TATA IRON AND STEEL CO. LTD. versus COLLECTOR OF CENTRAL EXCISE

Citation: [1994] SUPP. 6 S.C.R. 648 · Decided: 16-12-1994 · Supreme Court of India · Bench: R.M. SAHAI · Disposal: Appeal(s) allowed

Judgment (excerpt)

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TATA IRON AND STEEL CO. LTD. 
v. 
COLLECTOR OF CENTRAL EXCISE 
DECEMBER 16, 1994 
[R.M. SAHAI AND K.S. PARIPOORNAN, JJ.] 
Central Excises and Salt Act, 1944: Tariff Schedule-Entries-Item 26 
and 26AA-Scrap obtained in the course of manufacture of iron and steel-
Conversion of scrap into ingots after remelting-Held duty on .scrap was 
leviable under item 26 and not under item 26AA(i). 
' 
Words and Phrases: 
'Scrap', 'Semi finished product '-What is. 
The appellant-company was selling scrap, obtained by it in the 
course of manufacture of iron and steel products, to different parties 
for manufacturing steel ingots out of the scrap. On the question 
whether the scrap was dutiable under item 26 or 26AA of the Tariff 
Schedule the Central Excise and Gold (Control) Appellate Tribunal 
held that duty was to be levied under item 26AA. The Tribunal relied 
on a price circular issued by the Controller of Iron and Steel classifying 
scrap into industrial, re-rolling and melting scrap and fixing different 
rate for each and every size of the scrap. Further the Tribunal held that 
even 'through scrap sold by the appellant-company was melted- to 
produce ingots but that was not determinative of its character as what 
was melted was not melting scrap because of its size, therefore, it did 
not attract levy under item 26 but under item 26AA being 'something 
like sub-standard goods. The Tribunal also held that since the appellant 
company did not dispute that the scrap produced by it could be 
industrial scrap, the scrap produced by it could not be taken to be re-
melting scrap. Against the decision of the Tribunal an appeal was 
preferred in this Court. 
Allowing the appeal and setting aside the C>rder of the Tribunal, 
this Court 
HELD: 1. The scrap cleared by the appellant in each year having 
been melted and re-used as iron ingots was remelting scrap dutiable 
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under Item 26 of the Tariff Schedule. Item 26 purports to levy duty on 
648 
TATA IRON & STEEL v. COLL. C. EXCISE 
649 
re-melting scrap. The Tribunal having found that the scrap produced A 
by the appellant was remelted the products cleared by the appellant 
satisfied the test of being re-melting scrap. [652 F, 652 DJ 
2. Under Entry 26AA what is exigible to duty is semi finished steel 
including blooms, billets, slabs, sheet ~ars etc. Semi finished may mean 
between raw material and finished products. But it cannot be described B 
as scrap. A sub-standard bloom or billet is steel bloom or billet. But the 
scrap of billet or bloom would not be the same thing as semi finished 
products. In the commercial sense, scrap and semi-finished products 
cannot be understood in the same sense. The attempt of the 
Department, therefore, to levy duty on scrap under Item 26AA was not C 
correct. [651H,652 A to BJ 
3. Neither reasons given by the Tribunal appears to be sound. Price 
fixation by Controller of Iron and Steel could not furnish basis for 
interpreting the entry, for levying duty under the Central Excises and 
Salt Act, 1944. Size of scrap may be relevant for fixation of price but it D 
could not reflect on the nature of scrap. [652 EJ 
4. A semi-finished product is one which requires some further work 
or treatment to become serviceable. But it cannot apply to scrap as it is 
normally understood as something which is not serviceable. 'Scrap' 
according to dictionary means, 'a small piece cut or broken from E 
something; fragment'. In commercial parlance 'scrap' is normally 
understood as 'waste'. But it may be used for re-rolling or re-melting 
for bringing out raw material to be used for producing finished 
products. [650 G, 651 H] 
CIVIL APPELLATE WRISDICTION: Civil Appeal Nos. 3 l 96-96A of F 
1986 etc. etc. 
From the Judgment and Order dated 24/27.2.86 of the Central Excise 
(Customs) and Gold (Control) Appellate Tribunal, New Delhi in 
A.No.E.B./SB/T/142/76-B and 1844of1985-B. 
Soli J. Sorabjee, A. Haksar, Ms. Amrita Mitra and Ms. Sonu Bhatnagar 
for JBD and Co., for the Appellant. 
Subba Rao and P. Parmeswaran for the Respondent. 
The Judgment of the Court was delivered by 
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SUPREME COURT REPORTS 
[1994] SUPP. 6 S.C.R 
A 
R.M. SAHAI, J. The only dispute that arises for consideration· in these 
appeals directed against the Order of Central Excise and Gold (Control) 
Appellate Tribunal is whether scrap obtained by the appellant in course of 
manufacture of iron and steel and steel products was dutiable under Item 26 
or 26AA of the Ta

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