1990 (11) TMI 143 - SC - Central Excise

Whether the goods, pipes, tubes and poles made of iron and steel, are liable to excise duty under Item 26AA or under Item 68, in the First Schedule to the Central Excises & Salt Act, 1944? Held that - The appellant s contention that the goods in question are assessable to duty under Item 26AA is correct and has to be upheld. The assessments in question will be modified accordingly and the appellant will be entitled to complete exemption or reduced duty in accordance with the provisions of Item 26AA read with the relevant notifications; if any, extant at the various points of time with which we are concerned. The appeals are followed accordingly.

Issues Involved:
1. Classification of goods under Tariff Item 26AA vs. Tariff Item 68.
2. Eligibility for exemption under relevant notifications.
3. Validity of reopening previously approved classification lists.
4. Application of the doctrine of contemporaneo expositio.

Detailed Analysis:

1. Classification of Goods under Tariff Item 26AA vs. Tariff Item 68:
The primary issue was whether the poles manufactured by the appellant should be classified under Tariff Item 26AA or under the residuary Item 68 of the First Schedule to the Central Excises & Salt Act, 1944. The appellant argued that their products, which are poles made from iron and steel, fall under Item 26AA, which includes "pipes and tubes (including blanks thereof) all sorts, whether rolled, forged, spun, cast, drawn, annealed, welded or extruded." The Revenue contended that the poles, after undergoing an elaborate manufacturing process, became distinct commercial commodities and should be classified under Item 68, introduced in 1975.

The Court concluded that the language of Item 26AA is broad enough to encompass the poles manufactured by the appellant. The poles, although subjected to heating and forging processes, are essentially pipes and tubes of different diameters attached together. The ultimate product, therefore, does not lose its identity as iron and steel products or pipes and tubes as described in Item 26AA(iv). The Court emphasized that the process of manufacture and the commercial name "poles" do not sufficiently alter the character of the goods to warrant classification under Item 68.

2. Eligibility for Exemption under Relevant Notifications:
The appellant had initially paid duty under Item 26AA but later sought a refund based on a notification dated 1-3-1963, which exempted "telegraph, telephone, and electric lighting and transmission poles" from duty. The Assistant Collector initially rejected the refund claim on the grounds that the conditions for exemption were not met. However, the Collector of Central Excise later ruled that the goods were eligible for exemption, and the appellant cleared the goods without paying duty from 1962 to 1975.

The Court upheld the appellant's eligibility for exemption under the relevant notifications, noting that the poles were correctly classified under Item 26AA and thus entitled to the exemptions provided therein.

3. Validity of Reopening Previously Approved Classification Lists:
The Revenue argued that the introduction of Item 68 justified re-evaluating the classification of the appellant's goods. The Tribunal supported this view, stating that changes in the tariff or the manufacturing process could warrant a reconsideration of previously approved classifications.

The Court disagreed, stating that the introduction of Item 68, a residuary item, does not affect the interpretation of specific items like 26AA. The Court emphasized that the goods were correctly classified under Item 26AA before 1-3-1975, and the introduction of Item 68 does not justify reopening the classification.

4. Application of the Doctrine of Contemporaneo Expositio:
The Court noted that the consistent interpretation of Item 26AA by the Revenue over the years supports the appellant's classification. The practice of assessing poles under Item 26AA and issuing exemption notifications indicates a contemporaneous exposition of the statutory language. The Court cited several precedents to support the principle that administrative interpretation is a valuable guide in understanding statutory terms.

Conclusion:
The Court allowed the appeals, ruling that the poles manufactured by the appellant fall under Item 26AA and are eligible for exemption or reduced duty as per the relevant notifications. The Court found it unnecessary to address the issue of limitation, given the resolution of the primary classification issue.

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