http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: UNION OF INDIA & ORS:

       Vs.

RESPONDENT: TATA IRON & STEEL CO. LTD., JAMSHEDPUR

DATE OF JUDGMENT17/12/1975

BENCH: RAY, A.N. (CJ) BENCH: RAY, A.N. (CJ) BEG, M. HAMEEDULLAH SARKARIA, RANJIT SINGH SHINGAL, P.N.

CITATION:  1976 AIR  599            1976 SCR  (2)1002  1976 SCC  (2) 123

ACT:      Central Excises  and Salt Act, 1944-Section 3 read with First Schedule, items 25 and 26-Notification 30/60 dated 1st March, 1960  in terms  of Rule  8(1) of  the Central  Excise Rules, 1944  exempting steel  ingots in  which duty paid pig iron  is  used-Interpretation  of  the  Notification-Whether exemption is  not available  if duty-paid  pig iron is mixed with other non-duty-paid materials.

HEADNOTE:      The respondent  manufactures, as part of iron and steel products, ingot  moulds and  bottom stools from pig iron for use in  steel melting  shops. Under  item 25  and 26 and the first Schedule  to the  Central Excises  and Salt Act, 1944, the respondent  paid excise  duty leviable  on "pig iron and steel ingots" respectively.      In terms  of Rule  8(1) of  the Central  Excise  Rules, 1944, by  a notification  No. 30/60,  the Central Government granted exemption  to steel  ingots falling under item 26 of the First  Schedule if  produced out of scraps obtained from duty-paid pig  irons. Since  unserviceable ingot  moulds and bottom stools  are also scrapped into pieces and remedied in an admixture  with other  non-duty paid scraps and hot metal in the manufacture of steel ingots, the respondent claimed a set off of duty to the extent of duty paid on pig iron being the remelted  scrap used  in the manufacture of steel ingots which was  rejected by  the Assistant  Collector of  Central Excise. The  appeal before  the Collector  of Central Excise and  the  revision  before  the  Ministry  of  Finance  were dismissed, interpreting  the Notification  No. 30/60  as not applicable when  duty-paid pig iron is mixed with other non- duty materials.      When  the   orders  of   the  Revenue   Authority  were challenged in  the High  Court, the  High Court quashed them holding that (i) the Revenue Authorities fell into the error of  interpreting   Notification  No.   30/60  by   confining exemption to  steel ingots  in which "entirely" "exclusively or only" duty-paid pig iron is used since on such words were used in  the Notification;  and (ii)  the Notification would have to  be interpreted  in a  manner that the statute would

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

not cast  a burden  twice over the payment of tax unless the language of  the statute  is so compellingly certain to that effect.      Dismissing the appeal by certificate and negativing the contentions of the appellant that the exemption is given for virgin pig  iron and  if pig  iron was  used and  thereafter reduced to  scrap, there could be no exemption in respect of that scrap  being different  from pig iron and consequential refund of the duty-paid on pig iron, the Court. ^      HELD :  (1) The  only question is whether duty-paid pig iron is used along with non-duty-paid materials. Pig iron is made out  of iron  ore plus limestone plus coke. Pig iron is melted and  processed into  ingot moulds  and bottom stools. Nothing is  added to  pig iron. When ingot moulds and bottom stools become  unserviceable they  are broken.  This becomes scrap and  is melted  and used  in the  manufacture of steel ingots. All  the time  it is  duty-paid pig  iron  which  is processed into  ingot moulds  and bottom  stools  and  again broken into  scrap and melted in the making of steel ingots. [1048 E-F]      (2)  There  cannot  be  double  taxation  on  the  same article. The analogy of the Revenue of the example of excise duty on motor cars, in spite of the fact that there was duty on tyres and duty on metal sheets was misplaced. [1048 G]      (3) Notification  No. 30/60 granting exemption to duty- paid pig  iron does  not say  that exemption is granted only when duty-paid pig iron is used and that 1045 the exemption  would not  be available if duty-paid pig iron is mixed  with other  non-duty-paid materials. [1048 H, 1049 A]      (4) The  object of the Notification was to grant relief by exempting  duty-paid pig  iron. If  the intention  of the Government were  to exclude  the exemption  to duty-paid pig iron when  mixed with other materials, then the Notification would have  used the  expression "only"  or "exclusively" or "entirely" in regard to duty-paid pig iron. [1049 A-B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION : Civil Appeals Nos. 723- 737 of 1971.      From the Judgment and Order dated 18-4-1969 of the High Court of Judicature at Patna in Civil Writ Jurisdiction Case nos. 614 to 626 of 1967.      Shyamla Pappu,  Girish Chandra  and S. P. Nayar for the Appellants.      G. S. Pathak, J. B. Dadachanji, O. C. Mathur, R. Narain and A. K. Verma (Mrs.) for the Respondent.      The Judgment of the Court was delivered by      RAY, C.J.  These appeals  are by  certificate from  the judgment dated 18 April, 1969 of the High Court of Patna.      The High  Court  quashed  the  orders  of  the  Revenue Authorities dated 7 July, 1967.      The appellants  claimed before  the  Revenue  Authority exemption from  the payment  of duty in respect of duty paid pig iron which was used in the making of steel ingots.      The respondent  manufactures iron  and steel  products. The respondent  manufactures ingot  moulds and bottom stools from pig iron for use in steel melting shops. The respondent pays Central  excise duty  on such  ingot moulds and bottoms stools  in  accordance  with  the  provisions  contained  in section  3  of  the  Central  Excises  and  Salt  Act,  1944

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

hereinafter referred to as the Act.      Section 3 of the Act is the charging section. Section 3 states that  there shall  be levied  and collected  in  such manner  as  may  be  prescribed  duties  of  excise  on  all excisable goods  other  than  salt  which  are  produced  or manufactured at the rates set forth in the First Schedule.      Prior to  the Finance  Act 1964  Items No. 25 and 26 in the First  Schedule to  the Act mentioned pig iron and steel ingot respectively  as the  description of  goods subject to excise duty.      As a  result of  the Finance Act, 1964 Items No. 25 and 26 were substituted by the following:- 1046      The respondent’s case before the Revenue Authorised and also in the High Court in short was this : When ingot moulds and bottom  stools become  unfit for  further use  these are scrapped into  pieces and remelted in the respondent’s steel melting shops  in an  admixture with  other  non  duty  paid scraps and hot metal in the manufacture of steel ingots. The respondent claimed  a set  off of duty to the extent of duty paid on  pig iron  being the  remelted  scrap  used  in  the manufacture of steel ingots.      The  respondent   based  the  claim  for  exemption  on Notification No.  30/60 dated  1 March,  1960 issued  by the Central Government  in terms  of Rule  8(1) of  the  Central Excise Rules,  1944 (hereinafter called the Rules) exempting steel ingots  in which  duty paid  pig iron  is used from so much of  the duty  leviable thereon  as is  in excess of Rs. 30/- per  ton. By  notification No.  120  of  1960  dated  1 October,  1960   Notification  No.   30/60  was  amended  by substituting the  figures and  words "Rs.  29.35 per  metric ton" for the words "Rs. 30 per ton".      By Notification  No. 75/62  dated 24  April,  1962  the Central Government  in exercise  of powers conferred by Rule 8(1) of  the Rules  exempted steel ingots falling under Item 26 of  the First Schedule to the Act and specified in Column 2 of  the table appended to the notification from so much of the duty  of excise leviable thereon as is in excess of duty specified in the corresponding entry in Column 2 of the said table. In  column 2  of the  said notification the following descriptions and duty appear: ----------------------------------------------------------- Sl.            Descriptions                    Duty No. ----------------------------------------------------------- 1. If produced out of scrap obtained from    duty paid pig iron                         Rs 30 per M.T. 2. If produced out of old iron or steel scrap    obtained from duty paid steel ingots or    products (75/76)                           Nil -----------------------------------------------------------      The rates  given in  these aforesaid notifications were further amended  by Notification  No. 22 of 1964 issued on 1 March, 1964.  The rates in respect of Notification No. 30/60 dated 1 March, 1960 for the words and figures "Rs. 20.35 per metric ton" the words and figures substituted were "Rs. 20/- per ton".      Duty was  realised from  the respondent on steel ingots in the  making of which duty paid pig iron of rejected ingot moulds and  bottom stools  was used along with non-duty paid materials. The  respondent claimed  exemption in  respect of duty paid pig iron on rejected moulds and bottom stools used in the  making of  steel ingots. The claim of the respondent for exemption  in respect of duty paid pig iron was rejected by the  Assistant Collector  of Central  excise by his order

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

dated 29 August, 1965. 1047      The respondent  filed appeals  before the  Collector of Central Excise  who by  order dated  30 July, 1965 dismissed the respondent’s appeals.      The respondent  thereafter filed  a  revision  petition before the  Ministry of Finance under section 36 of the Act. The Government  by an  order dated 7 July, 1967 rejected the revision petition  of the  respondent. The  Government  held that the  respondent was not entitled to any exemption under Notification No.  30/60 dated 1 March, 1960 because remelted scrap obtained  from  unserviceable  casting  moulds,  viz., ingot moulds  and bottom stools was used in conjunction with other non  duty paid  pig iron  in the  manufacture of steel ingots.      The respondent challenged the orders in the High Court. The  High   Court  quashed   the  orders   of  the   Revenue Authorities.  The   High  Court   held  that   the   Revenue Authorities fell into the error of interpreting Notification No. 30/60  by confining  exemption to  steel ingots in which "entirely, exclusively  or only" duty paid pig iron is used. The High Court held that the words "entirely, exclusively or only" were  not used  in the  notification. The notification exempted steel  ingot in  which duty paid pig iron was used. The High Court also held that the notification would have to be interpreted in a manner that the statute would not cast a burden twice over for payment of tax on the tax payer unless the language  of the  statute is  so compellingly certain to that effect.      The appellant  contended that  exemption is  given  for virgin pig  iron and  if pig  iron was  used and  thereafter reduced to  scrap there  could be no exemption in respect of scrap. It  was also  said on  behalf of  the appellant  that scrap iron  was different from pig iron, and, therefore, the refund of the duty paid on pig iron would not arise.      The appellant  Government relied  on  Notification  No. 75/62 dated  25 April,  1962 which  gave exemption  to steel ingots from  so much  of the duty of excise leviable thereon if produced out of scrap obtained from duty paid pig iron or if produced out of old iron or steel scrap or scrap obtained from duty  paid steel  ingots  or  products.  The  appellant Government relied  on Notification No. 75/62 dated 25 April, 1962 for  two reasons. First, it was said that the exemption in Notification  No. 30/60  dated 1  March,  1960  exempting steel ingot  in which  duty pig iron is used will not exempt scrap  iron  which  is  different  from  pig  iron.  Second, Notification No.  75/62 dated  25 April, 1962 gave exemption to scrap  iron in  cases and when Notification No. 75/62 was rescinded in  1964 no  exemption could thereafter be claimed in respect of scrap.      The  respondent   contended  that   the  appellant  all throughout before the Revenue Authorities and the High Court knew and  treated the  case of  the respondent to be a claim for exemption  of duty  paid pig iron in the manufacture  of steel ingots.  In paragraphs  5, 6 and 7 of the statement of case of the appellant it is said that the respondent claimed refund of the duty paid on pig iron used in ingot moulds and bottom 1048 stools being  the melted  scrap in  the manufacture of steel ingots. In  the revision  order of the Revenue dated 7 July, 1967 in  paragraphs 4  and 6  it is stated that the claim of the respondent was for duty paid material used in the making of steel  ingots. The  Revenue Authorities in the said order did not  accept the claim of the respondent for exemption on

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

the ground  that duty  paid pig iron was mixed with non duty paid pig iron.      In paragraph  9 of the affidavit of the Revenue used in the High  Court the  Revenue said  that the  various  scraps mixed included  duty paid  and non  duty  paid  scraps.  The Revenue referred  to rejected ingot moulds and bottom stools as scrap.      The respondent  in the  affidavit in  reply in the High Court stated  that the  "question for consideration in these writ applications  is the  rate of  duty leviable  on  steel ingots produced  from processed  moulds  and  bottom  plates which have already borne a duty". The respondent also stated that the  processed mould  and bottom  plates  used  in  the manufacture of steel ingots are recorded.      The respondent  contended that it was never the case of the Revenue  that it  was scrap  in  respect  of  which  the respondent wanted  exemption.  Counsel  for  the  respondent rightly submitted  that if  the Revenue  made that  case the respondent would  have produced  not only affidavit evidence but also  evidence of  experts to  determine the question of fact whether  the article,  viz.,  melted  ingot  mould  and bottom stools altered the character of duty paid pig iron.      Counsel for  the respondent  is right in the contention that the only question here is whether duty paid pig iron is used along with non duty paid materials. There is no dispute that there  are materials  and data to find out the quantity of duty paid pig iron used. Pig iron is made out of iron ore plus limestone  plus coke.  Pig iron is melted and processed into ingot moulds and bottom stools. Nothing is added to pig iron.  When   ingot  moulds   and   bottom   stools   become unserviceable they  are broken.  This becomes  scrap and  is melted and  used in  the manufacture  of steel  ingots.  The respondent rightly  contends that  all the  time it  is duty paid pig  iron which  is processed  into  ingot  moulds  and bottom stools  and again broken into scrap and melted in the making of steel ingots.      The High  Court rightly held that the contention of the Revenue fails  on two  broad grounds. First, there cannot be double taxation on the same article. Counsel for the Revenue gave the  example of  excise duty on motor cars, in spite of the fact  that there  was duty  on tyres  and duty  on metal sheets. The  analogy is misplaced. In such cases the duty is on the  end product  of motor  cars as  a whole. The duty on tyres and  the duty on metal sheets do not enter the area of duty on  motor car.  Second, Notification  No. 30/60  grants exemption to duty paid pig iron. The High Court rightly said that the Notification does not say that exemption is granted only when duty paid pig 1049 iron is  used and  that the exemption would not be available if duty  paid pig  iron is  mixed with  other non  duty paid materials. If  the  intention  of  the  Government  were  to exclude the  exemption to duty paid pig iron when mixed with other materials  then the  notification would  have used the expression "only"  or "exclusively"  or "entirely" in regard to duty paid pig iron. The object of the notification was to grant relief by exempting duty paid pig iron.      For these  reasons, the  judgment of  the High Court is affirmed and the appeals are dismissed. Parties will pay and bear their own costs. S.R.                                      Appeals dismissed. 1050