LexANDHRA RE-ROLLING WORKS, HYDERABAD versus UNION OF INDIA & ORS.
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1001
ANDllRA RE-ROLLING WORKS, HYDERABAD
v.
UNION OF INDIA & ORS.
MAY 5, 1986
[V. BALAKRISHNA ERADI AND V. KHALID, JJ.]
Central Excise and Salt Act 1944 : s. 3 & Item No.
~ 26AA(i) First Schedule/Central Excise Rules 1944 rr. 10 & lOA
-
M.S. Rounds manufactured by re-rolling untested rails -
Excise duty - Liability of - Eff: ct of Notification No. 89/62
'
dated May 10, 1-962.
•
)-
!tea No. 26AA(i) of the First Schedule to the Central
· - Excise and Salt Act, 1944, at the relevant time provided for
)-
levy of excise duty on various semi finished steel ite11S and
all other rolled, forged or extruded shapes and sections, not
otherwise specified.
The appellant converted three thousand metric tonnes of
untested rails into M.S. Rounds of different specifications by
the process of re-rolling, in execution of the contract
entered into between him and the fifth respondent. The last
;., delivery of the finished products was effected on February 23,
1966 and the payment received. Nearly eight months thereafter,
on October 17, 1966 the Inspector of Central Excise issued
notices to the appellant under r. lOA of the Central Excise
Rules, 1944 demanding payment of excise duty on the rounds
r . .,
re-rolled.
A representation to
the Assistant
Collector
contending that the demand fo_r payment of excise duty was
illegal, since the M.S. Rounds had been re-rolled from rails
which were exempt from levy of excise duty, was rejected.
The appeal to the Collector and the revisi,~n petition to
the.Central Government were also rejected.
The appellant, thereafter filed a petition in the High
Court seeking an appropriate writ quashing the notices of
demand on the ground that the M.S. rounds in question were not
liable to be assessed to duty under item No. 26AA of the First
Schedule to the Act a~-<i that in any event the impugned demands
were time barred under r. 10 of the Rules and the resort
A
B
c
D
E
F
G
H
A
B
c
D
E
F
G
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1002
SUPREME COURT REPORTS
[1986] 2 s.c.R.
sought to be made to the provisions contained in r. lOA was
not legal or warranted. The High Court negatived all these "
contentions and dismissed the petition.
In the appeal by certificate to this Court it was
further contended that the M. S. Rounds manufactured by the
appellant were exempted by Notification No. 89/62 dated May
10, 1962, which granted remission of the excise duty payable
under item No.
26M to the extent of the amount of duty
already paid on the articles from which the iron and steel ~
products falling under that item had been made.
Dismissing the appeal, the Court,
HELD: 1. The M. S. Rounds manufactured out of untested -{
rails by the process of re-rolling fell within the ambit of
item No. 26M(i) of the First Schedule to the Central Excise i
and Salt Act 1944, which expressly took within its scope "all
other rolled, forged or extruded shapes and sections, not
otherwise specified", and were liable to be charged to duty
under the said item. [1005 G; 1006 B]
2. The ambit of r .10 of the Central Excise Rules, 1944
is confined to cases where the demand is being made for a
short levy caused wholly by one of the reasons given iq that A
rule. It pre-supposes an assessment which could be reopened on
specific grounds within the period specified therein. The time
limit of
three months
mentioned
in that rule
has
no
applicability in cases where there has been no assessment of
duty before the .goods were removed from the factory. Such
cases are covered by the provisions of r. lOA, which is a
residuary provision authorising the demand and collection of
any deficiency in duty or of any other sum of any kind payable
under the Act or the rules without any limit of time. [1006 D;
F-H)
Assistant Collector of Central kcise, Calcutta Dimicm
.,. Rations! Tobacco Collpmy of India Led.• [1973] l S.C.R. 822
and n.L Kohli and Ors • .,. Acn.1 Products Led., [1985) 2 s.c.R.
832, referred to.
3. It is only if the appropriate amount of duty had
already been paid on the article which formed the raw material
for manufacture of the product covered by itea No. 26M, th.at
l
•
ANDHRA RE-ROLLlNG WORKS v. U.0.1.
[ERADl, J,]
1003
the manufacturer will be entitled to a proport!.onate remission
-f of the duty on the latter product. Inasllllch as the untested
rails in the instant case were exempt from duty and no amount
whatever had been paid by way of duty on the said article out
A
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