Andhra HC (Pre-Telangana)
Bombay Iron Foundry vs Collector Of Central Excise, Hyderabad on 21 October, 1987
Equivalent citations: 1988(17)ECR254(AP), 1987(32)ELT360(AP)
Author: B.P. Jeevan Reddy
Bench: B.P. Jeevan Reddy
JUDGMENT Upendralal Waghray,J.
1. The writ Appeal is filed by 27 petitioners against the judgment of the learned single Judge dismissing the writ petition.
2. The appellants are operating Small Scale Foundries in the Hyderabad Urban Agglomeration and in Nizamabad district . For the production (manufacture of iron castings, they use old iron scrap and pig iron as raw material. They are all recognised as Small Scale Industries by the State Government authorities and they get their requirements of pig iron from them. The assistant Collector, Central Excise, by his letter/dated 21-8-1981 informed the petitioners that because pig iron is also used as a raw material in the manufacture of iron castings, produced by them they obliged to take L4 licence under the Act, as the product is liable to excise duty under item 25 -shedule I of the Central Excise Act The petitioners have filed writ petition questioning the correctness of the view of the Assistant collector and his jurisdiction contending that the Iron casting manufactured by them are not liable to Excise duty and that they are not obliged to take out L4 licence .the writ petition was opposed by the Department contending that in view of Item of Shedule I to the Act the Iron Castings manufactured by the petitioners are liable to duty and even the exemption granted under Rule 8 ny Notification No. 74/62, dated 24-4-1962 will not help the petitioners, as ping iron is used as a part of raw material. The writ petition was dismissed by the learned single Judge .
3. It is now brought to our notice that the Items 25 and 26AA have been amended with effect from 1-861983 and, consequently, old notification under Rule 8 was also rescinded and new Notification No. 208/83 has come into force form the same date. This new notification has also been amended by Notification No. 38, dated 1-3-1983 and Notification No. 79, dated 10-2-1986 but these amendments to the new exemption notification do not affect the controversy in this case. It is common ground that after 1-8-1983 the manufacture of iron castings by the petitioners is exempt from duty even though pig iron is used as a raw material and the appellants are not obliged to take out L4 licence . The controversy is only regarding the period prior to 1-8- 1983.
4. It is useful to extract Items 25 and 26AA of Schedule I to the Central Excise and Salt Act 1944 prior to and after amendment on 1-8- 1983:
Prior to amendment:
" 25. IRON IN ANY CRUDE FORM including pig iron,scrap iron, molten iron or iron cast in anyother shape or size. (seventy ruppee per metric tonne). " 26AA .IRON OR STEEL PRODUCTS. THE FOLLOWING NAMELY:-
(i)......
(v) All the other steel castings, not otherwise specified."
After amendment:
Item 26AA is omitted. Item 25 is made very comprehensive. The relevant extract form Item 25 reads as follows:
"25 . Iron and steel, and products thereof, the following namely:- (1) Pigiron, cast iron and spiegeleisen in pigs, blocks, lumps and similar forms; and molter iron. (2) to (15) X X X X X X X X X (16) Castings of iron or steel, not otherwise specified:
(i) of iron
(ii) of steel .........."
5. The exemption Notification No. 74/62, dated 24-4-1962 under Rule 8 reads as follows:
" Exemption to iron in any crude form produced from old iron or steel Scrap :
In exercise of the powers conferred by sub-rule (1) Rule 8 of the Central Excise Rules, 1944 The central Government hereby exempts iron in any crude form including pig iron, scrap iron molten iron or iron cast in any other shape or size falling under Item No. 25 of the First shedule to the Central Excise and Salt Act 1944 (1 of 1944) and produced out of old iron or steel scrap or scrap obtained form duty paid virgin metal, with effect form 1st March, 1964 from the payment of Excise duty leviable thereon."
It is not in dispute (vide counter-affidavit fled in the writ appeal that the pig iron used by the appellants supplied by the State Government authorities. therefore, pig iron thus supplied and also the old iron scrap (old iron) has already suffered Excise duty.
6. The contention of the appellants is that they manufacture iron castings in various shapes and sizes from old scrap iron and pig iron. According to them as pig iron, scrap iron and iron casts are all contained Item No.25, the levy of duty on iron casts is not justified.In the alternative it is contended that the notification under Rule 8 apples to them because they are old iron or steel scrap along with pig iron for the production of iron castings. they have also placed reliance on a decision reported in Union of India v. Tata I & SCo.-
7. On the other hand,it is contended by the learned Additional Central Government Standing Counsel that unless exempted, the iron casts produced by the appellants are liable to duty being different commodities from the raw material used. According to him, the exemption notification also cannot help the appellants as pig iron is used by them as raw material, while exemption is restricted to only those who use old iron or scrap mentioned in the notification.
8. The language of Items 25 and 26AA prior to 1-8-1983 indicates that iron in any crude form (including pig iron and iron casts)is treated as one commodity in distinction with the products of iron which are mentioned in Item 26AA (prior to 1-8-1983) .It cannot be said that the conversion (even by manufacture) of one type of iron in crude form into other will attract Excise duty . The Item speaks of iron on any crude form. When the duty is paid once on this commodity,there is no occasion for a levy at another stage. Acceptance of the contention of the Revenue will result in levy of Excise duty twice on crude iron, which is not contemplated by the scheme of the Item. The products of iron liable to duty are separately mentioned in Item 26AA . The contention of Revenue will also result in enlarging Item 26AA, where steel casting are included as a product iron cast are not. In view of this,it is necessary to examine the question of applicability of the exemption notification, particularly when after 1-8-1983 the entire scheme of the Items in the First Schedule to the Act and the exemption is changed and appellant's products are un-disputably exempt. It is held that even prior to 1-8- 1983 the appellants are not obliged to take out L4 licence for manufacture of iron castings. The appeal is allowed to this extent.
9. No costs.
Dated :21-10-1987.
10. An application for appeal to the Supreme Court is made by the Additional Central Government Standing Counsel. We do not see any substantial question of law of general importance requiring the consideration by the Supreme Court .Leave refused.