JUDGMENT
S. Mohan, Off. C.J.
1. All these appeals can be dealt with under a common judgment. They arise out of the order passed by our learned brother Nainar Sundaram, J., in W.P. No. 4062 to 4067 of 1980.
2. The short facts leading to the filing of the writ petitions were as follows :
We will confine ourselves to the facts in W.A. No. 321 of 1987 which will be sufficient to highlight the issue.
The petitioners-appellants are a Small Scale Unit holding Registration Certificate No. 18/07/20688/PMT/SSI dated 7-12-1976. They are manufactures of Stainless Steel Utensils among other things. For the purpose of the manufacture of stainless steel utensils, they import Stainless Steel Circles. They imported H. T. Stainless Steel Circles as per s.s. S. 737 for the manufacture of stainless steel utensils and cleared the goods under Bill of Entry No. 147 dated 4-9-1979. The duty was assessed by the concerned Customs Officer under the Item 73.15(2) of the Schedule to the Indian Customs Tariff Act, 1975.
3. Later on, legal opinion was obtained by the petitioners-appellants. They were advised that Stainless Steel Circles could not fall under Item 73.15(2) but only under 73.15(1) and hence the assessment of duty under 73.15(2) was erroneous. At the relevant time, the duty leviable under 73.15(2) was 220 per cent. on the CIF value whereas the duty leviable under 73.15(1) was only 40%. Where, therefore, wrongly the duty had been assessed, according to the appellants at 220% while they were liable only at 40%, they claimed a refund of excise duty which amounted to Rs. 1,91,205.80 in this case. They, therefore, filed a claim for refund under Section 27 of the Customs Act within the stipulated time. Thereafter, the Assistant Collector of Customs considered the application and rejected the same holding that Item 73.15(1) covered Alloy Steel and High Carbon Steel in the forms mentioned under Heading No. 73.06/07 to 73.14 other than those of stainless steel specified under sub-heading (2) of 73.15 CTA. Accordingly he held that the classification under Heading 73.15(2) CTA was in order. This was by his order dated 13-10-1979.
4. Aggrieved by the above, the matter was taken up in appeal before the Appellate Collector of Customs who confirmed the above order as a seen from his proceedings No. C3/3169/1979 dated 7-1-1980. Thereupon, W.P. 4062 of 1980 was filed by the petitioners-appellants.
5. The main point of attack was that commercially, sheets are different from circles which alone were imported by the appellants. Further, in so far as ‘circles’ came to be introduced by way of a specific amendment later on, the legislative intention, if gathered properly, would manifest that there was no possibility of including circles within the scope of Customs Tariff 73.15(2). Besides, in various other notifications, a clear-cut distinction has been made between circles and sheets. The learned Judge rejected these contentions though he did not specifically go into the scope of the later amendment to this entry. Thus the appeal.
6. Mr. Habibullah Badsha, learned counsel for the appellants would vehemently urge that where not only the genus has been specified as alloy steel and high carbon steel but also its species like bars, rods, wire rods, strips, sheets and plates are brought within Item 73.15(2), unless and until there is a specific entry in relation to ‘circles’, the general entry under 73.15(1), namely, ‘not elsewhere specified’ alone will have to be applied. Then again, commercially, stainless steel sheets are treated differently from ‘circles. This is common knowledge. There are number of Notifications where circles are treated separately. In the notification with regard to aluminium, even while granting exemption, specific mention has been made regard to circles apart from sheets as per the Indian Standard Specification. Therefore, where there are two different products, one cannot hold that sheets can take in circles as well.
7. More than above all these, when specifically am amendment was brought by Customs Tariff (Amendment) Bill, 1982 stating that circles and folded angles will have to be included, it stands to reason that unless and until the Parliament was conscious of the distinction between the two, it would not have specifically introduced an item known as ‘circle’. Lastly it is submitted that the learned Judge not having followed the reasoning of the Delhi High Court in Super Traders and Another v. Union of India and Others [1983 (12) ELT 258] and further having held that Note I(n) to Heading No. 73.13 would not be of much help; ought to have held that sheets are different from circles. From this point of view, the judgment of the learned Judge requires to be set aside and the writ petition to be allowed.
8. In opposition to this, the learned Senior Central Government Standing Counsel Mr. P. Narasimhan appearing for the Central Government would say that an identical question came to be decided by the Delhi High Court in [1983 (12) ELT 258] and he would commend acceptance of that ratio. Besides that, the said finding is rested on international basis. Where, therefore, it has been so understood, the principle laid down there will have to be applied to this case as well. No doubt, the Parliament brought about an amendment. That is to make it specific and not because of any distinction in the law which existed prior to the amendment. Therefore, much reliance cannot be placed on the later amendment. Equally, the other notifications under the Customs Acts cannot be pressed into service because the purposes of those Notifications are entirely different.
9. In order to appreciate the respective contentions, we are of the view that it is necessary to extract the relevant entries. Item 73.15 mentioned in the First Schedule to the Import Tariff as follows :
ANNEXURE
Extracts from the Customs Tariff Act, 1975
(51 of 1975)
THE FIRST SCHEDULE-IMPORT TARIFF
(see Section 2)
————————————————————————
Rate of Duty Duration when
Head-Sub-heading No. and ------------------ rates of duty
ing description of article Standard Preferential are protective
No. Areas
--------------------------------------------------------------------
(1) (2) (3) (4) (5)
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* * * * *
73.15 Alloy steel and High
carbon steel in the forms
mentioned in Heading Nos.
73.06/07 to 73.14;
(1) Not elsewhere
specified 60%
(2) Coils for re-rolling,
bars (including bright 300%
bars), rods, wire rods,
strips, sheets and
plates, of stainless
steel.
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10. While we are on this, we may also refer to Note I(n) to Heading No. 73.13. It reads as follows :
"I(n) 'sheets and plates' (Heading No. 73.13;....
Rolled products other than coils for re-rolling as defined in Paragraph (K) above of any thickness and, if in rectangles, of a width exceeding 500 millimeters.
Heading No. 73.13 is to be taken to apply, inter alia, to sheets or plates which have been cut to non-rectangular shape, perforated, corrugated, channelled, ribbed, polished or coated, provided that they do not thereby assume the character of articles or of products falling within other Headings;”…..
11. On a careful reading of the above, what we find in Heading 73.15 is that there is a clear dichotomy between one set of species which were specified as against non-specified items. The genus is of course ‘Alloy steel and high carbon steel’. The various forms, as we stated above, are classified under Clause (2) of 73.15. That states, (i) coils for re-rolling. (ii) bars (including bright bars); and (iii) rods, wire rods, strips, sheets and plates, of stainless steel. They were chargeable, at the relevant time, with duty at 220 per cent.
12. It is very clear from the above that Parliament was fully aware of the various forms of stainless steel. That was the object with which Clause (2) came to be introduced as against this, such of those would not fall under Clause (2) would certainly be covered under Clause (1), namely, ‘not elsewhere specified’. Where, therefore, there is no specification as such, the duty at the relevant time would be 40%.
13. The only question, therefore, would be whether ‘circles’ would fall under Clause (2). In our considered view, it cannot. Our reasons are as under :
14. Commercially, as a matter of fact, it is not so denied before us by the respondents that stainless steel sheets are different from circles. The reason why we are saying is that as per Indian Standard Specification for stainless steel sheets, coils and circles for utensils and hospitalware, we find that sheets and coils are measured in width and length while circles are always measured only in diameter. It is also of interest to note as to what this Notification states : (Vide page 9 of typed set) –
“…. Partial exemption to plates, sheets, circles, strips and foils produced from old or duty paid scraps :-
In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts the following manufactures of copper namely, plates, sheets, circles, strips and foils in any form or size falling under sub-item (2) of Item No. 26-A of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) in the manufacture of which copper falling under sub-item (1) of sub-item (1a) of said item made out of old scrap of copper or waste or scrap obtained from duty-paid virgin metal is used, from so much of the duty of excise leviable thereon as is in excess of Rupees seven hundred per metric tonne.”……
15. Similarly, with regard to aluminium, again another Notification can be referred to – vide page 35 of the typed set. It reads thus :
“Exemption to aluminium manufactures containing more than 97% of aluminium :- In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), and in supersession of the notification of the Government of India in the Department of Revenue and Banking No. 266, Customs, dated the 2nd August, 1976, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts aluminium manufactures containing more than 97 per cent. of aluminium, namely, plates, sheets, circles, strips and foil other than etched or formed aluminium foil but including foil in any form or size ordinarily used as parts and fittings of tea chests, falling within Chapter 76 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), 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 27 1/2 per cent. ad valorem.”…..
16. Therefore, if they are differently understood not only commercially but also by other fiscal authorities which, according to Mr. Narasimhan, for different purposes, the redeeming feature is that it is the Customs Department which has understood in that fashion. In view of this, we are unable to see as to how Note I(n) occurring under Heading 73.13 could even be pressed into service by the respondents. As rightly remarked by the learned Single Judge, that does not improve the case of the respondents. In the decision is Super Traders and Another v. Union of India and Others (1983 (12) ELT 258 at 262) in page-5, the learned Judges of the Delhi High Court observed as follows :
“……… The plea of the petitioners is that as there is no mention of stainless steel in the form of circles to be found in Heading 73.15(2) (prior to the Amendment Act) the only sub-heading under which the petitioner’s imports” could be covered would be the residuary one i.e., 73.15(1) i.e. not elsewhere specified. The respondent’s plea, however, is that circle is nothing else but ‘sheets’ which is specifically mentioned in 73.15(2) and, therefore, it would be covered by sub-heading (2). We agree with the interpretation given by the respondents. Reference in this connection be made to Clause (n) of Chapter 73 of the Schedule to the 1975 Act, which defines sheets, plates in Heading 73.13. The note further says that Heading No. 73.13 is to be taken to apply inter alia to sheets or plates which have been cut to non-rectangular shape perforated….. . Now Heading 73.15 requires two things, namely – (a) that goods must be of alloy steel, stainless; (b) they must be in the form mentioned in Headings 73.06/7 to 73.14. Admittedly the goods of the petitioner are of stainless steel. 73.13 deals with sheets and plates of iron and steel. But sheets in terms of clause (n) of Note 1 of Chapter 73 is to be taken to apply to sheets which have been cut to non-rectangular shape. The petitioner is importing stainless steel circle which really means sheet cut to non-rectangular shape. So there does not seem to be any justification to say as to why stainless steel circles would not be included in 73.15(2) read with 73.13, Clause (n) of Note 1 of Chapter 73. Mr. Sen, the learned Counsel for the petitioner sought to urge that non-rectangular does not mean circle because there is no angle in the circle. According to the counsel non-rectangular only means that the form is not rectangular but that form necessarily must have some angle, otherwise Clause (n) of Note 1 is in applicable. We cannot agree. Now when Clause (n) says that sheets or plates are to be taken to apply to sheets which have been cut to non-rectangular shape we must give it the obvious meaning i.e., the shape which is not rectangular. The additional requirement urged by Mr. Sen that the shape must be in a form which must necessarily have an angle reads something extra not found in the definition. A non-rectangular shape may be in the form of circle, may be of a shape having different angles like being quadrangular, or Hexagon. But on no reasonable interpretation of this definition while it excludes sheets out in the form of circles. In this connection we may note that Mr. Jain., J. in C.M. 2737/1982 in CW 1812/1982 decided on 26-8-1982 also took the view that non-rectangular shapes will include circular and sugar shapes. This view has our respectful concurrence. This view of ours find powerful support from the manner in which international custom people and trading circles understand the meaning of this heading. In this regard reference may be made to the compendium of Classification Opinion. This compendium gives a Numerical list set out in the order of the Customs Co-operative Council on the advice of the Nomenclature Committee. “Thus under the Heading 73.13 or 73.15 (as the case may be) sheets or plates of Iron or steel, for boiler or tank bottoms, or ends include sheets or plates, of iron or steel cut to circular shape but not further worked. This will show that in the international trade sheets or plates of iron or steel cut to circular shape will be included under the Heading 73.13 or 73.15. There is no reason why for our Indian Customs Sheets should not include sheets or plates cut to circular shape also. It is significant to note that the First Schedule to 1975 Act is broadly based on the Brussels Tariff Nomenclature, though some of the individual headings have been merged or sub-divided to accord with the pattern of Indian Import trade. The entries in the Schedule are common because without it international trade would suffer serious problems in being able to tax and identify various articles. As a matter of fact many a article bear lower rates of duty by virtue……
“Of General Agreement on Tariff and Trade (GATT). In that context the fact that international customs opinion describe sheets and plates under 73.15 to include sheets cut to circular shape would be a very strong reason not to interfere with the finding of the authorities under the Customs Act which have taken the view that stainless steel sheets would include stainless steel circles also.”
17. We do not think we should go that far in so far as commercially they are treated as different articles which alone is the prime test in such matters. That is sufficient for our purpose. We are not resting our judgment merely on this because there is something more substantial to follow. If according to the Department, sheets would take within it circles as well, we are totally unable to understand as to where was the necessity to pass a separate Amendment by reason of the Customs Tariff (Amendment) Bill, 1982 (Bill No. 50 of 1982) which came into force from 1st January, 1981 itself retrospectively. The amendment reads thus :
“2. Amendment of the First Schedule :- In the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) (hereinafter referred to as the Principal Act) in Chapter 73, –
——————————————————————-
Head- Sub-heading No. and Rate of duty Duration when
----------------------
ing description of article rates of duty
No. are protective
Standard Preferential
Areas
-------------------------------------------------------------------
(1) (2) (3) (4) (5)
--------------------------------------------------------------------
(a) in Heading No.73.15, for
sub-headings (1) and (2),
the following sub-headings
shall be substituted,
namely :-
(1) Not elsewhere specified 300%
(2) Coils for re-rolling
bars (including bright
bars), rods, wire rods,
wire, circles, angles,
shapes and sections strips
sheets and plates, of
stainless steel. 300%
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18. When we look at the statement of objects, it is clear as to why circles come to be specifically included.
It is as follows :
“….. the stainless steel articles, not elsewhere specified (other than those falling under sub-heading (2) fall under sub-heading (1) of Heading No. 73.15. The tariff rate of customs duty on such articles is 60 per cent. plus 25 per cent. auxiliary duty. The difference in duty under the two sub-headings is so large that attempts have been made by some importers to manipulate the description or form of the articles in such a way as to claim a lower rate of duty as has recently happened in the case of stainless steel sheets imported in the guise of ‘folded angles’ and ‘circles’. In both the above types of cases, the Customs authorities held the view that the goods were nothing but sheets attracting the higher of the two rates of duty. This position, however, has been challenged in various Courts. The release of the consignments in terms of the interim orders of the Courts has resulted in the deferment of substantial amount of revenue due to the Government.
2. With a view to making the intention clear and prevent the abuses of the type mentioned above, it is proposed to amend Heading No. 73.15 and also certain other Heading Nos. falling under Chapter 73 of the First Schedule to the Customs Tariff Act, 1975. The proposed amendment to Heading No. 73.15 in so far as it relates to angles, shapes, sections and circles of stainless steel is sought to be given retrospective effect from 1st January, 1981 with suitable safeguard so as to ensure that the effective rates of duty on such angles, shapes, sections and circles and the same as those applicable from time to time to stainless steel sheets.”…..
19. Therefore, the legislative intent is very clear that earlier under the Heading 73.15(2) as it stood, ‘circles’ were not included. That came to be specifically included on 1-1-1981. Under these circumstances, it is not open to the fiscal authorities to treat ‘circles’ on a par with sheets and levy duty at 220 per cent. If pursuant to that levy, a demand had been made and the appellants were obliged to pay, certainly they would be entitled to refund because we hold that ‘circles’ admittedly imported by the appellants would fall under Clause (1) of Heading 73.15, namely, ‘not elsewhere specified. In such an event, the duty will be only 40% at the relevant time and not 220 per cent.
20. Therefore, we set aside the judgment of the learned Single Judge and allow these appeals. There will be mandamus with a direction to refund. The said refund shall be made within eight weeks from today. There will be no order as to costs.