ORDER
Harish Chander, Member (J)
1. Collector of Customs, Madras has filed an appeal being aggrieved from the order-in-appeal No. C3/1371/1986, dated 29-1-1987 passed by the Collector of Customs (Appeals), Madras.
2. Briefly the facts of the case are that respondents, M/s. Delhi Tubes Pvt. Ltd., Hyderabad had filed a buff bill of entry for warehousing for clearance of 1399.00 M.T. of hot rolled coils in sizes 2.15 x 1025 x coil imported from M/s. Voest Alpine Inter Trading, Argentina to a GIF value of Rs. 41,54,155.30. The above bill of entry was assessed on 31-1-1986. The hot rolled coils imported were assessed under erstwhile CTA Heading 73.13(1) sheets in accordance with dimensions indicated, as per Chapter note (n) of Chapter 73, vide Customs Notification No. 34/82, dated 28-2-1982 as amended by Notification No. 186/84 at 60% + 40% of basic and auxiliary duty, respectively. The respondents had filed ex-bond bill of entry No. 683/6-5-1986,1.M. No. 908/85 Line No. 2 for removal of warehouse hot rolled coils. The said ex-bond bill of entry has been assessed under sub-heading 7208.24 at 80% of basic and 40% auxiliary duty vide Customs Notification No. 89/86, dated 17-2-1986 and 186/86, respectively, with countervailing duty of Rs. 500.00 per metric tonne under CET Items 7212.50. The importers filed the bill of entry for re-assessment requesting classification of hot rolled coils as “coils for re-rolling” claiming the benefit of Customs Notification No. 86/86, dated 17-2-1986 [serial No. 3(c)]. The adjudicating authority had asked the importer to produce the industrial licence indicating that they were engaged in the activity of re-rolling and the respondents had produced Industrial Licence No. ILS:108 (75), New Delhi dated 31-3-1975 issued by the Ministry of Industry and Civil Supplies, New Delhi and it did not indicate that they were engaged in the activity of re-rolling. The benefit of concessional rate of duty could be extended under Notification No. 86/86, dated 17-2-1986 only when the coils for re-rolling were imported. The respondents had imported these coils for the manufacture of tubes/pipes, and the above industrial licence was for the manufacture of “blank, galvanised and aluminised steel pipes and tubes.” The importer subsequently sought classification of hot rolled coils under Customs Notification No. 61/86, dated 17-2-1986 as coiled, semi-finished, hot rolled products. As per the mills’ test certificate, coils imported are “hot rolled coils ex-stock (stock rusty) in quality SAE 1008/1010 unpickled, unoiled without skinpass, mill edges, fish tails.” It is not indicated in the test certificate that the goods are “semi-finished.” The semi-finished products which are classifiable under Chapter 72 of Harmonised Tariff have been defined in Chapter Note 1(ii). The imported goods were hot rolled coils and these were not semi-finished as these were imported in coils. The adjudicating authority was of the view that in order to extend the benefit of Notification No. 61/86, dated 17-2-1986, the description of the goods imported should conform to the description of the goods mentioned in column No. 3 of the table annexed to the said notification. It was, therefore, concluded that by virtue of the goods having been imported in coils, these were excluded from the category of semi-finished products as per Chapter Note. As per the wordings of the notification, the goods should be hot rolled coils and also semi-finished products. Since the description of the goods was not as furnished in the table annexed to Notification No. 61/86, dated 17-2-1986 read with Chapter Note on semi-finished products, the goods were not eligible for concessional rate of duty under Notification 61/86, dated 17-2-1986. The Assistant Collector was of the view that hot rolled coils imported were classifiable under Heading 7208.24 and the goods in question were not eligible for concessional rate of duty under Notification No. 86/86, dated 17-2-1986 and 61/86, dated 17-2-1986 and hence the assessment already made under Heading 7208.24 read with Customs Notification No. 86/86, dated 17-2-1986 was in order.
3. Being aggrieved from the order passed by the Assistant Collector, the respondent had filed an appeal before the Collector of Customs (Appeals) the respondent contended that according to Serial No. 3(c) of the table attached to Notification No. 86/86-Cus., dated 17-2-1986, coils for re-rolling of iron or non-alloy steel (containing less than 0.6% carbon) and entitled for assessment at the concessional rate of duty of 40% . Explanation No. (1) appearing at the foot of the notification defines” coils for re-rolling” as ‘coiled, semi-finished, hot-rolled products of a rectangular section not less than 1.5 mm thick of a width exceeding 500 mm and of a weight of not less than 500 kgs. per piece.’ The respondent was of the view that the goods impugned fully satisfy the conditions laid down in the notification and the notification did not define what is re-rolling nor does it stipulate that only such of the importers who were engaged in the activity of re-rolling were eligible for the concessional assessment and the lower authority had gone into question not relevant to the conditions in the notification by referring to their industrial licence and coming to the erroneous conclusion that manufacture of pipes and tubes from the impugned goods did not involve re-rolling. The respondent further stated that the actual process of re-rolling was not relevant to the Notification No. 86/86-Cus., as it contains a precise mention of ‘coils for re-rolling’ and this does not stipulate that the imported coils being of width 1025 mm and have natural mill edges and fish tails have to be slit into smaller width and re-rolled into smaller widths. The sliced coils then pass through a series of roll passes which in turn re-roll the fiat strip into a circular form after which the edges are welded together. Hence, the manufacture of pipes and tubes also involves the process of re-rolling. The respondents further contended that the lower authority had erred in interpreting the description in Col. (3) against serial No. 3 in the table annexed to Customs Notification No. 61/86 with reference to the definition of semifinished products in Note 1(ii) of Chapter 72. The adoption of the definition of ‘semifinished’ existed. The definition which came into force subsequently cannot be applied in interpreting as notification issued earlier. The respondents have pleaded for setting aside the order of the Asstt. Collector and for ordering re-assessment of the impugned goods at 40% + 40% (AD) + Rs. 500.00 M.T. (additional duty) in terms of Customs Notification No. 86/86. Alternatively, they have pleaded for the benefit of Notification No. 61/86-Cus. under SI. No. 3 at 60% + 40 AD + Rs. 500.00 per Metric Tonne (additional duty). The Collector (Appeals) had observed that the explanation given at the foot of the notification defines ‘coils for re-rolling’ as coiled, semi-finished, hot rolled products of a rectangular section not less than 1.5 mm thick of a width exceeding 500 mm and of a weight of not less than 500 kgs and in the present matter the impugned goods are coiled of rectangular section, not less than 1.5 mm thick of a width exceeding 500 mm and are of over 500 kgs. in weight. Regarding the point whether they are semifinished, the lower authority had held that these were not semi-finished by applying the definition given in Note 1(ii) under Chapter 72 of the Harmonised Tariff wherein under the sub-heading ‘semi-finished products’ there is a note that these products are not presented in coils.’ The Ministry of Finance of Government of India themselves had dealt with this point in their letter F. No. 520/319/86-Cus. (TU)(ICD), dated 19-12-1986 and had classified that the definition for semi-finished products as given in the Note l(ii) to Chapter 72 would apply only to goods falling under Heading 72.07 and not to coils for re-rolling which fall under the category of ‘flat-rolled products.’ Even though the adjudicating authority has dealt with the issue of ‘semi-finished’ in the context of Customs Notification No. 61/86, dated 17-2-1986 only, the issue is relevant so far as Notification No. 86/86-Cus., dated 17-2-1986 also. The definition of semi-finished coils has not been given either in the notification or section/Chapter Notes. Hence, the issue has to be decided taking into account the nature of the goods as they are as per the Mills Test Certificate unpickled, with mill edges and fish tails.
The Collector (Appeals) further observed that in all processes employed for manufacturing welded tubes and pipes, the raw material was a flat semi-finished product, which was made into a tubular shape and the edges were then welded. This position has been reiterated in CCCN Explanatory Notes Vol. 3 page 1009, para (II) under the Heading 73.18. The Collector (Appeals) had relied on the certificate of M/s. M.N. Dastur & Co. (P) Ltd., Bombay who were a firm of consulting engineers of international repute had opined that hot rolled coils with mill edges, with permissible fish tail, unskinpassed, unpickled are semi-finished products and have also confirmed that semi-products ‘are synonymous with semi-finished products’. He had held that these goods were semifinished. He was of the view that the notification did not stipulate any end-use conditions regarding the goods which were accorded the concessional assessment. He was of the view that there was no necessity for going into the industrial licence and since the Notification No. 61/86-Cus., dated 17-2-1986 stipulated a higher rate in comparison to Notification No. 86/86-Cus., there was no need to go into the question whether that notification was applicable to the goods. He was of the view that the respondents were entitled to the benefit of Notification No. 86/86-Cus.
4. Being aggrieved from the aforesaid order, the revenue has come in appeal before the Tribunal.
5. At the outset of the hearing, the Bench had pointed out to Shri G.S. Agarwal, the learned advocate that the cross-objections filed by the respondents are hit by limitation, as the date of the receipt of the notice is 24th August, 1987 and the cross-objections were received on 13th October, 1987 and the respondents have filed an application for the amendment of the cross-objections seeking to award interest at the rate of 18%. To this Shri Agarwal stated that for grant of interest, no cross-objection is necessary in view of the Calcutta High Court judgment in the case of Neeraj Newspapers Association (P) Ltd. v. Assistant Collector of Customs, Air Cargo Complex (Import), Calcutta and Ors. – reported in 1988 (33) ELT 89 (Cal.) where the Calcutta High Court had held that where the collection is unauthorised, interest has to be paid on refund. Shri Agarwal later on fairly stated that he withdraws the application for amendment of the cross-objections, as the same is hit by limitation. After hearing Shri Agarwal, we dismiss the cross-objections as hit by limitation.
6. Shri G.S. Agarwal, the learned advocate, has stated that he does not press his miscellaneous application No. 450/88 and he seeks permission for the withdrawal of the same. Shri A.S.R. Nair, the learned SDR has got no objection if the necessary permission for the withdrawal of the same is granted and on miscellaneous application No. 71/89 he has pleaded that for the proper disposal of the appeal, the admission of these documents is very essential and these have been filed keeping in view the additional grounds of appeal raised by the appellant.
7. Shri A.S.R. Nair, the learned SDR has got no objection but states that he would like to refer to the documents in reply. After hearing both the sides, necessary permission for the withdrawal of miscellaneous application No. 450/88 is granted and miscellaneous application No. 71/89-B2 is being allowed.
8. Shri A.S.R. Nair, the learned SDR who has appeared on behalf of the appellant, has reiterated the facts. Shri Nair has stated that the goods imported are hot rolled coils of size 2.5 mm x 1025 mm x coil. Shri Nair stated that ex-bond bill of entry was filed and the goods were classified under Heading 73.13 (old Tariff) and the shipment was made on 5th October, 1985 of 1399.00 metric tonnes of hot rolled coils and the bill of entry was filed on 31st January, 1986. The goods were cleared into bond after 28th of February, 1986 in five or six instalments. The importers had warehoused the goods. The adjudicating authority had assessed the same under new Tariff Heading 7208.24 read with Notification No. 89/86-Cus., dated 17th February, 1986 and the respondents claimed the benefit of Notification No. 86/86, dated 17th February, 1986. Shri Nair, the learned SDR, stated that it is not disputed that the carbon content is 0.6%. Shri Nair further stated that the respondents’ alternative plea was the claim of benefit of Notification No. 61/86, dated 17th February, 1986 and both the claims were rejected by the Assistant Collector and there is no dispute as to the heading. Shri Nair has argued that the goods imported are coils for re-rolling and the revenue’s view is that the goods were not semi-finished, and also were not coils for re-rolling. In the old Tariff there were two different headings, 73.13 sheets and plates Chapter Note 73(lk) and Heading 73.08 coils for re-rolling. Shri Nair has referred to page 998 of CCCN Explanatory Notes and old Tariff Heading 73.13. He has referred to page 1003 of the Notes. He has argued that in the old Tariff there was a definition for semi-finished under Heading 73.08 and steel plate was under Heading 73.13. He has referred to Chapter No. 1(i)(j) of Chapter 72 Explanation for semi-finished products. He has argued that primary hot rolled products will be semi-finished. He has referred to page 998 of CCCN. Shri Nair has argued that as per revenue’s contention the goods are finished products and since the goods are in coil form, they will not come under Heading 72.07. He has argued that the description of the goods given by the respondents in their own papers is hot rolled coils and there is no mention of semi-finished. He has referred to Materials Handbook by George S. Brady page 756 where SAE steels has been described as under :-
“”SAE steels is the designation for the standard grades of steel approved by the Society of Automotive Engineers. These steels are made regularly by the various mills and are known by their designating numbers. The first number indicates the class of steel as follows : carbon steel, 1: nickel-carbon, 2: nickel-chromium, 3: molybdenum, 4: chromium, 5: chromium-vanadium, 6: tungsten, 7: nickel-chromium molybdenum, 8: and silicon-manganese steel, 9. The second figure indicates the average percentage of the predominating alloying element. The last two or three figures indicate the approximate carbon content in hundredths of 1%. Thus SAE 2350 steel is nickel steel containing 3% nickel (2.75 to 3.25) and 0.50 carbon (0.45 to 0.55). The manganese steels, with manganese from 1.60 to 1.90%, are designated by the letter T before the initial I. Thus SAE T1350 steel contains 0.45 to 0.55% carbon and 1.60 to 1.90 manganese. The SAE steels are made to close specifications of manganese, sulfur, and phosphorus content, and since they are very uniform in quality and usually carried in stock, they have been widely adopted for use in all kinds of products.”
Shri Agarwal, the learned advocate, objected that in the grounds of appeal there was no plea as to semi-finished products. To this Shri Nair requested time for amendment of grounds of appeal and also made an oral request to this effect. Shri Agarwal did not object to the request of the learned SDK.
9. Shri Nair had referred to HSN Notes pages 979 and 980. Page 979 describes what is semi-finished and 980 describes production of finished goods and on page 981 further manufacture and finished sheets are described as finished products. Shri Nair has argued that if an item is marketed as a finished product, it cannot be called as semifinished.
Shri Nair has relied on the following authorities :-
(1) 1986 (24) ELT 484 (Karnataka) – Inspector of Central Excise and Ors. v. S.T. Venkataramanappa and Ors.
(2) AIR 1981 S.C. 1921 – State of Gujarat v. Sayed Mohd. Baquir El Edross
(3) AIR 1961 S.C. 1549 – Collector of Customs, Baroda v. Digvijasinhji Spinning & Wearing Mills Ltd.
(4) 1983 (13) ELT 1337 (SC) – Collector of Customs, Baroda v. Digvijasinhji Spinning & Weaving Mills Ltd.
(5) AIR 1988 Bombay 366 – Miss Parvati K. Moorjani v. A. Fonseca, Director, DL & C. Ministry of Defence, Pune
(6) 1988 (38) ELT 564 – Collector of C.E., Guntur v. Andhra Sugar Ltd.
(7) 1984 (17) ELT 319 (Karnataka) – Mysore Acetate and Chemical Co. Ltd. v. Assistant Collector, Central Excise, Mysore
(8) 1988 (36) ELT 369 – Mysore Metal Industries v. C. C., Bombay
(9) 1983 (12) ELT 162 – Sharpedge Ltd., New Delhi v. C. C., Bombay
Shri Nair has argued that the goods imported are finished products and not semi-finished products. The respondents are not entitled to the benefit of Notification No. 86/86 and 61/86-Cus. He has pleaded for the acceptance of the appeal,
10. Shri G.S. Agarwal, the learned advocate, who has appeared on behalf of the respondent, has argued that before the Harmonised System, the coils for re-rolling were assessed Under Heading 73.08 and the duty was 40% in terms of Notification No. 38/84-Cus., dated 1st March, 1984 under Heading 73.18 on sheets and plates duty was 40% in terms of Notification No. 34/82, dated 28th February, 1982 and in June, 1984 duty on sheets and plates was raised to 60% in terms of Notification No. 186/84-Cus. He has referred to the Harmonised Tariff flat rolled products, Heading 72.08. Rate of duty in terms of Notification No. 61/86 is 40% and in terms of Notification No. 88/86-Cus. the rate of duty was 40%. Shri Agarwal has also argued that the goods imported are semifinished. He has also argued that the new notifications were issued on 12th August, 1987 vide No. 292/87-Cus., 293/87-Cus. and the words “semi-finished” have been replaced by “no further worked than “hot rolled…” He has also commented on the reference of SAE 1008 and 1010 mentioned by the SDR.
11. Shri Agarwal, the learned advocate has referred to the Notification No. 86/86-Cus., dated 17th February, 1986 which appears on page 39 of the department’s paper book and has also referred to Notification No. 61/86-Cus., dated 17th February, 1986. He has referred to the Heading 73.08 of the erstwhile Tariff and stated that there was earlier Notification No. 38/84, dated 1st March, 1984 prescribing the rate of duty at 40%. Shri Agarwal has referred to pages 47, 48 and 49 of the additional paper book filed by the respondent and has stated that the same are bills of entry and has argued that these are copies of bills of entry in other cases where the goods were cleared on payment of lesser duty under Heading 73.08. He has also referred to the order passed by the Collector (Appeals). Shri Agarwal has stated that here the dispute is as to the classification of the goods. He has referred to page 10 of the additional paper book filed by the appellant which is the Steel Making Flow Sheet. This shows how steel rolled coils and sheets are made. He has referred to page 3 of the Additional Paper Book which is Government of India’s letter dated 19th December, 1986 and in terms of this letter, it was observed that the definition incorporated for semi-finished products applied only to goods falling under Heading 72.07 of the Customs Tariff and would not apply to the coils for re-rolling which falls in the category of flat rolled products. Accordingly, the stipulation that the semi-finished products should not be in the form of coils would not apply to the coils for re-rolling. Shri Agarwal has argued that the coils imported by the respondent may be treated as semi-finished coils. He has also referred to Notification No. 293/87, dated 12th August, 1987 which amends Notification No. 86/86. Shri Agarwal has argued that tube mills are rolling mills and the coils are semi-finished products. Shri Agarwal has argued that re-rolling means rolling of rolled products. Shri Agarwal, the learned Advocate has referred to page 72 of IS 1956 – 1962 of Indian Standard and stated that para 5.87 pertains to rolling and rolling is defined as “The shaping of metal by passing it between two rotating rolls.” He has also referred to ISI 1956 – 1962 para 6.29 which defines cold rolling and cold rolling is “rolling steel (generally sheet or strip) when cold to a desired degree of reduction in thickness, light or heavy, depending on whether simply finishing (for example, skin passing) or appreciable reduction is involved.” He has stated that SAE 1008 and 1010 referred to by the learned DR do not apply in the respondents’ case. He has referred to page-8 of the additional evidence paper book which is useful metallurgical data 1968 by Republic Steel and it deals with the chemical compositions and practical data pertaining to carbon standard steels nonresulphurixed carbon steels ladle chemical ranges and limits. He has pleaded that the argument of the learned DR that price determines the quality of the goods is not tenable and the price can not determine the quality of the goods. He has referred to the Bill of Entry which appears on page 50 of the Paper Book. He has also referred to pages 39, 40, 41 and 47 of the additional paper book and has also referred to page 38 which is invoice of Hofflinghouse & Co. Ltd. invoice No. A-2174 of Hofflinghouse & Co. Ltd. in favour of Steel Authority of India and page 39 is the annexure to the invoice and he has further referred to IS 2830/1979. Shri Agarwal pleaded that the order passed by the Collector of Customs (Appeals) is correct in law and has pleaded that where an explanation has been added to the notification the same also forms part of the notification. In support of his argument he has referred to a Supreme Court judgment in the case of Coromondal Fertilizers Ltd. v. Union of India reported in 1984 E.C.R. 1853 (S.C.) para-10 that explanation added to the notification also forms part of the notification. Shri Agarwal further stated that when an explanation is given no recourse to any implied meaning. Shri Agarwal has further argued that the end use of the goods is not relevant. In support of his argument he has referred to the following judgments :-
1. 1988 (34) ELT 8 (S.C.) – Nat Steel Equipment (P) Ltd. v. Collector of Central Excise
2. 1988 (33) ELT 89 (Cal.) – Neeraj News Paper Association (P) Ltd. v. Asstt. Collector of Customs
Shri Agarwal has also referred to the certificate issued by M.N. Dastur & Company (P) Ltd. which appears in page-11 and stated that the same has been relied on by the Collector (Appeals). He has also referred to an adjudication order dated 29th January, 1987 and order-in-original dated 17th October, 1986. Lastly Shri Agarwal has pleaded that the coils imported by the respondents has to be classified as semi-finished goods. He has pleaded for the rejection of the appeals.
12. Shri A.S.R. Nair, the learned SDR stated that the documents of the respondents from Invoice, Bill of Entry nowhere there is mentioned that the goods were semifinished coils. He has further stated that there is no dispute as to classification. The goods have been classified by the revenue under Heading 7208.24. He has also referred to page-981 of Explanatory Notes, Vol. 3. Shri Nair has again referred to Notification No. 89/86-Cus., dated 17th February, 1986 rate of duty is 80%, Notification No. 86/86-Cus., dated 17th February, 1986 rate of duty is 40% and Notification No. 61/86-Cus., dated 17th February, 1986 rate of duty is 60%. Shri Nair has argued that where an importer claims the benefit of a notification the onus is on the importer to establish that the goods imported fall within the scope of the notification and the importer also satisfies the conditions laid down in the notification. In-support of his argument he has referred to the following judgments :-
1. 1988 (34) ELT 473 (Cal.) -Indian Tobacco Co. Ltd. and Anr. v. Union of India and Ors.
2. 1988 (38) E.L.T. 401 (Bombay) – Chowgule & Co. Pvt. Ltd. v. Union of India and Ors.
3. AIR 1967 (S.C.) 389 – Bihta Co-operative Development & Cane Marketing Union Ltd. v. Bank of Bihar and Ors.
4. 1984 (17) E.L.T. 607 (S.C.) – Coromandel Fertilisers Ltd. v. Union of India and Ors.
5. 1986(24) E.L.T. 484 (Karnataka) – Inspector of Central Excise and Ors. v. S.T. Venkataramanappa and Ors.
6. 1986 (25) E.L.T. 620 (Bombay) – Kirtilal Moolchand & Co. and Anr. v. Union of India and Ors.
7. 1988 (38) E.L.T. 564 (S.C.) – Collector of Central Excise, Guntur v. Andhra Sugar Ltd.
8. 1988 (38) E.L.T. 583 (Calcutta) – Stores Supply (India) Agency v. Asstt. Collector of Customs
13. Shri A.S.R. Nair, the learned SDR has stated that no representative sample was taken and no reliance on the certificate of M.N. Dastur & Company (P) Ltd. can be taken. Shri Nair has stated that the judgments cited by the learned Advocate do not help him. He has pleaded for the acceptance of the appeal.
14. We have heard both the sides and have gone through the facts and circumstances of the case. There is no dispute as to the assessment of goods under Heading 7208.24. The respondents have claimed the benefit of Notification No. 86/86-Cus., dated 17th February, 1986 attracting duty @ 40%. In terms of Notification No. 89/86-Cus., dated 17th February, 1986 the rate of duty is 80% and in terms of Notification No. 61/86-Cus., dated 17th February, 1986 the rate of duty is 60% and in terms of Notification No. 86/86-Cus., dated 17th February, 1986 the rate of duty is 40%. For the proper appreciation of the correct position the relevant extract from the said notifications are reproduced below :-
“Effective rate s of duty for iron and non-alloy steel products. – In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts iron and non-alloy steel products containing less than 0.6% of carbon in the forms described in column (2) of the Table below and falling within Chapter 72 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India, from so much of that portion of the duty of customs leviable thereon which is specified in the said First Schedule as is in excess of the amount calculated at the rate specified, in the corresponding entry in column (3) of the said Table.
Sl. Description of article Rate of duty No. 2. Sheets and plates of thickness not exceeding 5 mil- 80% ad valorem. limetres, other than the following, namely :- a) tin-free coated sheets; and b) galvanised sheets in coils or otherwise. [Notification No. 89/86-Cus., dated 17-2-1986]
Effective rates of duty for specified goods of iron or steel. – In exercise of the powers conferred by Sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts goods specified in column (3) of the table hereto annexed and railing under the heading No. or sub-heading No. of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), specified in column (2) thereof, when imported into India, from so much of that portion of the duty of customs leviable thereon, which is specified in the said First Schedule as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table :
Sl. Heading No. or sub- Description of goods Rate of duly
No. heading No. of the
First Schedule to the
Customs Tariff Act,
1975
1. 2. 3. 4.
3. 7208.11 Coiled, semi-finished, hot 60% ad valorem
7208.12 rolled products of iron or
7208.13 steel (having carbon con-
7208.14 tent by weight less than
7208.21 0.6%), of a rectangular sec-
7208.22 lion, not less than 1.5 mm.
7208.24 thick and of a width exceed-
7211.12 ing 500 mm. and of a weight
7211.19 not less than 500 kgs. Per
piece.
This notification shall come into force on the 28th day of February, 1986.
[Notification No. 61/86-Cus., dated 17-2-1986]
Sl. Description of goods Rate of duty
No.
3. (c) Coils for re-rolling 40% ad valorem
Explanations - For the purpose of this notification, the following expression shall have the meanings hereby assigned to them :-
(1) Coils for re-rolling--Coiled, semi-finished, hot-rolled products of a rectangular section, not less than 1.5 mm thick, of a width exceeding 500 mm and of a weight of not less than 500 kgs. per piece;
This notification shall come into force from the 28th day of February, 1986.
[Notification No. 86/86-Cus., dated 17-2-1986]
A simple perusal of Notification No. 86/86-Cus., dated 17th February, 1986, shows that the benefit of the notification can be extended only if the coils are imported for re-rolling and explanation for coils to re-rolling further explains that coiled, semifinished hot rolled products of a rectangular section not less than 1.5 mm thick and of a width exceeding 500 mm and of a weight of not less than 500 kgs. per piece. The goods imported in the matter before us are 2.5 mm thickness X 1025 mm width are in the form of a coil in manufactured form. The terms of the notification shows that the coils for re-rolling should be coils, coiled, semi-finished, hot rolled product of a rectangular section. Notification No. 61/86-Cus., dated 17th February, 1986 provides that this should be coiled, semi-finished, hot rolled product of iron and steel, (having carbon content of less than 0.6%) of a rectangular section not less than 1.5 mm thick and of a width exceeding 500 mm and of a weight not less than 500 kg. per piece and Notification No. 89/86-Cus., dated 17th February, 1986 the goods should be sheets and plates of thickness not exceeding 5 mm other than the tin-free coated sheets and galvanised sheets in coils or otherwise and explanation further provides that sheets and plates :- rolled products (other than coils for re-rolling) of any thickness and if in rectangles of a width exceeding 500mm. We have to see whether the goods are semi-finished or not. Carbon content of the imported goods at less than 0.6% are not disputed. In the old Tariff there were two different Headings 73.08 coils for re-rolling and 73.13 sheets and plates. In the old Tariff in Chapter 73(1)(k) coils for re-rolling have been described as coiled, semi-finished, hot rolled products of rectangular section, not less than 1.5 mm thick of a width exceeding 500 mm and of a weight not less than 500 kgs. per piece. A simple look of the Notification 61/86 shows that the SI. No. 3 is exact reproduction of Chapter Note 73(1)(k) of the old Tariff. The relevant C.C.C.N. explanatory notes are reproduced below :-
“73.08 – IRON OR STEEL COILS FOR RE-ROLLING.
Chapter Note 1 (k) defines coils for re-rolling.
These semi-finished products are coiled lengths of hot-rolled sheet steel weighing upto several tons. They are obtained by the hot-rolling of slabs and are generally converted into thin sheets by cold reduction in modern continuous rolling processes. These coils therefore tend to replace sheet bars (Heading 73.07) as used for the manufacture of sheets by the other processes.”
“73.13 – SHEETS AND PLATES, OF IRON OR STEEL, HOT-ROLLED OR COLD-ROLLED.
Sheets and plates are defined in Chapter Note l(n).
Hot-rolled plates and sheets are produced by hot-rolling ingots, slabs and sheet bars. These may be subsequently cold-rolled to improve the finish. Cold-rolled sheet and plate is now often produced by cold reduction of the coils classified in Heading 73.08″.
New Tariff Heading 7208.24 is also reproduced below :-
“Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, hot-rolled, not clad, plated or coated –
In coils, not further worked than hot-rolled, of a thickness of less than 3 mm and having a minimum yield point of 275 MPa or of a thickness of 3 mm or more and having a minimum yield point of 355 MPa :
Of a thickness of less than 3 mm 100%”
Chapter Note 72 (1)(ij) is also reproduced below :-
“Semi-finished products
Continuous cast products of solid sections, which have not been further worked than subjected to primary hot-rolling or roughly shaped by forging including blanks for angles, shapes or sections.
These products are not presented in coils.”
A simple perusal of Chapter Note 72(1)(ij) shows that the products are not presented in coils. In the matter before us the goods imported are coils. We have also perused the Bill of Entry and other invoices etc. The description has been given as hot rolled coils. There is no mention of word semi-finished anywhere. We have also perused the Materials Handbook by George S. Brady page 756 SAE. A simple reading of the same shows that SAE steel is the designation for the standard grade of steel approved by the Steel Automotive Engineers. These steels are made regularly by the various mills and are known by their designating numbers. Shri G.S. Agarwal, the learned Advocate for the respondents had pleaded before us that before the harmonised system the coils for re-rolling were assessed under Heading 73.08 and the rate of duty was 40% read with Notification No. 38/84-Cus., dated 1st March, 1984 and 73.13 described sheets and plates, the rate of duty was 40% vide Notification No. 34/82-Cus., dated 28th February, 1982. In June, 1984 the duty on sheets and plates was raised to 60% in terms of Notification No. 186/84-Cus. and in the harmonised tariff the goods were assessed under Heading flat rolled products 72.08. He had argued before us that the intention of the Government was to levy duty at lesser rate and in subsequent Notification No. 292/87-Cus. and 293/87-Cus. the words ‘semi-finished’ were replaced by “not further worked than hot rolled”. It is not disputed that the respondents manufacture pipes and tubes. Shri Agarwal had argued and placed strong reliance on ISI Standard and SAE 1008 and 1010 cited by the SDR do not apply. Shri Agarwal had also strongly contended that end use was not relevant and the coils imported by the respondents have to be treated as semi-finished goods. We have also gone through the certificate of M.N. Dastur & Company (P) Ltd. and the Collector (Appeals) had placed its sole reliance on the certificate of M/s. M.N. Dastur & Company (P) Ltd. It is a settled proposition where an assessee claims the benefit of a notification the onus is on the assessee to prove that he is entitled to the benefit of the notification.
15. Hon’ble Calcutta High Court in the case of the Bengal National Textile Ltd. v. C.T.A. Pillai, Jt. Secretary and Ors. reported in 1979 (4) ELT J-664 had held that “it is well settled that the provisions of a statute or legislation should be construed in the context and the interpretation should not be confined only to its grammatical meaning. If there is any ambiguity in the expression used in the statute, it should be resolved in favour of the assessee or the tax-payer. It is not the technical meaning that should be adhered to in interpreting the expression in a statute but preference should be given to the expression as understood in the world of commerce.” It was further held by the Hon’ble High Court as under :-
“In this connection reference was made to the significantly different languages used in the earlier notification dated 24th March, 1972 and 24th July, 1972 referred to hereinbefore, and also to the subsequent notification dated the 16th March, 1976 which according to counsel for the petitioners was redundant if the non-cellulosic fibre content was included in the acrylic fibre. Counsel naturally stressed that in constructing a provision of this nature the expression used in the context or the statute must be looked into and mere grammatical meaning or dictionary meaning of one particular expression divorced from the context or the scope of the notification or the statute should not be adhered to and in this context the context and the purpose and the entire scheme was much more important than grammar as, he stressed, was emphasised by Sur Thomas Moore as indicated in Craies Law, on Statute 7th Edition, page 159 to 160. There is, however, in my opinion, no dispute on this proposition and now it is well settled that an expression of this nature in a particular fiscal or in any other legislation must be construed in the context and the meaning should not be confined only to its grammatical meaning. There is also no dispute on the proposition that an ambiguity, if there be any, in the expression used should be resolved in favour of the assesses or tax-payer. Counsel also drew my attention to three affidavits of Bhupendra Singh Boid, Mangal Singh and S.K. Guin filed in support of this rule claiming to be the dealers in these types of goods and who have alleged that acrylic fibre is not known in the trade as non-cellulosic fibre. In this connection, reliance was placed on the decision in the case of Union of India v. Delhi Cloth & General Mills, AIR 1963 SC 791, where the Supreme Court has reiterated that in construing expressions of this nature, it is not the technical meaning that should be adhered to but rather preference should be given to the expression as understood in the world of commerce.”
Hon’ble A.P. High Court in the case of Andhra Pradesh Paper Mills Ltd. v. Assistant Collector of C.E. reported in 1980 (8) ELT 210 had held that the “object of the exemption notification is to confer a certain benefit upon the manufacturer or the buyer/consumer as the case may be, as an incentive, with a view to encourage production or consumption. But, it cannot be said that this would virtually amount to adding a part of the excise duty to the manufacturing cost and profits while arriving at the assessable value under Section 4 of the Central Excise Act.”
16. In view of the above discussion, we have to see the three notifications, viz., Notification No. 89/86-Cus, 61/86-Cus and 86/86-Cus all dated 17-2-1986. All these notifications took effect from 28-2-1986 to coincide with the new Import Tariff based on HSN, which also came into effect from the same date 28-2-1986.
17. In the old Customs Tariff i.e. prior to 28-2-1986 hereinafter referred to as CCCN, Heading 73.08 reads as follows :-
Heading Description of article Standard rate 73.08 Iron or steel coils for re-rolling 60% Chapter Note 1(k) of Chapter 73 assigned the following meaning to the expression 'Coils for rerolling' (Heading No. 73.08) :- "Coiled semi-finished hot rolled products, of a rectangular section not less than 1.5 mms thick, of a width exceeding 500 mms. and of a weight of not less than 500 kgs. per piece." 18. It would thus be observed that the Explanation to Notification 86/86, dated 17-2-1986 under the HSN, carrying the lowest rate of duty @ 40% ad valorem for the product 'coils for re-rolling' corresponds exactly to the definition of the said product under the old Tariff i.e. CCCN. 19. Further expression 'semi-finished' occurring in Chapter Note l(k) of Chapter 73 of the CCCN has not been defined. However, in Explanatory Notes to CCCN under Heading 73.08, the following explanation occurs :- "73.08 - IRON OR STEEL COILS FOR RE-ROLLING. Chapter Note l(k) defines coils for re-rolling.
These semi-finished products are coiled lengths of hot-rolled sheet steel weighing upto several tons. They are obtained by the hot-rolling of slabs and are generally converted into thin sheets by cold reduction in modern continuous rolling processes. These coils therefore tend to replace sheet bars (Heading 73.07) as used for the manufacture of sheets by the other process.”
20. In HSN, introduced w.e.f. 28-2-1986, there is no separate heading for ‘coils for re-rolling’. Coils, under consideration, being flat rolled product have been classified rightly under Heading 72.08 HSN. Department’s case is that the classification being correct, the product does not satisfy the characteristic ‘semi-finished’ given in Explanation to Notification 86/86, dated 17-2-1986. It is admitted by both sides that ‘semi-finished’ has not been defined in the Notification 86/86, nor in the CCCN from where the Explanation was lifted. However, the term ‘semi-finished products’ is defined in Note 1(ij) of Chapter 72 HSN. It is worth noting that the expression ‘semi-finished product’ defined in Note l(ij) of Chapter 72 HSN clearly mentions that such “products are not presented in coils”.
21. Department’s contention is that the product under consideration being in ‘coiled’ form is, therefore, not semi-finished. This reasoning, in our view, is fallacious and a result of applying the definition in HSN (one statute) to the expression lifted from CCCN (another statute) in the Notification 86/86 (yet another statute); such a course is not permissible under the law. Supreme Court’s observations in para 22 of the judgment in the case of Gramophone Co. of India v. Birendra Bahadur Pandey (AIR 1984 SC 667) are reproduced below in support of the above proposition :-
“The question is what does the word ‘import’ mean in Section 53 of the Copyright Act? The word is not defined in the Copyright Act though it is defined in the Customs Act. But the same word may mean different things in different enactments and in different contexts. It may even mean different things at different places in the same statute. It all depends on the sense of the provisions where it occurs. Reference to dictionaries is hardly of any avail particularly in the case of words of ordinary parlance with a variety of well-known meanings. Such words take colour from the context. Appeal to the Latin root would not help. The appeal must be in the sense of the statute. Hidayatullah J. in Birmah Shell v. Commercial Tax Officer, [(1961) 1 SCR 920 : AIR 1961 SC 315] has illustrated how the contextual meanings of the very words ‘import’ and ‘export’ may vary.”
22. It is also useful to reproduce extracts from para 28 of Supreme Court’s judgment reported in AIR 1961 S.C. 315 which illustrate beautifully how the meaning of the word ‘export’ varies according to the context in which it occurs :-
“Here, the buyer does not export the goods to a foreign country, but purchases them for his own use on the journey of the aircraft to foreign countries. This difference is vital, and makes the position of the appellant Companies, if anything weaker. It is for this reason that the appellant Companies depend on a wide meaning of the word ‘export’, which they illustrate from other Acts where the word is tantamount to ‘taking out of the country’. We are of opinion that this meaning cannot be given to the word ‘export’ in the clause. The word ‘export’ may conceivably be used in more senses than one. In one sense, ‘export’ may mean sending or taking out of the country, but in another sense, it may mean sending goods from one country to another. Often, the latter involves a commercial transaction but not necessarily. The country to which the goods are thus sent is said to import them and the words ‘export’ and ‘import’ in this sense are complementary. An illustration will express this difference vividly. Goods cannot be said to be exported if they are ordered by the health authorities to be destroyed by dumping them in the sea, and for that purpose are taken out of the territories of India and beyond the territorial waters and dumped in the open sea. Conversely, goods put on board a steamer bound for a foreign country but jettisoned can still be said to have been exported’ even though they do not reach their destination. In the one case, there is no export, and in the other, there is, though in either case the goods go to the bottom of the sea. The first would not be within the exemption even if a sale was involved, while any sale in the course of the second taking out would be. In both, the goods were taken out of the country. The difference lies in the fact that whereas the goods, in the first example, had no foreign destination, the goods in the second example had. It means, therefore, that while all exports involve a taking out of the country all goods taken out of the country cannot be said to be exported. The test is that the goods must have a foreign destination where they can be said to be imported. It matters not that there is no valuable consideration from the receiver at the destination end. If the goods are exported and there is sale or purchase in the course of that export and the sale or purchase occasions the export to a foreign destination, the exemption is earned. Purchases made by philanthropists of goods in the course of export to foreign countries to alleviate distress there, may still be exempted, even though the sending of the goods was not a commercial venture but a charitable one. The crucial fact is the sending of the goods to a foreign destination where they would be received as imports. The two notions of export and import, thus, go in pairs.”
The definition of ‘semi-finished products’ in Note 1(ij) of Chapter 72 HSN shall apply to the said expression occurring in HSN; since the said expression ‘semi-finished’ does not occur in the Heading 72.08 or any of its sub-headings particularly 7208.24 under which the product has been classified and on which there is no dispute, the definition of that expression cannot apply to the product under consideration.
23. Explanation to Notification 86/86, dated 17-2-1986 leaves no doubt that ‘coils for re-rolling’ have, inter alia, to be both coiled and semi-finished; otherwise the explanation would not have used both expressions – ‘coiled and ‘semi-finished’.
24. It is also to be observed at this stage that Explanation to Notification 86/86-Cus., dated 17-2-1986 does not use the expression ‘semi-finished products’; instead it merely uses the expression ‘semi-finished’. For this reason as well, it is not correct to apply the definition in Note 1(ij) of Chapter 72 HSN to the product and describe the product as not ‘semi-finished’ on the criterion of the said note.
25. It is also a well-settled proposition that where a term is not defined in a statute, the meaning given to that term by the people generally dealing with such a statute should be applied. The department has not adduced any evidence as to what is meant by the expression ‘semi-finished’ in relation to a ‘flat-rolled product, hot-rolled’ in coil form. The respondent, on the other hand, relies on a certificate of well-known firm of Consulting Engineers M.N. Dastur & Co. Credibility of this certificate is sought to be struck at by the department on that no sample was sent to M.N. Dastur & Co. This, in our view, is not a good ground when the description of the product, namely, ‘unpickled, with mill edges, fish tail and unskin-passed’ is not challenged and it is on the basis of that description that a certificate has been given to the effect that the product is semi-finished.
26. Department’s attempt to rely on the symbols SAE 1008/1010 in confirmation letter dated September 12, 1985 from the Indentor to the respondent and Analysis Certificate of the manufacturer is also not a decisive test of a finished product in the face of the description of the product as ‘unpickled, unskinpassed with mill-edges and fish tails’.
27. Another argument of the department is that it is for the assessee, who claims exemption, to prove that he qualifies for the exemption. The invoice or other related documents, according to the learned SDR, do not describe the product as ‘semi-finished’ and, therefore, the respondent/assessee has failed to discharge the burden cast on him. This argument of the department is untenable in the absence of any unambiguous criterion in the notification for the product to be called semi-finished or of any clear trade understanding of that term ‘semi-finished’.
28. Appellant, on the other hand, has adduced some evidence in the form of a certificate from M.N. Dastur & Co. An impractical and unreasonable burden cannot be cast on the assessee.
29. Yet another argument of the department to treat the product as finished is the price of the product. Price of a product cannot form the sole basis for treating the product as finished. Further, the department has not adduced any evidence as to what is the price .range of ‘semi-finished’ hot rolled coils. In the absence of the comparative prices, the argument has no merit whatsoever.
30. We, therefore, hold that the product under consideration is ‘semi-finished’ as stated in the Notification 86/86-Cus., dated 17-2-1986.
31. Another ground of denying the benefit of exemption is that the ‘product’ has not been rolled but has been used for making tube and pipes. The respondents contend that the Explanation does not envisage any ‘end-use’ of the product. End-use is relevant only when it is spelt out in the exemption notification or is necessarily implied. We agree with the respondents. The entire expression ‘coils for re-rolling’ (and not merely the term ‘coils’) to which exemption applies under Notification 86/86 has been defined. That definition in the Explanation is admittedly satisfied. To impose a further restriction on the product, about the end-use would be untenable in law.
32. To accept the contention of the department would mean addition of the words ‘for re-rolling’ in the meaning assigned to expression ‘coils for re-rolling’ in the Explanation to Notification 86/86, dated 17-2-1986. Such a course is impermissible in law.
33. Department further places its reliance on the Explanatory Notes in CCCN under the Heading 73.08 to buttress its argument that “coils for re-rolling’ are meant to be used for re-rolling. This contention is not acceptable. Relevant extracts from the Explanatory Notes to CCCN have already been set out. It may be that such coils are generally used for rerolling “into thin sheets by cold reduction in modern continuous rolling processes.” But it does not mean that these are invariably used for re-rolling into thin sheets. Other uses are not ruled out, if there are any. Nor is it the department’s case that the coils under import cannot be reduced in thickness by the process of cold rolling if anybody so desires.
34. In view of the foregoing discussion, we do not find any merit in the department’s appeal. Accordingly, it is dismissed.