Customs, Excise and Gold Tribunal - Delhi
Collector Of C. Excise vs Nagarjuna Signodes Ltd. on 6 April, 1995
Equivalent citations: 1995(78)ELT522(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This is a Revenue appeal against the order-in-original dated 24-9-1987 passed by the Collector(Appeals), Hyderabad.
2. The facts of the case are that a show cause notice dated 8-4-1987 was issued to the assessee calling upon them to explain as to why the "Tensile steel strappings" manufactured and cleared by them should not be brought under Excise Central with immediate effect and why an amount of Rs. 1,13,82,247/-should not be demanded on the basis of goods being classified under Chapter sub-heading 7308.90 of the Central Excise Tariff Act, 1985 by invoking Rule 9(2) of Central Excise Rules, 1944 read with provisions to Section 11A of the Central Excise Act, 1944.
3. The further facts of the case are that the assessees are manufacturers of Tensile Steel Strappings and Steel Seals; after obtaining of Central Excise Licence for manufacture of Seals and whereas no licence had been obtained for the manufacture of the other item namely, 'Tensile Steel Strappings' manufactured by them. They had filed a classification list claiming various items of Seals as falling under Chapter sub-heading 8308.90 attracting Central Exicse duty at the rate of 15% ad valorem and had claimed the steel strappings to be nothing other than steel strips on which the appropriate Central Excise duty liability had already been discharged at the point of its procurement. They had also stated that since they receive duty paid steel strips out of which steel strappings are manufactured, they had claimed their final product as non-excisable in terms of an order passed by the Assistant Collector of Central Excise, Hyderabad I Division, Hyderabad vide his order dated 14-7-1983. It is alleged that the Assistant Collector had approved the classification for seals, whereas he had not spelt out the durability or otherwise of the steel strappings. It is further alleged in the show cause notice that the Audit Party during the investigation of the functioning of the assessee's unit, prima facie, felt that the steel strappings are classifiable under sub-heading 7308.90 of CET, 1985. Thereafter a detailed study was carried out with regard to the classification of 'Tensile Steel Strappings'. It was ascertained that the assessee had been granted an Industrial Licence dated 6-7-1981 for the manufacture of Tensile Steel Strappings and for this purpose steel coils were being supplied by M/s. SAIL or M/s. M.M.T.C. or in the alternative such steel coils were being imported by them. The raw materials viz. steel coils in its receipt are directly sent to the assessee or certain other units for job work such as slitting, pickling and cold rolling. The resultant product viz. cold rolled steel strips were cleared on payment of duty of Rs. 715/- per M.T. by the job worker and then consigned to the assessee. The cold rolled steel strips thus received by the assessee from the job worker is the raw material in the manufacture of Tensile Steel Strappings. It was claimed by the assessee that what they did is conversion of strips of larger widths into one of smaller width and that such strips after waxing and painting continue to remain strips for purposes of central excise classification and that such process does not involve any manufacturing activity. It was further alleged that the various elaborate processes carried out by them prove that such processes are processes of manufacrture within the provision of Section 2(f) of the Central Excise Act, 1944, and thus would be a different product classifiable under sub-heading 7308.90 of the Central Excise Tariff Act, 1985.
4. It is further alleged that the cold rolled steel strips which are received in coils are first decoiled. Thereafter it is passed through a pin hole detector where even a hole of a diameter of 1 /1000 of an inch also can be detected. The purpose of passing through the pin hole detector is to ensure that the material does not have even the tiniest of a hole which could result in breaking of finished product during handling. In case a hole is detected then that portion of the strip is cut and it is welded by a T.I.G. welding process, thus making the strip continuous. The elimination of the holes is also to ensure that the strap during handling does not break and that such breakages do not cause injury to the persons during handling. After ensuring that the holes are totally eliminated, the strips are passed through a looper which is a compensator for variation of guages and which ensures that the line runs continuously. Thereafter, it is passed through a sheet grinder wherein sufrace defects of the raw mterials are eliminated. The sheet grinder also ensures that the unevenness of the surface due to welding done at any stage are totally removed. The strips, thereafter, undergo slitting operation wherein the widths of the raw materials are reduced to smaller widths. This is done according to the requirements of the customers and according to their production programme. Normally strappings of widths varying from 18 mm to 48 mm are manufactured. The slit strappings are thereafter passed through a spool feeder where it is rewound into a coil. The said coil subsequently undergoes side-trimming. The side-trimming is done generally to avoid unevenness of the widths of the material that could have caused during slitting operations. If the width is uneven such portions are cut off and the cut ends welded. Thereafter, the edge conditioner which is known as a process of deburring, wherein the edges of the straps after its slitting and trimmings are conditioned so as to ensure that the edges are rounded off to aviod injury of fingers during handling of the strappings. The deburred edges, on microscopic examination would show that the edges are perfectly rounded. After deburring the material is passed through a narrow strap detector which detects any narrow width of the strappings, the portions having narrow width are cut off and such portions are welded together in order to maintain the continuity. The cut ends of the strappings are thereafter passed through a scrap bailer and is subjected to spot welding. Thereafter it is passed through a cooperative controller and followed by tensioner in order to enable the coil to run at a specific speed. Thereafter, the material viz. strappings are heated in order to remove surface impurities such as oil etc. The heat treatment also determines the tensile strength and ductility of the strappings. The temperature to which the strappings which the unit wants to produce [sic]. In other words, temperature is controlled and manipulated in such a manner that this treatment determines the quality of the finished product. After the heat treatment the material is passed through a chamber wherein it is painted. Normally the paints used are in red, green, blue or zinc colour. After painting it is passed through a chamber where it is subjected to infrared treatment and curing. The painting and infrared treatment & curing etc. are done so as to provide smoothness and a glossy finish to the surface of the strappings. It also helps to prevent corrosion and rusting of the material. The painted, waxed and cured strappings are thereafter passed through an exit looper and tensioner. The final product which is thus obtained viz. the strappings are cut to normally at 45 Kgs weight or as required by the customers and the strap coil removed is given thread type of winding at a bobbin winder. The strapping is thereafter sealed to prevent loosening the coil followed by gunny packing before it is despatched. It is alleged that the cold rolled steel strips are subjected to this elaborate manufacturing process results in production of an entirely new sophisticated product which is a part of a packaging system as per their own literature. It is also alleged that the manufacturing cost, the cost of tehnical know-how in the form, of royality and various overheads results, in a value addition of about 200% at the cost of the C.R. Strips resulting in the end product viz. Tensile Strapping. Therefore, it is alleged that cold rolled steel strips are different from final product namely. Tensile Strappings. In this context, the show cause notice refers to the 'British Tensional Strapping Association's booklet' which also refers to the definition of steel strips given in the Tariff, and also definition of the term stripping as found in the literature. It is alleged that the product is highly sophisticated stripping used in the modern packing industry and it is a part of packaging system and therefore, it is cold rolled steel strips. It is also alleged in the show cause notice that the assessee has misguided the department on this aspect of the matter and also by citing wrong citations. Therefore they have been called upon to explain as to why final product should not be classified under Chapter sub-heading 7308.90 of the Central Excise Tariff chargeable at the rate of 15% ad valorem and also explain as to why duty on the value of clearance of Rs. 58,81,650 for the period 1-3-1986 to 19-2-1987 should not be demanded.
5. In reply to the show cause notice the assessee has contended that the box strappings are made by cutting duty paid steel strips and had quoted the Assistant Collector's order dated 17-7-1983. This had been duly verfied by the Superintendent Central Excise by his endorsement dated 5-3-1986 which was duly approved by the Assistant Collector of Central Excise, Hyderabad I Division under his endorsement dated 21-3-1986. Therefore, they submitted that the Assistant Collector had approved the classification, of seals after due enquiry and such approval was unconditional as the said classification list has been filed under Rule 173B of the Central Excise Rules, 1944, and the approval had been made after due process of law. They had also stated that their unit had been periodically visited by various grades of officers right from 1983 onwards and even on 21-3-1986 the Superintendent of Central Excise (Audit) had visited their unit and carried out investigation of the functioning of their unit. Therefore, they submitted that the approved classification list cannot be reopened, as the classification list had been approved after due enquiry. The department on 25-6-1983 had applied its mind after indepth study of the process of manufacture and the same is clear by the Assistant Collector's letter dated 25-6-1983. They had replied to the said letter dated 2-7-1983, thereupon the Assistant Collector had issued an order dated 14-7-1983. The process of manufacture has been described therein and after such examination the Assistant Collector had held that primarily the cold rolled steel strips had already discharged its duty liability under Tariff Item [26AA(iii)] and the resultant product continues to be cold rolled strips under Tariff Item [26AA(iii)] and no further duty liability arises. It had also been found by the assessee that once the classification list is approved it cannot be reopened except by the department taking recourse of Section 35E(2) of the Act. The Assistant Collector after approval of classification list by his endorsement dated 21-3-1986 has attained finality and it cannot be reviewed and set aside. They had submitted that the various processes carried out do not amount to manufacture and that no new product comes into existence. In this context, they had relied on several judgments of the Hon'ble Supreme Court and that of the Tribunal. They had also relied on the ISI Specification 5872-1973 which referred to the product cold rolled steel strips. Therefore, they had submitted that their final product complied with the specification laid down in the ISI for cold rolled strips and, hence, there is no question of treating the goods as new products.
6. The Learned Collector after due consideration of the reply upheld the assessee's contention in the following words as follows : -
"1 will first deal with the question of assessment of goods under chapter sub-heading 7308.90 As already explained earlier and as contained in the show cause notice, the cold rolled steel strips which are received from SAIL, MMTC or imported are first sent to M/s. Nagarjuna Steels Ltd. or some other unit for converting them into cold rolled steel strips. These cold rolled steel strips are cleared from the respective job workers' units on payment of appropriate Central Excise duty and there after they are brought to the party's premises viz; M/s. Nagarjuna Singnodes Ltd. Rudraram. As already explained these strips are subjected to the processes which ultimately results in the end product viz; Tensile Steel Strappings. In the show cause notice, it was alleged that the end product viz. the strappings are to be assessed under chapter sub-heading 7308.90. In order to substantiate the department's case the various processes involved have been explained. The party has rebutted every allegation put forth in the show cause notice by holding that the processes do not bring about a new product. They have explained the various stages through which the cold rolled steel strips are passed which ultimately result in the strappings which are marketed as strappings. The decoiling, slitting, pin held detecting, side trimming, deburring, cutting welding, heating, painting, waxing etc; do not alter the essential characteristics of the goods viz; the strips. The various processes only make strips of uniform length, size, thickness and free from any holes or damages etc. The arguments put forth by the party that these processes do not bring into existence a new product appears to be having considerable force. As already explained, all these processes do not change the basic characteristics or the qualities of the strips and the final product still remains strips when read with the definitions of strips in the tariff. In this connection, I refer to Rule 3(a) of the Rules for the interpretation of the Schedule which reads as follows :
"The heading which provides the most specific description shall be preferred to headings providing a more general description."
Thus the goods in question viz; strappings fits into more specific description viz. strips than a general description of products of iron and steel under chapter sub-heading 7308.90, under which the department has sought the goods to be classified. In as much as none of the processes to which the goods are subjected to alters the basic characteristics of the strips, I am inclined to accept the party's argument. Thus as far as the classification of the product is concerned, I have no ambiguity that its classification shall be as strips only.
30. The next point which needs to be considered is whether the various processes to which the strips are subjected to would involve processes of manufacture attracting the provisions of Section 2(f) of the Act. As already explained in paragraph above, in as much as the basic characteristics and qualities of the products are not altered and the processes are only intended for giving a regular strip which is free from any defects whatsoever, and painting, waxing and infrared treatment and heating only provide the material a smooth and clearer surface etc. for easy handling, these processes do not bring about any change in the material viz. strips in order to call it by any different name, identity or usage in the market. Before commencement of the manufacture of the product these finished box strappings were imported by the company, while assessing these strappings Madras Custom House as well as Hyderabad Collectorate classified them as cold rolled steel strips only. In fact, Assistant Collector Hyderabad-I Division has gone into the whole question and after detaileq" examination of the product passed an Order confirming the product as cold rolled steel strips. I do not find any further material to warrant a change of classification. Hence I hold the processes do not involve the provisions of Section 2(f) of the Central Excises and Salt Act."
7. The Revenue is aggrieved with the above findings and it is contended that the process of manufacture reveals that special characteristics are imparted to the cold rolled strips when they are subjected to heat treatment, and definite change is brought/about in the basic characteristics of the cold rolled strips, when it is subjected to the processes like heating, deburring, heat treatment, painting and waxing. These processes bring about a definite change in the characteristics and the quality of the said inputs bringing into existence a new product with distinct nomenclature, identity and usage in the market. It is stated that when the steel undergoes all these processes of manufacture they are transformed into a new product and assume the characteristics of articles and are ready for use in packing industry as a specialised item known as "Tensile Steel Strappings". It is stated that Chapter 72 as it stood prior to 1-3-1986 covers, inter alia, cold rolled steel strips under sub-heading 7211.31. A strip when subjected to further processing is capable of being classified under different heading, as the tariff makes a differentiation between cold rolled strips and galvanised strips prescribing different rates of duty. The cold rolled strips are classified under sub-heading 7211.31 whereas galvanised strips are classifiable under Heading 7211.20. Therefore, when cold rolled strips are subjected to the process of galvanisation, it brings into existence a new excisable product. On the same analogy, the Tensile Steel Strappings' which are made out of cold rolled steel strips merit classification under 7308.90 as other articles of steel. On this premise the Revenue seeks to set aside the impugned order and to confirm the allegations made in the show cause notice and hold the goods to be classifiable under Chapter sub-heading 7308.90 as other articles of steel leviable to a duty of excise at 15% ad valorem and the amount of duty of Rs. 1,13,82,247'/- is recoverable from the assessee.
8. We have heard the Learned JDR, Shri Somesh Arora for the Revenue and the Learned Consultant, Shri C. Chidambaram for the assessees.
9. The Learned JDR submitted that the order is bad in law for the-simple reason that the Learned Collector had first decided the question of classification and thereafter taken the question of excisability. It is like placing a cart before a horse. The Ld. Collector has also failed to examine the enormous evidence placed by the department and also failed to discuss the same. The trade parlance and commercial understanding also has not been examined by the Collector. He further argued that the order is without due consideration and hence requires to be set aside. He pointed out to the Chapter sub-heading 7308.90 and submitted that the articles of iron & steel were more akin to be brought under this chapter heading. The ld. JDR strongly placed his reliance on the pamphlet of 'British Tensional Strapping Association' which had been relied by the Revenue to make out a case for a different product as is known in the market. He submitted that once the product has undergone several changes by a series of manufacturing processes then the product does not continue to remain as cold rolled strips and that it requires to be classified as a different product within the categary of iron and steel in the residuary sub-heading. He submitted that the goods are no longer strips under Chapter Heading 72 and hence they are more appropriately classifiable under chapter sub-heading 7308.90. He submitted that the ld. Collector reliance on Interpretative Rule 3(a) does not arise in the present facts and circumstances of the case and, therefore, the order requires to be set aside and allegations made in the Show Cause Notice to be upheld.
10. The Learned Consultant, Shri Chidambaram appearing for the Revenue explained the facts of the case and also filed a detailed note showing the processes adopted for making the impugned product. The said note filed is reproduced hereinbelow -
"DETAILED NOTE ON THE PROCESS ADOPTED FOR MAKING STRAPPING RAW MATERIAL : Hot rolled steel is procured from SAIL/TISCO and it is cold rolled to required thickness at the converters place. The cold rolled steel in strip form is processed into strapping.
HOT ROLLING : Steel slabs are heated to 2300 F and rolled in the hot strip mill to a thickness of 2 mm to 10 mm and at a width of 1000 mm to 1700 mm at Major Steel Plants.
COLD ROLLING : The hot rolled coils are pickled in dilute Hydro Chloric Acid for removal of the rust and scale. Then the pickled coil is passed in cold condition at room temperature through the cold rolling mill rolls several times and the thickness is reduced to the required level. The thickness of the cold rolled strips may vary from 0.3 mm to 2.00 mm normally.
ACTUAL PROCESS DETAILS AT M/S NAGARJUNA SIGNODES LTD.
1. DECOILING : The cold rolled coil is loaded on the decoiler which holds the coil and maintains constant tension during running.
2. PIN HOLE DETECTING : This equipment works on the light passing through the hole and in case of a hole in the raw material it gives an alarm and the operator takes care.
3. SHEARING : A hand shearing machine is used by the operator to cut and remove the portion containing pin holes.
4. TIG WELDING (TUNGSTEN INERT GAS WELDER) :This is used to weld the trailing end of the outgoing coil to the front end of the incoming coil to keep the continuity.
5. LOOPER: This is a set of gravity pulleys one each for each strip to take care of the clackness in the individual strip during slitting.
6. SHEET GRINDING : A hand grinder is used to remove the surface defects like laminations etc, on the strip by manual grinding.
7. SLITTING : The slitter is used for slitting the cold rolled strip into required widths of 1/2", 5/8", 3/4" & 1-1/4".
8. SCRAP BALLER : This equipment is used for compacting and bundling the edge trim which is generated as scrap during slitting operation.
9. NARROW STRAP DETECTOR :This equipment detects the strip which is less than the required width and gives an alarm. The defective portion is cut manually using a hand cutter and removed as scrap.
10. EDGE CONDITIONING : (DEBURRING) : The burr (uneven edge) generated during slitting is smoothened by passing the strip through a set of rolls.
11. REWINDING : After the deburring operation the strips are wound into coils on spools which are mounted on the shaft of the rewinder.
12. SPOOL FEEDER : The spools from the rewinder are removed and placed on the spool feeders which feed the strips to the line.
13. SPOT WELDER : Spot welder is used to keep the continuity of the strip in the line by spot welding the trailing end to the incoming end of the coils.
14. LOOPER CONTROLLER : A set of gravity looper pulleys helps the line running continuously during the spot welding operation.
15. TENSIONER : This drive maintains proper tension on the strips during operation so as to avoid twisting of the strips of the line.
16. HEAT TREATMENT: Heat treatment is administered through a lead bath by which the impurities get removed and the strips become malleable so that they do not break during usage as a result of brittleness.
Depending on the end use of strips, the aforesaid Heat Treatment is done by maintaining the temperature of the lead bath in the range of 650°F to 1100 F. The type of temperature variation depends on use of Textiles, Engineering, Steel and other industries. This process does not alter the basic structure or properties of Cold Rolled Strips.
Strips used for TV tube; which are similar to other applications hold the tube fight to avoid possible explosion of the tube. The strips basically provide tension and gripping. Magnus is a higher tensile strapping than Apex Strapping.
17. PAINTING : Strips are dipped into a paint tank and excess paint is wiped off by using a stationery wiper.
18. INFRARED CURING : The painted strips are passed through an infrared paint curing oven which dries the paint at high speed. Painting is carried out for prevention of rusting.
19. PACER : This drive maintains the constant line speed of the strips.
20. WAXING : The strips are passed through a tank containing water based wax and excess wax is wiped by used stationery wiper.
21. DRYING : The waxed strips are passed through a wax oven for drying the wax. Waxing helps in reducing the friction and uniform distribution of tension.
22. EXIT LOOPER : A set of gravity looper pulleys are used as accum-mulators while removing the finished coil from the rewinder to keep the line running continuously.
23. TENSIONER : To keep constant tension on strips to avoid their twisting.
24. STRAP SHEAR : Used to cut the strips for removal at 45 kgs. coil weight.
25. BOBBIN WINDER : This is used for winding the finished strips into coils of 45 kgs. weight.
26. PACKING : Coils are packed by using steel strips and sealed manually to prevent loosening and are ultimately wrapped with hessian."
11. The ld. Consultant argued on the basis of above process and also on the basis of ISI specification to contend that the cold rolled steel strips do not change into another article of Iron & Steel but would continue to remain in the same sub-heading despite several processes carried out on the said cold rolled strips. It is, therefore, his contention that the details in the pamphlet of 'British Tensional Strapping Association' is not relevant in so far as their product is concerned as their product is manufactured according to the ISI Specification and not as per the pamphlet relied by the Revenue. He submitted that the processes are carried out by them only with a view to add tensile strength to product as it was being used for packing heavy articles. He admitted that some portions of the product were being used in T.V. industries for the purpose of strapping the TV tubes to prevent the effect of any possible explosion of the TV tubes, as these strappings provide tension and gripping. He also referred to page 981 of HSN Notes to butteress his argument that the goods fall as products of 'Iron & Steel' but would be rightly classifiable under chapter sub-heading 7211.31 only. He further submitted that the pamphlet relied by the department is an advertisement material and the same cannot be accepted as evidence, besides the goods, not having been manufactured as per that specification, and therefore, such reliance is not helpful to the Revenue. He submitted that the basic characteristics of the strip are not changed by virtue of various processes carried out by them. He relied on the ruling rendered by the Gujarat High Court in the case of Zaverchand Gaekwad (P) Ltd. v. Union of India as reported in 1992 (61) E.L.T. 225 wherein it has been held that the steel strips remain the same even after galvanisation. He also referred to the judgment of the Hon'ble Supreme Court in the case of Gujarat Steel Tubes Ltd. v. State of Kerala as reported in 1989 (42) E.L.T. 513. He referred to the ruling as rendered in the case of Government of India In Re : Bralco Metal Industries (P) Ltd. as reported in 1981 (8) E.L.T. 502 (GOI) and as another as rendered in the case of Government of India In Re : Ram Singh Sumer Singh as recorded in 1982 (10) E.L.T. 581 (GOI). He submitted that the Chapter Heading 73 cannot be invoked as it refers to articles of Iron & Steel and the present item does not fit in the tariff description of the types of goods stated therein.
12. Countering the argument of the ld. Consultant, the ld. JDR, Shri Somesh Arora submitted that the reliance on HSN Notes is improper as HSN does not laid down the question of excisability. He also submitted that the ISI Specification is also meant for maintaining the quality and it cannot be relied for the purpose of classification or for market understanding. In this context, he relied on the Tribunal's ruling in the case of J.P.S. Khar a v. Collector of Customs, Bombay as reported in 1994 (74) E.L.T. 861 (T). He submitted that the item is not a strip but strappings and hence, it goes out of Chapter 72. He submitted that after amendment to the tariff the position is altered.
13. We have carefully considered the submissions made by both the sides and have perused the records and the literature. On a perusal of the detailed notes and the process of manufacture given by the assessee which is noted herein, it is clear that the cold rolled steel strips undergo various processes and, thereafter, the item acquires tensile strength and durability, which is a requirement for the purpose of adding strength to strips for its use in packaging of heavy items. The characteristics of cold rolled strip vis-a-vis tensile steel strappings are totally different after a series of manufacturing processes carried out by the appellants and, therefore, they cannot be equated together as one and the same. But the Revenue's main reliance is on the basis of literature of 'British Tensional Strapping Association', for classification as an article of Iron & Steel, which is seriously contested by the assessee on the ground that it is a marketing literature and also the goods are not manufactured as per the said literature. It is assessee's contention that the goods are as per ISI Specification and it satisfies the criterion laid down for cold rolled strip and, therefore, despite such processes the item continues to remain as cold rolled strip as classifiable under 72. The assessee, however, admit that there are different uses of the item and it is not merely used as a packing material but also used in the TV sets, and it is known differently in the trade in respect of such manufacture. It is also their admission that the item is not being treated as cold rolled strips but as Tensile Steel Strappings. As can be examined from the order of the ld. Collector we notice that the ld. Collector has not gone into these details and also not given a detailed examination of the literature as well as allegations of the Revenue and the submissions of the assessees. We also notice that the ld. Collector has straightway proceeded to apply interpretative Rule 3(a) and dealt with the classification issue before dealing with the question of excisability and on perusal of order we are convinced that the order suffers from application of mind. The trade and commercial understanding to the product is the best guide for the purpose of classification. Undoubtedly, the processes carried out by the assessees are processes of manufacture. But what is required to be examined is as to whether, it results into a product of Iron & Steel for the purpose of classification under Chapter sub-heading 7308.90. In this context, the pamphlet of 'British Tensional Strapping Association' cannot be considered as the best evidence for determining the trade parlance test, unless, it is shown that the product has been manufactured as per its specification. It is also required to be ascertained as to whether it is a mere advertisement material or a specification by itself. We see force in the argument of the ld. JDR that the ISI Specification can merely be a guide for the purpose of classification and it cannot be the sole guide, so also the HSN, which has only a persuasive value. The question of excisability is required to be settled in the first instance, before the issue of classification is examined. The ld. Collector's reliance on interpretative rules, without first exhausting the applicability of Section notes, and Chapter notes will not be a proper thing to do. The Rule 1 of the Rules of Interpretation of Tariff Act, makes this point clear. As per the admission of the assessees themselves the impugned goods have a variety of other uses besides as 'cold rolled strip', therefore, this matter requires detailed examination, with the assistance of experts in the field and with the help of market understanding. We, therefore, think it proper to set aside the impugned order and remit it back to the original authorities for de novo consideration, after giving options to both the sides to produce enough technical and market evidence, to support their respective claim.
14. Thus, the appeal is allowed by remand.
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(S.L. Peeran) Dated : 23-1-1995 Member (J) S.K. Bhatnagar, Vice President
15. With due respect to Hon. Member (J) my views and orders in the matter are as follows :-
16. I find that the argument of Ld. D.R. have strong force.
17. The processes to which the raw material is subjected have been indicated by the appellants and reproduced in para 10 above. A study thereof shows that taken as a whole they result into production of a new product having different qualities and characteristics as well as different uses. They are also being marketed under a different name for different purposes.
18. These processes cause a substantial change in character, name and use is evident from the pamphlet of British Tensional Strapping Association, and this evidence cannot be sidetracked because the way a product is manufactured and marketed is an important consideration and a valid one for our purpose and both are referred to therein (Annexures I and II). The ISI Specifications only relate to those grades of cold rolled steel strips (tensional steel strappings) which are for general packaging purposes and not for such specialised purposes for which the appellants products in question are meant to be used. Secondly the Central Excise Tariff is not aligned with ISI but is broadly based on HSN and if the tariff distinguishes between galvanised and non-galvanised and the cold rolled and hot rolled ones, we have to keep that in view. The HSN refers to thin flat products which may be subjected to subsequent manufacture and finishing; and in the Chapter Note (C) of Chapter 72 (page 981) various proccesses and treatments have been indicated. These may be utilised for simply finishing treatments or for conversaion into other articles. When they are used for the first purpose, the product may only become a finished product but when they are used for second purpose, it would result into coming into existence of a new product. In the former case, the heading may not change. In the latter case, the heading may change. Even otherwise, even in the same heading, sub-headings can change and within the same sub-heading a new product could still come into existence.
19. The case law cited also does not help the cause of the appellant because the cases cited either relate to old tariff or to other laws and it is well known that the new tariff is entirely on a different pattern,
20. In view of the above position, I consider that the goods were excisable and classifiable under sub-heading 7308.90. I, therefore, set aside the impugned order and accept the appeal.
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(S.K. Bhatnagar) Dated : 20-3-1995 Vice President Lajja Ram, Member (T)
21 I have carefully gone through the separate orders proposed by the learned Member (Judicial), and by the learned Vice President. It is seen that the different type of products were produced by the respondent and those products were used in different industries and for different purposes - in electric arc furnace, for packing electrodes, for television tubes etc. The goods had been described as of two types - 'apex' and 'magnum'. 'Apex' was manufactured to meet the requirements of most standard packing applications. 'Magnum' was a specially heat treated stripping, said to be with a unique combination of high tensile strength, high elongation and high ductility (refer page No. 90 of the paper book). The goods produced were of such a technical nature that foreign collaboration with the world leaders in the line - Signode Corporation of USA was required and royalty was paid to the foreign collaborator. The value addition as a consequence of process to which the strips were subjected by the respondent was said to be about 55%.
22. In the case of Collector of Central Excise, Indore v. Madhya Pradesh Electricals Limited, 1994 (73) E.L.T. 263 (SC), the assessee's liability to pay excise duty a second time around, that is consequent upon the processing of the strips into insulated strips was not questioned. The form whether in coil form or not is not relevant, and even the sheets could be in the form of coils (refer Supreme Court's decision in the case of M.G. Metal Industries v. Government of India, and Ors., 1992 AIR SCW 3239).
23. As all the factual information is on record, there does not appear to be a case for remand. The Hon. Supreme Court in the case of M.G. Shahani and Company (Delhi) Limited v. Collector of Central Excise, New Delhi, 1994 (73) E.L.T. 3 (SC) -1994 AIR SCW 3411 had held "To our mind, it appears that the Tribunal has adopted an easy course in remitting the matter to the Collector. On the materials, on record, being an appellate authority, the Tribunal itself should have analysed the evidence and given a factual conclusion."
24. In view of the above, I agree with the learned Vice President that the goods under consideration are excisable, and classifiable under sub-heading No. 7308.90 of the Tariff and that the appeal filed by the Revenue merits acceptance and the impugned order is liable to be set aside. It is ordered accordingly.
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(Lajja Ram) Dated : 6-4-1995 Member (T) FINAL ORDER
In view of the majority opinion, the goods are excisable and classifiable under Heading 7308.90 2 The impugned order is therefore set aside and the department's appeal is accepted.