1997 (1) TMI 92 - SC - Central Excise

Whether the respondents should pay duty on the plain Flat Sheets of Iron and Steel during the period from 1-8-1983 to 16-3-1985 at the rates applicable under T. I. 25 (13) first and after corrugation under T.I. 68? Held that - The appeal that was filed on 3rd July, 1985, pursuant to the view taken on 28th May, 1985, related only to the classification of the corrugated sheets. In so far as duty for the period November, 1984, to 16th March, 1985, was concerned, the appellants had already been issued with a show cause-cum-demand notice on 29th May, 1985, and the procedings thereunder were and are still pending. In the appeal the Collector was within jurisdiction in so far as he held that the order dated 31st July, 1984, classifying the corrugated sheets was incorrect but, his further direction was not. The scope of the appeal did not relate to a demand for duty for the period 1st August, 1983 to 16th March, 1985, nor was there a claim that duty should be paid first under Tariff Item 25(13) on plain sheets and again, after their corrugation, under Tariff Item 68. The appeals must, therefore, be allowed and the impugned orders of the Collector (Appeals) set aside in so far as they direct payment of duty on plain flat sheets of iron and steel first at the rate applicable under T.I. 25 and again, after corrugation, under T.I. 68. The demands for duty in accordance with these orders must also be set aside.

Summary

Issues:
1. Classification of corrugated sheets under Tariff Item 25.
2. Legality of the impugned order directing payment of duty on plain sheets and corrugated sheets.
3. Validity of the demands for duty based on the impugned order.
4. Jurisdiction of the Collector in issuing the impugned order.

Detailed Analysis:

1. The judgment concerns the classification of corrugated sheets under Tariff Item 25 of the Excise Tariff. The issue arose due to an amendment on 17th March, 1985, which added corrugated sheets to the definition of "sheet." The Collector of Central Excise challenged the classification of corrugated sheets under Tariff Item 25, leading to a demand notice for duty on corrugated sheets manufactured during a specific period.

2. The legality of the impugned order directing payment of duty on both plain and corrugated sheets was challenged in a Writ Petition filed in the High Court. The Single Judge initially allowed the petition on the ground of limitation, but the Division Bench overturned this decision. The Division Bench reviewed the impugned order on its merits and found no irregularity or illegality, leading to the current challenge before the Supreme Court.

3. The Supreme Court, after hearing the arguments, concluded that the impugned order suffered from illegality and irregularity. The appeal filed by the Collector only pertained to the classification of corrugated sheets, not the demand for duty on plain sheets. The Court held that the impugned order's direction to pay duty on plain sheets first under Tariff Item 25 and then under Tariff Item 68 after corrugation was beyond the scope of the appeal and jurisdiction.

4. The Court allowed the appeals, setting aside the impugned orders directing payment of duty on plain sheets and corrugated sheets. The demands for duty based on these orders were also quashed. The Court clarified that its decision did not opine on the validity of the demands or the classification of corrugated sheets, allowing the appellants to raise further contentions on these matters.

5. Ultimately, the Supreme Court allowed the appeals, overturned the judgment under challenge, and quashed the impugned orders and demand notices. No costs were awarded in the case.