1990 (3) TMI 69 - SC - Central Excise

Whether Runners and Risers being solidified moulten metal in process of manufacture in the channel and the better one being subjected to same use as ingot namely for rolling their clearance as ingots was in accordance with law and the notices issued for short levy were liable to be discharged? Held that - What is apparent is that leviability of duty on Runners and Risers as covered by Tariff Item No. 26 was not free from difficulty. The Board the Government and even the department by and large was clearing these items as scrap entitled to benefit of notifications exempting or levying duty on concessional rate on item covered by Tariff Item No. 26. Even in the State of Punjab it was cleared for some time till dispute arose. Although it would not operate as estoppel but rule of fairness is yet another principle which is well-settled and precludes public bodies specially the government departments from re-opening such matters which were taken to be settled due to its actions. Further from perusal of notices issued to different petitioners some appear to be wholly beyond six months and others partly. For instance notice was issued to M/s D.B.A. Steel Pvt. Ltd. Punjab on 24-12-1981 for period 20-1-1979 to 4-8-1981. Similarly notice to Pratap Steels Mandi Gobindgarh Punjab was issued on 17-9-1979 for period 15-7-1977 to 8-4-1979. The period within six months was from 10th March 78 only. Therefore one of the questions that shall arise and which has been kept open by Tribunal is if notices beyond six months were barred by time.

Summary

Issues:
Challenge to notices under Central Excises and Salt Act for short levy on clearances of Runners and Risers, classification of Runners and Risers as ingots or scrap, interpretation of Tariff Item 26, burden of proof for exemption, leviability of duty on Runners and Risers, applicability of notifications exempting or levying duty, time limitation on issuance of notices.

Analysis:
The manufacturers of steel ingots challenged notices issued under the Central Excises and Salt Act for short levy on clearances of Runners and Risers, claiming they should be treated as steel ingots or melting scrap and subjected to the same duty. The Tribunal found that Runners and Risers, being solidified molten metal in a refractory channel, were not ingots but scrap, as they were not of predetermined size or designed for a specific use. The issue revolved around the interpretation of Tariff Item 26, which included "Steel ingot including steel melting scrap."

The Board clarified that the exemption under notifications extended to both steel ingots and steel melting scrap arising in electric furnace units. The Government held that Runners and Risers obtained during the manufacture of steel ingots were exempt from duty. The appellants argued that Runners and Risers should be treated as ingots due to their use in the rolling process, while the Solicitor General contended that the burden of proving exemption lies with the claimant and that the exemption applied only to ingots, not scrap.

The Appellate Collector accepted the appellants' claim, highlighting the potential economic hardship if the Tribunal's order was upheld. The leviability of duty on Runners and Risers under Tariff Item 26 was contentious, with varying interpretations by the Board and different states. The judgment emphasized the principle of fairness and the preclusion of public bodies from reopening settled matters due to their actions.

The Supreme Court refrained from definitively deciding whether Runners and Risers were ingots or scrap but discharged the notices issued against the petitioners based on the Board's order, which was acted upon by the department. The judgment did not entitle anyone to claim a refund of any duty paid on Runners and Risers. The Civil Appeals and Special Leave Petitions were disposed of without costs, considering the peculiar circumstances of the case.