1975 (12) TMI 79 - SC - Central Excise

Whether the article viz. melted ingot mould and bottom stools altered the character of duty-paid pig iron? Held that - 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 car, 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 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. Appeal dismissed.

Summary

Issues:
- Interpretation of Notification No. 30/60 for exemption from excise duty on steel ingots made from duty-paid pig iron.
- Application of Notification No. 75/62 for exemption on steel ingots produced from scrap obtained from duty-paid pig iron.
- Determination of whether duty-paid pig iron retains its exemption status when used in the manufacture of steel ingots along with non-duty paid materials.

Analysis:
1. The case involved a dispute regarding the exemption from excise duty on steel ingots manufactured using duty-paid pig iron. The respondent claimed exemption based on Notification No. 30/60, which exempted steel ingots with duty-paid pig iron. The High Court quashed the Revenue Authorities' orders, emphasizing that the notification did not require the pig iron to be used "entirely, exclusively, or only" in the steel ingots for the exemption to apply.

2. The appellant Government relied on Notification No. 75/62, which provided exemption for steel ingots made from scrap obtained from duty-paid pig iron. They argued that the exemption under Notification No. 30/60 did not extend to scrap iron, distinct from pig iron. The Government contended that once Notification No. 75/62 was rescinded, no exemption could be claimed for scrap iron thereafter.

3. The respondent maintained that their claim for exemption was consistently based on duty-paid pig iron used in steel ingots' production. The Revenue Authorities acknowledged the use of both duty-paid and non-duty paid scraps in the process. The respondent argued that the duty-paid pig iron was processed into ingot moulds, broken into scrap, and then used in steel ingots, ensuring the continuous use of duty-paid pig iron throughout the process.

4. The High Court upheld the respondent's position, emphasizing that double taxation on the same article should be avoided. The court noted that Notification No. 30/60 aimed to exempt duty-paid pig iron without imposing conditions like exclusive use. The absence of terms like "only" or "exclusively" in the notification indicated the intent to grant relief by exempting duty-paid pig iron, regardless of its mixture with other materials.

5. Consequently, the High Court's judgment was affirmed by the Supreme Court, dismissing the appeals and directing each party to bear their own costs. The decision clarified that duty-paid pig iron retained its exemption status when used in the manufacture of steel ingots alongside non-duty paid materials, in accordance with the relevant notifications and legal interpretations.