2003 (12) TMI 63 - SC - Central Excise

Whether duty had been paid by ITCO on the residue treating the same as scrap? Held that - there was no separate heading in respect of cold rolled strips and hot rolled strips. It is not in dispute that the duty was paid on the hot rolled strips treating the same as assessable under 26AA(III). The strips having already been subjected to excise under the tariff heading, it was open to the assessee to have argued that no further duty was payable on the strips in any subsequent form. On the other hand, the assessee has also paid duty on the strips after shearing and slitting. However, the assessee does not claim any refund. Apart from the consistent view taken by the Tribunal as noted, we are also of the view that this case is squarely covered by the decision of this Court in Steel Strips (1995 (5) TMI 26 - SUPREME COURT OF INDIA) in that there was no proof whatsoever of the marketability of the cold rolled strips which is an essential item of manufacture for the purposes of the Act. Marketability is a question of fact and does not follow from the mere mention of the item in the ISI. The decisions of the High Court and the Revisional Authority upholding the demand are accordingly set aside and the demand of the Revenue is quashed. Although there is no question of refund of the Excise duty paid on the cold rolled strips raised, there is a claim for refund relating to the reversible mill ends, we make it clear that the Revenue shall comply with the decision of the Revisional Authority and the Single Judge and refund the excise duty paid in respect of the reversible mill ends. Appeal allowed of assessee.

Summary

Issues:
Interpretation of the term "cold rolled strips" for excise duty purposes.

Analysis:
The case involved a dispute regarding the demand raised under the Central Excises and Salt Act, 1944 for the period September 1968 to January 1969. The Indian Tube Company (ITCO) purchased hot rolled strips to process them into cold rolled strips. ITCO contended that cold rolled strips only referred to strips that emerged after processing, while the Revenue argued that it included unsheared and unslit strips. The Revisional Authority held that strips with mill edges were marketable but reversible mill ends were not cold rolled strips and should be treated as scrap.

ITCO filed a writ petition challenging the revisional order, claiming that the manufacturing process was incomplete until slitting and cutting. The High Court rejected the petition, stating that duty was leviable once the strips came into existence commercially, regardless of trimming and shearing. The Division Bench upheld this decision but set aside the direction for refund on reversible mill ends.

The matter reached the Supreme Court in 1986, where the appellant sought to raise a new legal point based on a previous decision. The Court allowed this additional argument, citing subsequent decisions and the lack of new facts. The Court noted that duty had been paid on hot rolled strips under a specific tariff heading, and there was no proof of marketability for cold rolled strips, a crucial aspect for excise duty. The Court set aside the decisions of the High Court and Revisional Authority, quashing the Revenue's demand. Refund was ordered for excise duty paid on reversible mill ends, in line with previous orders.

In conclusion, the Supreme Court allowed the appeal, emphasizing the lack of marketability proof for cold rolled strips and the applicability of a previous decision. The demand was quashed, and the Revenue was directed to refund excise duty on reversible mill ends. No costs were awarded in the case.