before  the  Collector of Central Excise who held  that  the product fell within the definition of ’Hoops’ and upheld the order of the Asstt. Collector.     The respondent appealed to the Tribunal which held  that the  flat product of thickness less than 3.0 mm and a  width of less than 75 mm was classifiable as ’bars’ as claimed  by the  respondent company and not as ’Hoops’ and  allowed  the appeals.     The Department therefore filed the appeals under Section 35L(b)  of the Central Excises & Salt Act, 1944 before  this Court.     Dismissing the appeals, this Court,     HELD:  If  the revenue wants to tax a  particular  goods known as such then the onus is on the Revenue. [600F]     ’Hoop’ is made either by slitting coiled strip rolled in multiple  width,  into narrow coiled strip  of  the  desired width, or from narrow coiled strip with a hot-rolled or mill edge  and  the  type  and  width  of  hoop  being   produced influences the choice of the method used. [599B]     Curled  hoop is made by a pinch-roll and  curved  guide- shoe  arrangement that permits the hoop to take  a  circular form. A straight length hoop is produced merely by  removing the curved guide-shoe.1599D]                                                   PG NO 597

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                                                 PG NO 598     Straight  length  is  not a short length,  it  is  long. [599E]     The fact is that they were produced in a mill that could produce  hoops and strips. Their lengths are not such as  to place  them in the same class as hoops.  Having,  therefore, regard  to this and the relevant tariff item,  the  Tribunal came to the conclusion that it will be more appropriate   to assess them under Item 26AA(ia) than Item 26AA(ii).  [599(G- H; 600A]     South  Bihar Sugar Mills Ltd. v. Union of India &  Ors., [1968] 3 S.C.R. 21, referred to.     In an appeal under Section 35L(b) this Court has to  see the propriety and the correctness of adjudication. There was no  misdirection in law nor any non-consideration of  facts. There  is  no  exclusion from  consideration  of  legitimate proper materials. [600F-G]

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeals Nos.  1671- 87 of 1987.     From  the  Judgment  and order dated  22.4.1987  of  the Customs,  Excise and Gold (Control) Appellate Tribunal,  New Delhi in Appeal No. 1546, 1547 etc. in Order No. 267 to  283 of 1987 B I.     M.K. Banerjee, Solicitor General, R.P. Srivastava and P. Parmeswarn for the Appellants.     Soli J. Sorabji, K.K. Patel, Rajiv Dutta and R.S.  Sodhi for the Respondents .     The Judgment of the Court was delivered by     SABYASACHI  MUKHARJI,  J.  These are  appeals  from  the decision  of the Customs, Excise & Gold (Control)  Appellate Tribunal,  New  Delhi (hereinafter referred to  as  ’CEGAT’) under Section 35L(b) of the Central Excises & Salt Act, 1944 (hereinafter  called  ’the Act ).  The  respondent  Calcutta Steel Industries filed revised classification lists  wherein they  had classified all rectangular products  of  thickness below 3.0 mm manufactured by them as bars covered by  Tariff item  26AA(ia) of the Central Excise Tariff.  The  Assistant Collector,  Central  Excise was of the tentative  view  that rectangular  products of thickness less than 3.0 mm  and  of width less than 75 mm conform to the definition of Hoops and merit  classification  under item (ii) of Tariff  Item  26AA attracting effective rate of duty of Rs.450 per MT less the                                                   PG NO 597 reduction  provided for under Notification No.  55/80  dated 13th May, 1980. The respondents were, therefore, called upon to  show cause as to why the classification list should  not be  amended  and duty charged accordingly.  The  respondents submitted  their  written  statement  and  requested  for  a personal hearing. The matter came up for adjudication before the Assistant Collector, Central Excise. He held inter  alia that  the  type  of  Mills  used  for  the  manufacture  was irrelevant.  He relied on the definition of "Hoops"  evolved in  consultation with the Ministry of Steel and  the  Indian Standard Institution. The revised definition was as follows:     "The  finished product, generally of cross-section  with edges of controlled contour and of thickness 3.0 mm and over width 400 mm and below and supplied in straight lenths.  The product  shall  have rolled edges only (square  or  slightly rounded). This group also includes flat bars with bulb  that has  swelling  on one or two phases of the same  edge  under width of less than 400 mm.

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   The Assistant Collector, Central Excise on the basis  of certain  discussion,  in  his order, was of  the  view  that rectangular  products of thickness less than 3.0 mm  and  of width  less  than  75  mm  were  hoops  and  were  correctly classified  under sub-item (ii) of Tariff item 26AA  of  the Central  Excise  Tariff  and  accordingly  exigible  to  the appropriate  duty.  The  revised  classification  list   was accordingly modified and approved. The respondents preferred appeals  to the Collector of Central Excise  (Appeals).  The Collector  considered  the  Indian  Standard  1956-62   (2nd reprint May 1975) which defined "Hoops" as follows:     "5.54  HOOP  (bailing,  hoop  iron)-a  Hot  Rolled  Flat Product,  rolled  in rectangular section of  thickness  less than 3.0 mm and width less than 75.0 mm."     He held that according to the specifications the product in  question  sequarely  fell within  the  above  definition particularly  when  the  description  of  the  Tariff  Items covered  "Hoops,  all sorts". The Appellate  Collector  also considered  the  definition  of "Hoop  and  Strips"  in  the Brussels  Tariff  Nomenclature  which  described  these   as follows:     "Hoop and Strip (heading No. 73. 12)     rolled  products  with  sheared or  unsheared  edges  of rectangular  section, of a thickness set exceeding 6  milli-                                                   PG NO 598 metres,  of width not exceeding 500 millimetres and of  such dimension  that the thickness does not exceed  one-tenth  of the width, in straight strips, coils or flattened coils."     He accordingly held that this definition showed that the edges  of  the  product  in question  might  be  sheared  or unsheared  and the products might be in straight lengths  or in  coils.  He  also held that the nature or  type  of  mill cannot  by itself be the determining factor of the issue  in dispute  which has to be determined taking into account  all relevant considerations, viz., the phraseology and the scope of  the Tariff Entry, the trade practice terminology,  well- recognised  standard  national and  international  technical literature.  In  the  result,  the  Appellate  Collector  of Central  Excise  inter alia for the  reasons  stated  above, found no reason to interfere with the order of the Assistant Collector, Central Excise which was accordingly upheld.     The  respondents preferred appeals to the Tribunal.  The Tribunal allowed the appeals and held that the flat  product of thickness less than 3.0 mm and a width of less than 75 mm is classifiable as bars as claimed by the respondents herein and not as hoops as held by the Assistant Collector, Central Excise  and  upheld by the Appellate  Collector  of  Central Excise.  in allowing the appeals, the Tribunal  referred  to U.S. Steel Publications (The shaping and treating of  steel) wherein it is stated as follows:     "goods have been rolled in a bar mill and have not  been subjected to the process mentioned by the book for producing hoops and that they were not meant for bailing or  packaging which a hoop is meant for.’’     The  Tribunal in its order discussed various aspects  of the matter. The Tribunal noted that the Collector had stated and  what  are  the  different  categories.  In  U.S.  Steel Publication  (The  Making, Shaping and Treating  of  Steels) edited by Herald E. Mc. Gannon 9th Edition whom the Tribunal has described as an authority on the Steel and we presume he is,  there  are  some observations at  page  808  under  the heading  "Narrow Flat--rolled products" which are  relevant. There,"Hoops" have been described as follows:      "Hoop--There  are four general classification  of  this type  of products:

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   1. Tight cooperage hoop for barrels to hold liquid.                                                   PG NO 599     2. Slack barrell hoop for barrels to hold dry products.     3. Tobacco barrel hogshead hoop, and     4. Special hoop for special packages."     It has further to be noted that "hoop" is made either by slitting coiled strip rolled in multiple width, into  narrow coiled  strip  of the desired width, or from  narrow  coiled strip with a not-rolled or mill edge and the type and  width of  hoop being produced influences the choice of the  method used. It further appears that the method of the products  in question   is  not  one  of  the  methods  listed  in   this authoritative  work for hoops. The so called hoops were  not produced  by  slitting coiled strip nor rolled  from  narrow coiled strip, with hot rolled or mill edge. The article,  as has  been  noted, says that "hoop" is  produced  as’  curled hoop’  or  ’a  straight length’. Curled hoop is  made  by  a pinchroll and curved guide-shoe arrangement that permits the hoop  to  take a circular form. A straight  length  hoop  is produced merely by removing the curved guide shoe.     The  Tribunal was conscious that the goods  in  question were  neither  curled hoops nor straight  length.  In  those circumstances,  it was necessary to understand clearly  that the "straight length" used in this book is not the  straight length  understood  by the department which seems  to  think that  any  short  straight length  is  the  straight  length signified  by the term for these products. It is nothing  of the  kind as can be seen from the above passage quoted  from the authority. Straight length is not a short length, it  is long.  The  means  of  producing  the  goods  is  completely different  from what is generally written. The Tribunal  was justified  in holding that it is not possible to agree  with the  department that the manner of production of  the  goods can be taken into account.     It has also to be borne in mind that the very nature  of the mill was a criteria to decide the nature of the  product manufactured.  Further,  however, taking  into  account  the nature and type of the mill cannot itself be the determining factor in the issue in dispute. The Tribunal also took  into account  that  these  are produced in a  mill  which  cannot produce  hoops or strips. The Tribunal found the  fact  that they  were produced in a mill that could produce  hoops  and strips.  Their lengths are not such as to place them in  the same  class as hoops. Having, therefore, regard to this  and the   relevant  tariff  item,  the  Tribunal  came  to   the conclusion  that it will be more appropriate to assess  them                                                   PG NO 600 under  item 26AA(ia) than under Item 26AA(ii). The  Tribunal has  considered  all  the  relevant  facts.  There  was   no misdirection on the facts. All proper and relevant materials relevant  for the determination of the question  before  the Tribunal  have  been  applied to.  Reliance  was  placed  on certain  observations  of this Court in  South  Bihar  Sugar Mills Ltd. v. Union of India & Ors., [1968] 3 SCR 21. There, this  Court  was dealing with Item 14A and  the  appellants’ manufacturing mixture of gases containing carbon dioxide  by burning  lime-stone  with  coke in  using  only  the  carbon dioxide  from the mixture for refining sugarcane  juice  and for  producing  soda  ash by solvay  ammonia  soda  process- Whether  the  mixture of gases was kiln  gas  or  compressed carbon  dioxide  covered by Item 14-H in Schedule I  to  the Act. It was held by this Court that the gas generated by the appellant companies was kiln gas and not carbon as known  to the trade, i.e., to those who deal in it or who use it.  The kiln gas in question therefore is neither carbon dioxide nor

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compressed  carbon dioxide known as such to  the  commercial community  and  therefore cannot attract Item  14-H  in  the First  Schedule.  It was held that it was incorrect  to  say that because the sugar manufacturer wants carbon dioxide for carbonisation  purposes  and sets up a kiln for it  that  he produces  carbon dioxide and not kiln gas. In fact  what  he produces  is  a mixture known both to trade and  science  as kiln  gas  one  of the constituents of which  is  no  doubt, carbon  dioxide.  The kiln gas which is generated  in  these cases  is admittedly never liquified nor solidified  and  is therefore  neither liquified nor solidified carbon  dioxide, assuming that it can be termed carbon dioxide. It cannot  be called compressed carbon dioxide as understood in the market among  those who deal in compressed carbon dioxide.  If  the Revenue  wants to tax a particular goods known as such  then the  onus  is  on the Revenue. That they  have  failed.  The Tribunal has analysed all the aspects. In appeal, we have to see  the  propriety  and the  correctness  of  adjudication. Having  examined the aspects from all angles, we  find  that there  was no misdirection in law nor any  non-consideration of  facts.  There  is no  exclusion  from  consideration  of legitimate  and proper materials. In the premises,  we  have also examined the ultimate conclusion of the Tribunal.  That conclusion  appeals to us. It follows irresistibly from  the other  premises as indicated hereinbefore. In the  premises, the appeals fail and are accordingly dismissed.     S.K.A.                              Appeals dismissed.