Customs, Excise and Gold Tribunal - Delhi
Collector Of C. Ex. vs Orient Steel Industries Ltd. on 14 March, 1995
Equivalent citations: 1995ECR85(TRI.-DELHI), 1995(78)ELT242(TRI-DEL)
ORDER K. Sankararaman, Member (T)
1. Collector of Central Excise, Calcutta-II has filed this appeal against Order-in-Appeal No. 917/Cal/84, dated 6-7-1984 passed by Collector of Central Excise (Appeals), Calcutta whereby the latter had allowed the appeal filed before him by M/s. Orient Steel Industries Ltd. who are respondents herein holding that Steel shots manufactured by them by throwing molten metal into water are steel castings. Grits which are obtained by breaking shots are also castings. He accordingly held them to be classifiable under Item 26AA of the Central Excise Tariff and not under Item 68 ibid as in force at the relevant time.
2. In the appeal, it has been contended by the Collector of Central Excise, Calcutta-II Collectorate that the finding of the Collector (Appeals) is not correct because mere throwing of molten metal into water does not satisfy the definition of castings. The definition of the term "casting" as defined in the Chambers Dictionary of Science and Technology 1971 has been referred to by him. It has been defined in the said dictionary as the operation of pouring of molten metals into sand or metal moulds in which they solidify. Another definition was that the term casting referred to a metallic article cast to the shape required as distinct from one shaped by working. It has been pointed out in the appeal that in the revised Tariff Item 25 that came into effect from 1-3-1983, shot and angular grit have been specified under sub-item 4 of Item 25 while castings of Iron or Steel not otherwise specified have been specified under sub-item 16 of Item 25 which clearly indicated that shot and grit were different from castings. It has then been urged that castings are products obtained by pouring molten metal in a die mould/pattern followed by cooling the same enabling the molten mass to take the shape of such die, mould or pattern. But in the manufacture of shots and grits no such procedure is followed and, therefore, shots and grits do not merit classification as casting under old Tariff Item under 25 or 26AA(v) but fell under Item 68 at the material time.
3. When the appeal was taken up for hearing, Shri K.K. Dutta, learned Departmental Representative appeared for the appellant Collector while the respondents were represented by Ms. Anita Rastogi, learned Advocate. Shri Dutta referred to the grounds urged in the appeal and pleaded that the appeal be allowed. He referred to the description of casting in Audels New Mechanical Dictionary for Technical Trades published by D.B. Paraporevala Sons & Co. Private Ltd. (1986 Reprint Edition) as forming into shape by pouring melted metal into a mould and a casting has been described as a metallic object formed by running molten metal into a mould of sand or plaster which has been previously prepared from a mould or pattern of the requisite form. As against this Ms. Rastogi referred to the detailed written submissions contesting the grounds urged in the appeal and pleaded that the appeal be dismissed.
4. We have taken note of the submissions. We have carefully perused the record as both sides have relied upon the appeal memorandum and the written note of submissions. We find that the written note of submissions filed by the learned Advocate, Shri A.K. Jain on 30-5-1994, inter alia, refers to the Tribunal decision in respondents' own case which has been reported in 1987 (31) E.L.T. 979 which has been taken up in appeal by them in the Supreme Court where it is pending. It has been pleaded that the Bench should not rely upon the Tribunal decision so challenged. It has been urged that the said decision that shots and grits are not castings came to be literature or expert opinion. They have submitted technical literature and expert opinion that the products are castings. These are examined by us later on in this order.
5. It has then been pointed out that the Supreme Court had observed in the case of Bharat Forge and Press Industries P. Ltd. v. Collector of C. Ex. reported in 1990 (45) E.L.T. 525 that under a residuary entry only such goods are covered which cannot be brought under the various specific entries in the Tariff and that unless the goods can by no conceivable process by reasoning be brought under any of the Tariff items resort cannot be had to the residuary item. It has been urged that as the above proposition Of the Supreme Court was not available when their earlier case was decided by the Tribunal holding the goods in question to be classifiable under Item 68 of the Tariff and not as castings.
6. We have considered the above contention which we find to be devoid of merit. Though the Bharat Forge and Press Industries judgment of the Supreme Court was admittedly not available before the Tribunal when their earlier appeal was decided the proposition therein referred to in the note of submission is of an earlier vintage. This unexceptionable proposition which was not missed and which could not be said to have been missed by the Tribunal in that decision had been felicitously, we would respectfully submit, expressed by the Honourable Supreme Court in Dunlop India Ltd. and Madras Rubber Factory Ltd. v. Union of India, reported in AIR 1977 SC 597 in the following words :-
"When an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule it will be against the very principle of classification to deny it the parentage and consign it to an orphanage of the residuary clause."
7. As against the definition in Standard Technical dictionaries and Reference Books on Metals, Metallurgy etc. describing casting as forming into shape by pouring melted metal into a mould as pointed out by Shri Dutta in support of the Department's appeal, the paper book filed by the learned counsel for the respondents contains opinions in support of the rival contention that shots and grits are castings. The manufacturing process involved has been described. In the water jet process, steel scrap is melted in an electric furnace and liquid metal is poured into a metering pot from where a measured quantity stream of molten metal is hit by a water jet of specified shape, size and pressure. This jet disintegrates the stream of molten metal into small spherical particles which are allowed to fall into a pool of water solidifying into spherical particles. The size of steel shots is governed by the size and temperature of the molten metal stream and the shape, size and pressure of water jet.
Spinning wheel process : Liquid metal is poured into a spinning pot with holes and surrounded by a pool of water. Liquidation by centrifugal force disintegrates into small spherical particles which are allowed to fall and solidify in a pool of water. Grits are broken pieces of shots. In both the processes, a conventional type of mould is not used to get the desired size and shape.
8. It has been urged that various Government Departments/Agencies Institutes and Metallurgists have also classified Steel Shots as Steel Castings. The following have been enclosed :-
(i) The industrial licence issued by the Government of India for Steel Shots stating that these fall under the heading Ferrous Castings and Forgings.
(ii) Directorate General of Technical Development (Metals Directorate) have vide their letter dated 15-10-1987 classified Steel Shots and C.I. Shots are castings.
(iii) Engineering Export Promotion Council have stated in their letter dated 18-9-1986 addressed to Jt. Chief Controller of Imports and Exports, Calcutta that Iron/Steel shots and grits are classifiable as Industrial Castings and as such the said item should be granted export benefits as industrial castings.
(iv) Letter dated 11-8-1987 from Jt. Chief Controller of Imports and Exports addressed to Chief Controller of Imports and Exports enclosing the minutes of the Jt. Chief Controller of Imports and Exports Classification Committee 1987-88. It is stated that in the Index of 1976-77 Chilled Grits and shots were classifiable under A. 7.1. Iron Castings.
(v) The decision of Commissioner of Sales Tax, Maharashtra State Bombay that steel shots fall within the scope of the term steel castings.
(vi) The letter dated 5-9-1987 from the Institute of Indian Foundrymen addressed to the respondents that steel shots and grits produced by pouring molten metal into a trough and subjecting it to a water jet to give particular shape and size under forced cooling conditions fulfil all basic conditions for a cast product. The process is a casting process.
(vii) The certificate dated 21-9-1987 issued by Dr. N.P. Sinha of Foundry and Metallurgical Services. Foundry Engineers and Consultant, Calcutta opining that Steel shots are a type of castings made from liquid metal to solid shape in one step and that they are manufactured by a non-conventional process i.e. atomising without using any refractory or metallic mould. The process by which shots could be manufactured have been referred to as spinning wheel centrifugal casting process and atomisation process using water jet. Conventional sand moulding is not used. It has been opined by Dr. Sinha in his certificate that with the advancement of science and development of new foundry technologies, it is not necessary nowadays to have a sand mould to make a casting. In process like die casting, no sand mould is used. The metal may be poured in mould or in any other way. As long as the final shape is achieved without any mechanical work in one step from liquid it is called a casting. In the concast process a fundamentally new method of continuous casting has been developed and introduced in practice. This involves shaping of liquid metal solely by an electro-magnetic field pro- ducing cast products of different shapes. It has been stated that although no mould or die like conventional concast is used, the shape formed by using such electromagnetic field is termed casting and accepted.
Dr. Sinha has, in conclusion, referred to the Metals Handbook published by American Society for Metals in 10 volumes. The second volume deals with Heat Treatment, Cleaning and Finishing. In the articles Abrasive blast cleaning and shot peening, shots and grits are classed as castings. A specification for cast shots and grit has been drawn as SAE J 444. The following has been extracted from the said publication :-
"Cast steel shot is made by blasting a stream of molten steel with water (often called atomising), and thus forming globules that rapidly solidify into nearly spherical pellets. The pellets are screened for sizing reheated for hardening and tempered to the desired hardness. Cast steel shot is now most widely used peening medium. With suitable heat treatment, cast steel shot has a useful life many times that of cast iron".
9. We have carefully considered the submissions. We have perused the material extracted from the publication "Metal Handbook" and the certificates, orders etc. produced by the respondents as also the extract from the New Mechanical Dictionary for Technical Trades tendered by the learned Departmental Representative.
10. We find that the issue for decision in the present appeal had been considered by the Tribunal. In the case reported under 1987 (31) E.L.T. 979 where the appeal was by the present respondents themselves, it was held by the Tribunal that shots and grits being not formed like castings are not castings and not classifiable under Item 26AA but under Item 68 of the Central Excise Tariff. While reaching the said finding, the Tribunal had considered inter alia some of the references and authorities now placed before us by the respondents. These are :-
(1) The decision of Commissioner of Sales Tax, Maharashtra State (which has been referred to as Serial Number (V) on page 6 ante of this order.) (2) The certificate dated 18-9-1986 of Engineering Export Promotion Council.
The Tribunal's findings are contained in para 5 of their order which is extracted below :-
"5. These shots and grits are not castings because they have not been formed in the way castings are formed. They have not been given their characteristic spherical shape by another shaping device, but acquire it when the molten iron is ejected from the laddie to form tiny pellets or balls which solidify on contact with the water. It is, therefore, not correct to say that these balls are castings. Even if some government agencies regard them as castings, we cannot do so, because we are satisfied that they are not castings and that the process of making them was not the process of casting. Therefore, assessment under Item 26AA is not correct."
This decision has been appealed against by the present respondents to the Supreme Court. The order has, however, not been stayed by the Honourable Court.
In a subsequent decision dated 12-5-1988, the Tribunal had taken same view. That was in Wheelabrator Alloy Castings Ltd. v. Collector of Central Excise reported in 1989 (39) E.L.T. 579, relevant paragraphs [3 to 8] from which are extracted below :-
* * * * * * * It is incidentally to be seen that this decision has been taken in the case of Wheelabrator Alloy Castings in whole case the Commissioner of Sales Tax, Maharashtra State has taken the view that Steel shots fall within the scope of the term "Steel Castings" which the respondents would like us to accept. It is also to be incidentally noted that stand taken by them in the said proceedings was that steel shots are classifiable under Central Excise Tariff item application to Steel Castings. Since this is the issue for decision now, any decision in proceeding before other authorities dealing with Tariff entries which are not pari materia with the entry in the Central Excise Tariff is not a reliable guide particularly when it had been pleaded before them that the Excise Department has already treated them as castings which in view of the present proceedings cannot be said to have been finally accepted by the department. The decision in the Sales Tax proceedings has got no relevance now. The respondents have produced a certificate issued by Dr. Sinha, Director of Foundry and Metallurgical Services, Foundry Engineers and Consultants, Calcutta wherein he has stated that technical definitions of the term castings would show that castings are products of metal founding industry manufactured in a single step from liquid metal without operations of mechanical working such as Rolling or Forging and that it is manufacture of designed finished part in one piece and by one operation. He has relied upon the references to steel shots as cast steel shots made by blasting a stream of molten steel with water (atomising) in Metals Handbook published by Americans Society for Metals Volume 2 relating to Heat Treatment, Cleaning and Finishing.
11. We have taken note of the above-cited technical opinion of Dr. Sinha and the reference in the Metals Handbook. In the earlier Tribunal decision in the case of 'Wheelabrator Alloy Castings Ltd. referred to already by us, the different technical literature produced by them was considered by the Tribunal and while noticing that only SAE J827 referred to Steel Shots as Cast Steel Shots, it was observed that unfortunately the appellants had given only a few pages of this work. The full publication was necessary to see the full morphology of the descriptive nomenclature they use. The Tribunal then referred to the appellants' contention that in the Customs Cooperation Council Nomenclature these shots were classified as Iron and Steel Products. This contention did not find favour with them as the Central Excise Tariff, it was noted, did not have the same structure as the CCCN. Even here it is to be noted that Steel shots and grits fall under the classification 7205.10 as granules. Steel shots are described as being produced by pouring liquid iron or steel into cold water or into a jet of steam. The grits are obtained by the crushing of shot or cold crushing sheets etc. of hardened metal. Thus we find that in the CCCN Steel shots and grits are classified separately as granules and they are not treated as castings. It has been pointed out in the appeal that in the Central Excise Tariff which was effective from 1-8-1983 shots and angular grits of Iron and Steel were specified under Item 25(4) whereas Steel Castings not otherwise specified were classified under sub-item (16) thereof. Since the relevant entry in the Central Excise Tariff applicable here did not have a separate sub-item for steel shots the classification question has to be decided without placing reliance on the subsequent Tariff provision or the CCC Nomenclature. The claim of the respondents that the Steel shots and grits are Steel Castings has to be considered in the light of the material available, both sides having provided some. The Metals Handbook of the American Society for Metals mentions that cast steel shot is made by blasting a stream of molten steel with water to form globules which solidify into spherical pellets. As against this mention of cast iron shots in Volume 2 of Metals Handbook dealing with Heat Treating, Cleaning and Finishing, Volume 15 of the same Metals Handbook on the subject casting itself defines casting as only a metal object cast to the required shape by pouring/injecting liquid metal into a mould as distinct from one shaped by a mechanical process. This is the trend of definitions in various other Technical Reference Books as well.
Mcgraw-Hill Dictionary of Scientific and Technical Terms, Fourth Edition -
"Cast -1. To form a liquid or plastic substance into a fixed shape by letting it cool in the mold. 2. Any object which is formed by placing a castable substance in a mold or form and allowing it to solidify. Also known as casting."
Principles of Metal Casting published by TATA Mcgraw-Hill Publishing Company Ltd. -
"A casting may be defined as a "metal object obtained by allowing molten metal to solidify in a mold," the shape of the object being determined by the shape of the mold cavity."
An Encyclopaedia of Metallurgy and Materials published by the Metals Society -
"Casting. The operation of pouring molten metal into sand, metal or other moulds and allowing it to solidify.
A metallic object which has been made by casting the metal into the shape required without any working other than machining."
Chambers Science and Technology Dictionary -
"Casting (Foundry). (1) The operation of pouring molten metals into sand or metal moulds in which they solidify. (2) A metallic article cast in the shape required, as distinct from one shaped by working."
Metals Handbook, Ninth Edition, Volume 15 Casting published by ASM International -
"Casting. (1) Metal object cast to the required shape by pouring or injecting liquid metal into a mold, as distinct from one shaped by a mechanical process. (2) Pouring molten metal into a mold to produce an object of desired shape."
Thus shots are not castings. Grits which are obtained by breaking shots are even more obviously not castings. In view of this position, the appeal of the department should succeed. We accordingly allow the appeal and set aside the impugned order-in-appeal.