LexCOLLECTOR OF CENTRAL EXCISE, CHANDIGARH versus M/S. STEEL STRIPS LTD. SANGRUR
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COLLECTOR OF CENTRAL EXCISE, CHANDIGARH
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v.
M/S. STEEL STRIPS LTD. SANGRUR
MAY 2, 1995
[A.M. AHMADI, CJ., S.P. BHARUCHA AND
K.S. PARIPOORNAN, JJ.1
Central facise Tariff:
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Tariff Item 26AA-Cold rolled steel strips-c--Excise duty payable C
on-Excise authorities alleging the article to be the result of process of
manufacture-Held, excise authorities should have led evidence before first
adjudicating authority-Failure to lay requisite evidence cannot be made up
by reference .to authoritative publication unless assessee is infonned of it. ·
The assessees carried on the business of making cold rolled steel D
strips from hot rolled steel strips, an article covered under Tariff Item No.
26AA of the Central Excise Tariff. In view of the exemption notification no .
55/80 dated 13.5.1980, excise duty payable on cold rolled steel strips and
hot rolled steel strips was Rs. 650 and Rs. 450 per metric tonne respective·
ly. Though the assessees had paid excise duty on hot rolled steel strips, E
the excise authorities held that since hot rolled steel strips underwent a
process of manufacture at the hands of the assessee before production as
cold rolled steel strips, the assessees were required to pay excise" duty at
the rate of Rs. 650 per metric tonne on cold rolled steel strips also. The
assessees appealed to the Customs, Excise and Gold (Control) Appellate
Tribunal, which allowed the appeals.
In the appeals filed by the Revenue before this Court, reliance was
piaced on certain publications. Reference was also made to a publication
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of the Indian Standards Institute and the Specification therein for Cold
Rolled Carbon Steel Strips for general engineering purposes. However, G
there was no evidence on record in regard to the process adopted in
producing cold rolled steel strips from hot rolled steel strips.
Dismissing the appeals, this Court
HELD : 1. When the excise authorities allege that an article is the H
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SUPREME COURT REPORTS
[1995] 3 S.C.R.
A result of a process of manufacture and is commercially distinct and known
as such, it is for them to lay evidence in this behalf before the first -
adjudicating authority. In appropriate cases, the excise authorities may
seek a direction requiring the assessee to set out in writing what it does to
obtain the article. The experience of this Court and of the High Courts
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before the establishment of the Tribunal, shows. that lack of evidence has
led to the failure of the case of the excise authorities, and, consequently,
to the loss or revenue to the State. [1054-G-H, 1055-A)
2. Failure to lay the request evidence cannot be made up by reference -
to authoritative publications unless the Excise authorities inform the
c assessee that they propose to rely upon the same before the adjudicating
authority. In matters relating to excise, technical knowledge plays a part,
and that is why the Tribunal has a Technical Member. Technical evidence
and authoritative publications must, therefore, be placed in the first
instance before the adjudicating authority and the Tribunal. [1055-CJ
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"The Making, Shaping & Treating of Steel", (8th Edn.) by Harold E.
Mcgannon, referred to.
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3. Upon the material on record, it is not proved that hot rolled steel
strips undergo a process of manufacture before they become cold rolled
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steel strips. Therefore, the Excise authorities cannot claim that the
assessees' cold rolled steel strips are liable to excise duty at the rate of Rs.
650 per metric tonue. [1055-E)
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 438 of
1989 Etc.
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From the Judgment and Order dated 29.9.88 of the Central Excise
and Salt Act, 1944 of the Customs Excise and Gold (Control) Appellate
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Tribunal, New Delhi ;n A.No.E./1567/88B-1, Order No. 423/88-B.
P. Parmeswaran, Sarva Mitter for M/s. Miter & Motter Co. Sumaj J.
G Khaitan for M/s. Khaitan & Co., R. Karanjawala, Mrs. M. Karanjawala
K.L. Hathi, for Mis Hathi & Co., D.N. Mishra, for JBD & Co. and C.V.S.
Subba Rao for the appearing parties.
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The Judgment of the Court was delivered by
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BHARUCHA, J. These appeals may be disposed of by a common
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COLLECTOR OF CENTRAL EXCISE». STEEL STRIPS LTD. {BHARUCHA. l I
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judgment inasmuch as the Customs, Excise and Gold (Control) Appellate A
Tribunal allowed the appeal in the case of Mis. Steel Strips Ltd. (Civil
Appeal No. 438 of 1989 before us) following its judgment in the case of
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