Customs, Excise and Gold Tribunal - Delhi
Steel Corporation Of Punjab And Ors. vs Collector Of Central Excise on 15 April, 1987
Equivalent citations: 1987(13)ECC39, 1987(12)ECR558(TRI.-DELHI), 1987(30)ELT527(TRI-DEL)
ORDER H.R. Syiem, Member (T)
1. By his order C.No. 2-CE/ APPEL/CHG/REV/83, dated 25-4-1986 the Collector of Central Excise (Appeals) New Delhi decided 37 appeals in respect of the assessment of steel products of thickness less than 3 mm and width of 75 mm or more. The period was prior to 1-8-1983. The Assistant Collector of Central Excise, Patiala approved 37 classifications filed by the manufacturers of iron and steel products and classified them as bars excisable under Item 26AA(ia). The Collector not being satisfied with the classification, caused appeals to be filed against these orders under Section 35E of the Central Excises and Salt Act before the Collector (Appeals), who decided that assessment should be under Item 26AA(iii); these appeals impugn that order of the Collector (Appeals).
2. Before the arguments started, the learned counsel for the department said that an order passed by the Collector (Appeals) in terms of Section 35E(4) on an application by the Collector of Central Excise is not appealable to the Tribunal, and that the right of appeal in a case like this has not been specifically given as in other cases; therefore this appeal is not maintainable. However in 1986(25) ELT 51 the Tribunal decided that such an appeal was in order.
3. The learned counsel for the manufacturers said that the Assistant Collector had approved the assessment as a bar since the measurement was below 3 mm in thickness and above 75 mm in width; their mill is a merchant/bar mill and cannot produce a strip; it can produce only bars. The strip needs operations for shearing and cutting the edges so that uniform rectangular cross-section is achieved throughout the length of the product. Their bar mill/merchant mill only has two horizontal rollers between which the product is rolled; it is not possible in these circumstances and in the condition of the factory to produce uniform rectangular cross-sections throughout the length of the product. A strip must be in coil form, where as their products are in straight lengths.
4. The counsel said that this Tribunal has given orders supporting the assessment made by the Assistant Collector and he suggested that the same order should be issued in these cases. He emphasised very strongly that the assessment in other factories and in other collectorates are not according to the Collector (Appeal)'s decision in their case, and if the Collector (Appeal)'s order is upheld it will result in serious disparity and discrimination against them. He noted that there have been several decisions by departmental officers like Assistant Collectors and Collector (Appeals) and these have never been appealed. He drew special attention to order-in-appeal C.No. 289/CE/APPL/KNP, dated 17-9-1983 in which the Collector of Central Excise (Appeals) New Delhi assessed such goods as bars. This order has not been appealed by the department.
5. The department did not have the goods examined by the chemical examiner of the department to determine its cross-section by scientific methods. The Collector (Appeals) says the fact that the mill is a bar mill is not relevant for assessment of these products; however the counsel emphasised that their products are not contoured.
6. At the hearing held before us the learned counsel for the department entered many arguments, the chief being his vehement denial of such goods ever being capable of passing as bars; he showed samples which he said he had obtained and said that the goods look more like strips or thin sheets of steel products. When one speaks of bars one understands the Section to be a fairly substantial thickness, strong enough to hold up against weight and pressure. The present sample would have no strength and has nothing to qualify it as bars. He pointed to the retaining or horizontal bars in the window of the court room and said that such are the things one understands as bars. The bars must be stout and strong enough to pass as bar; the goods manufactured by these assessees are known as patti which is the Hindi for strips. He also quoted AIR 1985 SC 989 and 1974 (3) SCR 882.
7. The learned counsel said that bar, strip and hoop are items of common use by common people. The bar is known as saria and he pointed to the window bar in the window in the court room. It is necesary to look into the uses because use is relevant; these products are never sold as saria but are known as patti. The product less than 3 mm is never a bar and he referred to IS 1956 part IV 1976 defining flat bar. He also said that the appellate order of the Appellate Collector deals with all the necessary points. As can be seen from page 4 of his order dated 25-4-1986, he lists five points. The points are :
1. It must be hot or cold rolled product.
2. It must be rolled approximately in rectangular cross-section of thickness usually of 10 mm and below.
3. It should be mill rolled trimmed or sheared edges.
4. It should be supplied in coil or flattened coil (straight length) form and
5. It should not be a hoop or skelp.
8. Each of these points has been dealt with by the Collector (Appeals) and he has proved that the goods are strips and not bars. The learned counsel said that a bar should be over 3 mm; but in deciding this we should not go by the technical point of view but by the common man's point of view; use is a most important criterion. A bar, must have strength to hold or lift or support weight.
9. Inspite of the fact that there is overlapping in the definition of different steel products the learned counsel said that the Supreme Court ruled that the specific must overrule the general; he quoted 1985 ECR 1745, AIR 1956 SC 1730 and AIR 1973 SC 194.
10. The ISI's criterion is very important and he quoted 1985(20) ELT 179 and 1985 ELT 611. He read the foreword of the glossary of the terms used in the iron and steel industry compiled by the ISI. The compilation by the ISI was made in consultation with business as well as technical people.
11. The learned counsel referred to the paragraph 8 of the Tribunal decision in Rama Steel Rolling Mill order No. 130/86-B1, dated 7-3-1986. He said that the Tribunal referred to ISI 1926 (Part VII) 1976. In this the Tribunal made an error; the correct ISI was ISI 1956 (Part IV) 1976. This decision he said was based on the wrong Indian Standard Publication.
12. If there are ambiguities, said the learned counsel, the case of the department should not be upset. In fact he urged that when there is ambiguity the decision should be in favour of the revenue. He said that the Tribunal had ruled in M/s. Tigrania order No. 698/83-B that the type of mill should decide what the product is, but he said there is no basis for this. The machinery used for the production was irrelevant. He quoted 1983 (143) ITR page 29.
13. The reliance placed by the opposite side on the tariff ruling etc. has been shown to be unacceptable because the Supreme Court had ruled that no one should be bound in his judicial judgment by the directions of any person. He said that the belief that they would be discriminated if their products are not assessed under Item 26AA(ia) has no validity because there is no equity in taxation : he quoted AIR 1962 SC 1216 for support.
14. The order of the Collector (Appeals) should hold good and the products should be assessed as directed by him.
15. We have dealt with this matter several times and we are dealing with it again here. We have patiently heard all the lengthy arguments of the two learned counsels.
16. The learned SDR argued that a bar should be more than 3 mm thick but unfortunately the department has not seen it his way. As we shall show in the following paragraphs, the Board defined the products in various ways at different times and we may say that the confusion and the disputes that arose over the years were caused entirely by those conflicting and changing definitions. There was perhaps reasons for these conflicting decisions and tariff rulings, but the fact remains that the assessees followed the rulings and notices and that it was when the department changed its views, the disputes arose which in our opinion were avoidable.
17. The learned Appellate Collector correctly said in paragraph 5 that the Government/Board after consulting various authorities including the Iron and Steel Controller and ISI, issued guidelines from time to time for the proper classification of the various products. At times these clarifications conflicted or overlapped and to obviate these difficulties, the three Tariff Items 25, 26 and 26AA were replaced by one Tariff Item 25 which incorporated statutory tariff descriptions of the products. All the appeals were with respect to products of rectangular cross-sections having thickness below 3 mm and width 75 mm and above. The learned Appellate Collector takes the definition (XIV) in the new Item 25 which defines a strip as "a hot or cold rolled product, rolled approximately in rectangular cross-section of thickness usually of 10 mm and below with mill rolled, trimmed or sheared edges and supplied in coil or flattened coil (straight length) form". He came to the conclusion that the products under dispute fell under this definition, but here he makes a mistake. To fall under definition (XIV) of Tariff Item 25, the product must, among other things, have trimmed or sheared edges and these products do not have them, as admitted by the learned Collector. But he said that this would not make any material difference, since even mill rolled edges would qualify to be as a strip. The question, therefore, is whether the product have mill rolled edges. The manufacturers have repeatedly said that they are not mill rolled edges and that they have no arrangements for rolling the edges and the department has not brought any evidence to support the claim that the edges are rolled, trimmed or sheared. The learned Collector does say that mill rolled edges would qualify the product as strip but he does not say that the edges are mill rolled nor does he say that he had evidence to prove that the edges are mill rolled. This argument must be rejected and for this reason alone the product will not qualify to be assessed as strip even if we go by the new tariff definition.
18. There has been little or no answer from the department to the assessee's claim that the department has changed its stand very many times. There is reason to believe that the practice to assess these goods as bar was a fairly old one and there are orders to that effect passed by the various adjudicating authorities. One is an order passed by the Appellate Collector of Central Excise, New Delhi order No. 2387/2388-CE/7 dated 19-12-1977. From this order we see that at least from 1-3-1976 products with thickness less than 3 mm and width of less than 135 mm were assessed as bars. In 1983 the Collector (Appeals) Central Excise passed an order C.No. 289-CE/APPL/KNP, dated 17-9-1983 directing that the products of thickness less than 3 mm were to be treated as bars. In fact this order assesses as bars products not exceeding 3 mm in thickness and width ranging 20 to 25 mm. The Assistant Collector of Central Excise, Aurangabad in order No. v. 26AA(17)-49/77/8390, dated 11-11-1980 after a very detailed analysis and examination extending to the process of manufacture and the mill in operation, decided that steel products with thickness less than 3 mm and width less than 75 mm which has no rectangular cross-section and which is a product of a mill other than strip or plate mill, was classifiable under Tariff Item 26AA(ia).
19. We have seen varying definitions put up by the various authorities. In a circular letter No. 139/43/77.CX.IV, dated 13-4-1982. The Board instructed that in the revised definition given, a bar of rectangular thickness below 3 mm would be classified as bar without reference to the width. In another circular letter dated 17-6-1982 the Board gave the direction that the revised definition of the bar would cover all rectangular products of thickness below 3 mm and width 75 mm or more. For example a rectangular product having thickness 3 mm and width 50 mm or thickness 1.75 mm and width 127 mm would classifiable as bar only. Hot rolled flat products of thickness less than 3 mm and width less than 75 mm would be classifiable as hoops.
20. However by another letter dated 7-10-1982 the Board revised the definition again and ruled that flat products of thickness less than 3 mm and width of 75 mm above but not more than 200 mm would be classified as strips provided they are not covered by the definition of any other products. The hot rolled flat products of thickness less than 3 mm and width less than 75 mm would be classifiable as hoops. The instructions of 17-6-1972 were also cancelled. As pointed out by the Collector (Appeals), the Assistant Collector classified the products as bars in pursuance of the clarification issued by the Board in its letter dated 13-4-1982. It is not clear why the Collector came to the conclusion that this assessment was incorrect and he does not say whether the October letter of the Board changing the definitions had anything to do with it. That is highly likely to be the case.
21. We do not think that the assessment can be changed in this way simply by changing one definition to another. It is a different matter if new facts are brought to light which establish the error of the assessing authority. If the definition had been based on incorrect assumption or insufficient details, we are not told that that was the cause for the change. No fact has been lost sight of as far as we can ascertain nor were any wrong details taken into account in giving the definitions. The only reason for the new definition in October 1982 was that the authorities changed their mind and thought bar products should have definitions and dimensions different from the ones in the old definition. It is to be remembered very clearly ¦ that definition and dimensions of steel products are "arbitrary" to say nothing of the fact that they frequently overlap. It is entirely the discretion of the law making authority how they will define steel products and they have done so statutorily now. This was not the case in the old days. But the definitions remain "arbitrary" definitions because a bar and a flat can be assigned different thicknesses at different times and they will still be bars and flats. Such manufactured products are not like chemicals or products of the vegetable kingdom which are not susceptible to human manipulation except in certain very limited ways.
22. The assessment by the Assistant Collector as we can see from the learned Collector's order, were made in accordance with the directives of the Board and the assessment were that the products measuring 3 mm below thickness and over 75 mm in width should be treated as bars. There is much that can be said for as well as against these definitions, but it is unnecessary to do so. It is only necessary to record that the Assistant Collector acted in accordance with existing instructions and on this he cannot be faulted and it is not right for his superiors to change the assessment simply because they changed their views and opinions or simply because new instructions have appeared. The instructions that were applied by the Assistant Collector were applicable when he assessed the goods and so we want to see them upheld and not unnecessarily disturbed as they have been in these cases.
23. The learned SDR argued vehemently that a bar must be more than 3 mm in thickness, and he would have a good deal to support him; but unfortunately this would take us neither here nor there. If the definition given by the Board was that a bar should be less than 3 mm, and if the Assistant Collector acting on this instructions assessed goods accordingly, we cannot say he was wrong. As soon as they changed the definition of thickness and width they can assess all goods accordingly; but if the goods have .already been assessed we cannot justify reopening of the assessment simply because a new opinion has been formed. The SDR was dissatisfied that the Assistant Collector acted on the advice of the Board, a practice that had been condemned by the Supreme Court in M/s. Orient Paper Mills. But the learned SDR does not see the paradox - he should fault the Board too; after all it was the Board that issued the instructions/ definitions one after another. The SDR, at any rate is not in a good position to assail the Assistant Collector for following an instruction.
24. A word about the learned SDR's criticism when he said that the Tribunal was mistaken in referring to ISI 1956 Part VII 1976 in paragraph 4 of its order No. 130/86-B1 - M/s. Rama Steel Rolling Mill. If the learned SDR will read the order carefully he will find that this paragraph states only that the Appellate Collector relied on this IS; in fact if he reads the order of the Appellate Collector of New Delhi No. 182 to 262-CE/81, he will discover that the Appellate Collector in his impugned order relied on this standard; this was not an error of the Tribunal.
25. We are therefore, satisfied that the Collector (Appeals) was, wrong in his judgment. Even technologically the goods did not have mill rolled, sheared or trimmed eges and for that reason they will not qualify as strips. The Collector (Appeals) further says the term flattened coil (straight length) should include even the products which are not necessarily supplied in coil form but in the straight length. Coiling is necessary if the product is of a very big length. But here the learned Collector was mistaken, the products in the present case vary in length from 6 feet to 7 feet and strips are not in such short length; nor are these products flattened coil. They are in straight lengths but are not in flattened coil (straight length) forms as the definition requires.
26. If an assessment fetches higher revenue it should not be disturbed argued the learned SDR. There can be no objection to the assessment that fetches higher revenue provided the assessment is reasonable and proper. The assessment sought to be made here by the Collector (Appeals) will certainly fetch higher revenue but it is not correct nor can we say that the assessment made by the Assistant Collector is incorrect. If anything the Assistant Collector's assessment appears to be more correct as it is based not only on the practice but on technological facts.
27. We accordingly order assessment under Item 26AA(ia) as being more appropriate.