Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5
PETITIONER:
UNION OF INDIA & ORS:
Vs.
RESPONDENT:
TATA IRON & STEEL CO. LTD., JAMSHEDPUR
DATE OF JUDGMENT17/12/1975
BENCH:
RAY, A.N. (CJ)
BENCH:
RAY, A.N. (CJ)
BEG, M. HAMEEDULLAH
SARKARIA, RANJIT SINGH
SHINGAL, P.N.
CITATION:
1976 AIR 599 1976 SCR (2)1002
1976 SCC (2) 123
ACT:
Central Excises and Salt Act, 1944-Section 3 read with
First Schedule, items 25 and 26-Notification 30/60 dated 1st
March, 1960 in terms of Rule 8(1) of the Central Excise
Rules, 1944 exempting steel ingots in which duty paid pig
iron is used-Interpretation of the Notification-Whether
exemption is not available if duty-paid pig iron is mixed
with other non-duty-paid materials.
HEADNOTE:
The respondent manufactures, as part of iron and steel
products, ingot moulds and bottom stools from pig iron for
use in steel melting shops. Under item 25 and 26 and the
first Schedule to the Central Excises and Salt Act, 1944,
the respondent paid excise duty leviable on "pig iron and
steel ingots" respectively.
In terms of Rule 8(1) of the Central Excise Rules,
1944, by a notification No. 30/60, the Central Government
granted exemption to steel ingots falling under item 26 of
the First Schedule if produced out of scraps obtained from
duty-paid pig irons. Since unserviceable ingot moulds and
bottom stools are also scrapped into pieces and remedied in
an admixture with other non-duty paid scraps and hot metal
in the manufacture of steel ingots, the respondent claimed a
set off of duty to the extent of duty paid on pig iron being
the remelted scrap used in the manufacture of steel ingots
which was rejected by the Assistant Collector of Central
Excise. The appeal before the Collector of Central Excise
and the revision before the Ministry of Finance were
dismissed, interpreting the Notification No. 30/60 as not
applicable when duty-paid pig iron is mixed with other non-
duty materials.
When the orders of the Revenue Authority were
challenged in the High Court, the High Court quashed them
holding that (i) the Revenue Authorities fell into the error
of interpreting Notification No. 30/60 by confining
exemption to steel ingots in which "entirely" "exclusively
or only" duty-paid pig iron is used since on such words were
used in the Notification; and (ii) the Notification would
have to be interpreted in a manner that the statute would
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5
not cast a burden twice over the payment of tax unless the
language of the statute is so compellingly certain to that
effect.
Dismissing the appeal by certificate and negativing the
contentions of the appellant that the exemption is given for
virgin pig iron and if pig iron was used and thereafter
reduced to scrap, there could be no exemption in respect of
that scrap being different from pig iron and consequential
refund of the duty-paid on pig iron, the Court.
^
HELD : (1) The only question is whether duty-paid pig
iron is used along with non-duty-paid materials. Pig iron is
made out of iron ore plus limestone plus coke. Pig iron is
melted and processed into ingot moulds and bottom stools.
Nothing is added to pig iron. When ingot moulds and bottom
stools become unserviceable they are broken. This becomes
scrap and is melted and used in the manufacture of steel
ingots. All the time it is duty-paid pig iron which is
processed into ingot moulds and bottom stools and again
broken into scrap and melted in the making of steel ingots.
[1048 E-F]
(2) There cannot be double taxation on the same
article. The analogy of the Revenue of the example of excise
duty on motor cars, in spite of the fact that there was duty
on tyres and duty on metal sheets was misplaced. [1048 G]
(3) Notification No. 30/60 granting exemption to duty-
paid pig iron does not say that exemption is granted only
when duty-paid pig iron is used and that
1045
the exemption would not be available if duty-paid pig iron
is mixed with other non-duty-paid materials. [1048 H, 1049
A]
(4) The object of the Notification was to grant relief
by exempting duty-paid pig iron. If the intention of the
Government were to exclude the exemption to duty-paid pig
iron when mixed with other materials, then the Notification
would have used the expression "only" or "exclusively" or
"entirely" in regard to duty-paid pig iron. [1049 A-B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 723-
737 of 1971.
From the Judgment and Order dated 18-4-1969 of the High
Court of Judicature at Patna in Civil Writ Jurisdiction Case
nos. 614 to 626 of 1967.
Shyamla Pappu, Girish Chandra and S. P. Nayar for the
Appellants.
G. S. Pathak, J. B. Dadachanji, O. C. Mathur, R. Narain
and A. K. Verma (Mrs.) for the Respondent.
The Judgment of the Court was delivered by
RAY, C.J. These appeals are by certificate from the
judgment dated 18 April, 1969 of the High Court of Patna.
The High Court quashed the orders of the Revenue
Authorities dated 7 July, 1967.
The appellants claimed before the Revenue Authority
exemption from the payment of duty in respect of duty paid
pig iron which was used in the making of steel ingots.
The respondent manufactures iron and steel products.
The respondent manufactures ingot moulds and bottom stools
from pig iron for use in steel melting shops. The respondent
pays Central excise duty on such ingot moulds and bottoms
stools in accordance with the provisions contained in
section 3 of the Central Excises and Salt Act, 1944
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5
hereinafter referred to as the Act.
Section 3 of the Act is the charging section. Section 3
states that there shall be levied and collected in such
manner as may be prescribed duties of excise on all
excisable goods other than salt which are produced or
manufactured at the rates set forth in the First Schedule.
Prior to the Finance Act 1964 Items No. 25 and 26 in
the First Schedule to the Act mentioned pig iron and steel
ingot respectively as the description of goods subject to
excise duty.
As a result of the Finance Act, 1964 Items No. 25 and
26 were substituted by the following:-
1046
The respondent’s case before the Revenue Authorised and
also in the High Court in short was this : When ingot moulds
and bottom stools become unfit for further use these are
scrapped into pieces and remelted in the respondent’s steel
melting shops in an admixture with other non duty paid
scraps and hot metal in the manufacture of steel ingots. The
respondent claimed a set off of duty to the extent of duty
paid on pig iron being the remelted scrap used in the
manufacture of steel ingots.
The respondent based the claim for exemption on
Notification No. 30/60 dated 1 March, 1960 issued by the
Central Government in terms of Rule 8(1) of the Central
Excise Rules, 1944 (hereinafter called the Rules) exempting
steel ingots in which duty paid pig iron is used from so
much of the duty leviable thereon as is in excess of Rs.
30/- per ton. By notification No. 120 of 1960 dated 1
October, 1960 Notification No. 30/60 was amended by
substituting the figures and words "Rs. 29.35 per metric
ton" for the words "Rs. 30 per ton".
By Notification No. 75/62 dated 24 April, 1962 the
Central Government in exercise of powers conferred by Rule
8(1) of the Rules exempted steel ingots falling under Item
26 of the First Schedule to the Act and specified in Column
2 of the table appended to the notification from so much of
the duty of excise leviable thereon as is in excess of duty
specified in the corresponding entry in Column 2 of the said
table. In column 2 of the said notification the following
descriptions and duty appear:
-----------------------------------------------------------
Sl. Descriptions Duty
No.
-----------------------------------------------------------
1. If produced out of scrap obtained from
duty paid pig iron Rs 30 per M.T.
2. If produced out of old iron or steel scrap
obtained from duty paid steel ingots or
products (75/76) Nil
-----------------------------------------------------------
The rates given in these aforesaid notifications were
further amended by Notification No. 22 of 1964 issued on 1
March, 1964. The rates in respect of Notification No. 30/60
dated 1 March, 1960 for the words and figures "Rs. 20.35 per
metric ton" the words and figures substituted were "Rs. 20/-
per ton".
Duty was realised from the respondent on steel ingots
in the making of which duty paid pig iron of rejected ingot
moulds and bottom stools was used along with non-duty paid
materials. The respondent claimed exemption in respect of
duty paid pig iron on rejected moulds and bottom stools used
in the making of steel ingots. The claim of the respondent
for exemption in respect of duty paid pig iron was rejected
by the Assistant Collector of Central excise by his order
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5
dated 29 August, 1965.
1047
The respondent filed appeals before the Collector of
Central Excise who by order dated 30 July, 1965 dismissed
the respondent’s appeals.
The respondent thereafter filed a revision petition
before the Ministry of Finance under section 36 of the Act.
The Government by an order dated 7 July, 1967 rejected the
revision petition of the respondent. The Government held
that the respondent was not entitled to any exemption under
Notification No. 30/60 dated 1 March, 1960 because remelted
scrap obtained from unserviceable casting moulds, viz.,
ingot moulds and bottom stools was used in conjunction with
other non duty paid pig iron in the manufacture of steel
ingots.
The respondent challenged the orders in the High Court.
The High Court quashed the orders of the Revenue
Authorities. The High Court held that the Revenue
Authorities fell into the error of interpreting Notification
No. 30/60 by confining exemption to steel ingots in which
"entirely, exclusively or only" duty paid pig iron is used.
The High Court held that the words "entirely, exclusively or
only" were not used in the notification. The notification
exempted steel ingot in which duty paid pig iron was used.
The High Court also held that the notification would have to
be interpreted in a manner that the statute would not cast a
burden twice over for payment of tax on the tax payer unless
the language of the statute is so compellingly certain to
that effect.
The appellant contended that exemption is given for
virgin pig iron and if pig iron was used and thereafter
reduced to scrap there could be no exemption in respect of
scrap. It was also said on behalf of the appellant that
scrap iron was different from pig iron, and, therefore, the
refund of the duty paid on pig iron would not arise.
The appellant Government relied on Notification No.
75/62 dated 25 April, 1962 which gave exemption to steel
ingots from so much of the duty of excise leviable thereon
if produced out of scrap obtained from duty paid pig iron or
if produced out of old iron or steel scrap or scrap obtained
from duty paid steel ingots or products. The appellant
Government relied on Notification No. 75/62 dated 25 April,
1962 for two reasons. First, it was said that the exemption
in Notification No. 30/60 dated 1 March, 1960 exempting
steel ingot in which duty pig iron is used will not exempt
scrap iron which is different from pig iron. Second,
Notification No. 75/62 dated 25 April, 1962 gave exemption
to scrap iron in cases and when Notification No. 75/62 was
rescinded in 1964 no exemption could thereafter be claimed
in respect of scrap.
The respondent contended that the appellant all
throughout before the Revenue Authorities and the High Court
knew and treated the case of the respondent to be a claim
for exemption of duty paid pig iron in the manufacture of
steel ingots. In paragraphs 5, 6 and 7 of the statement of
case of the appellant it is said that the respondent claimed
refund of the duty paid on pig iron used in ingot moulds and
bottom
1048
stools being the melted scrap in the manufacture of steel
ingots. In the revision order of the Revenue dated 7 July,
1967 in paragraphs 4 and 6 it is stated that the claim of
the respondent was for duty paid material used in the making
of steel ingots. The Revenue Authorities in the said order
did not accept the claim of the respondent for exemption on
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5
the ground that duty paid pig iron was mixed with non duty
paid pig iron.
In paragraph 9 of the affidavit of the Revenue used in
the High Court the Revenue said that the various scraps
mixed included duty paid and non duty paid scraps. The
Revenue referred to rejected ingot moulds and bottom stools
as scrap.
The respondent in the affidavit in reply in the High
Court stated that the "question for consideration in these
writ applications is the rate of duty leviable on steel
ingots produced from processed moulds and bottom plates
which have already borne a duty". The respondent also stated
that the processed mould and bottom plates used in the
manufacture of steel ingots are recorded.
The respondent contended that it was never the case of
the Revenue that it was scrap in respect of which the
respondent wanted exemption. Counsel for the respondent
rightly submitted that if the Revenue made that case the
respondent would have produced not only affidavit evidence
but also evidence of experts to determine the question of
fact whether the article, viz., melted ingot mould and
bottom stools altered the character of duty paid pig iron.
Counsel for the respondent is right in the contention
that the only question here is whether duty paid pig iron is
used along with non duty paid materials. There is no dispute
that there are materials and data to find out the quantity
of duty paid pig iron used. Pig iron is made out of iron ore
plus limestone plus coke. Pig iron is melted and processed
into ingot moulds and bottom stools. Nothing is added to pig
iron. When ingot moulds and bottom stools become
unserviceable they are broken. This becomes scrap and is
melted and used in the manufacture of steel ingots. The
respondent rightly contends that all the time it is duty
paid pig iron which is processed into ingot moulds and
bottom stools and again broken into scrap and melted in the
making of steel ingots.
The High Court rightly held that the contention of the
Revenue fails on two broad grounds. First, there cannot be
double taxation on the same article. Counsel for the Revenue
gave the example of excise duty on motor cars, in spite of
the fact that there was duty on tyres and duty on metal
sheets. The analogy is misplaced. In such cases the duty is
on the end product of motor cars as a whole. The duty on
tyres and the duty on metal sheets do not enter the area of
duty on motor car. Second, Notification No. 30/60 grants
exemption to duty paid pig iron. The High Court rightly said
that the Notification does not say that exemption is granted
only when duty paid pig
1049
iron is used and that the exemption would not be available
if duty paid pig iron is mixed with other non duty paid
materials. If the intention of the Government were to
exclude the exemption to duty paid pig iron when mixed with
other materials then the notification would have used the
expression "only" or "exclusively" or "entirely" in regard
to duty paid pig iron. The object of the notification was to
grant relief by exempting duty paid pig iron.
For these reasons, the judgment of the High Court is
affirmed and the appeals are dismissed. Parties will pay and
bear their own costs.
S.R. Appeals dismissed.
1050