Mahesh Iron and Steel Re-rolling Vs. Collr. of C. Ex. - Court Judgment

Excerpt:
1. all these appeals arise from common order passed by the collector (appeals), new delhi against each of the appellants demands were raised by issue of show cause notice in respect of 'rolled flat products of iron & steel, having thickness above 5 mm and width less than 150 mm', manufactured by them and in which they had filed revised classification lists effective from 20-5-1988 classification under sub-heading 7214.90 as 'other bars and rods' and full exemption under notification no.202/88, dated 20-5-1988. however, the assistant collector by order-in-original has rejected their claim and has classified the goods in question under sub-heading 7211.11 of the tariff as 'flats', attracting duty at rs. 3857- per mt plus sed. he has also confirmed the demands for duty according to various periods indicated in the show cause notice. it was contended before the collector by the appellants that the goods cannot be considered as 'flats' as the same were not so understood in common trade parlance and they are also sold in the market as 'flats'. they also submitted that the goods in question did not specify the definition of 'flat rolled products' as provided in chapter note (k) to chapter 72 and hence it cannot be classified under svib-heading 7211.11.2. however, the collector (appeals), did not agree with the submissions and has held that the appellants are having rolling mills and are engaged in the manufacture of 'flat products' in question by the process of rolling are of width less than 600 mm. she has observed that the appellants are selling the product as flats only and that its thickness exceeding 5 mm and width measuring at least twice the thickness. therefore, in terms of chapter note (k) of chapter 72, the item is required to be considered as flat rolled products of iron or non-alloy steel of a width of less than 600 mm falling under sub-heading 7211.11.3. it is the contention of the appellants that the item is known in the market as flat. they also relied on circular no. 20/89, dated 26-5-1989 issued by the board clarifying that the flat rolled products were classified prior to 1-3-1988 as 'flats' and they did not confirm entirely to the dimensions specified in note 1(k) to chapter 72 would not in order. the classification of these product should be determined according to these characteristics and dimensions and in accordance with the meaning assigned to various expressions in the relevant chapter notes. it is stated that the flat rolled products of thickness exceeding 5 mm of which width does not exceed 150 mm are classifiable only under sub-heading 7414.90 as 'other bars & rods'. they points out that chapter note (k) which defines flat rolled products includes only those rolled products of which thickness should be less than 4.75 mm are of a width measuring at least ten times the thickness.of thickness of 4.75 mm or more are of a width which exceeds 150 mm & measures at least twice the thickness. it is stated that the product of the appellant is of thickness exceeding 5 mm & width not exceeding 150 mm and as such the goods are not covered by note (k) of the tariff of chapter 72. it is stated that the products which are not covered by definition (ij), (k) or (i) are covered by note (m) under sub-heading 7214.90 of the cet.4. we have heard shri n.c. sogani and shri a.l. mathur, the learned advocates for the appellants and shri s. nunthuk, the learned dr for the revenue.5. while reiterating the grounds taken by the appellants in their appeal memo and written submissions, the learned advocate also drew attention to the judgment rendered in the case of calcutta steel industries v. collector of central excise, as reported in 1991 (54) e.l.t. 90, wherein the classification of various type of flats and various dimensions were considered including the present dimensions.the claim of the appellants in respect of present type of goods as can be seen from page 107 of the report at si. no. 4 referred to the description of the goods flat products of thickness above 5 mm width less than 600 mm. this si. no. was claimed by the lower authorities as flat rolled products under sub-heading 7211.11 as 'flat' while the appellants claim was under 7214.90 as 'other bars and rods of non-alloy'. it was submitted that the tribunal at page 108 have decided the case in favour of the appellants for classification after examining both the hsn as well as chapter note 1(k) of chapter 72.6. the learned dr submits that the chapter note 1(k) is clear and therefore, the appellants contention is required to be confirmed.7. on a careful consideration of the submissions, we notice that in the judgment of calcutta steel industries v. collector of central excise, the tribunal in para 10 appearing at 107 of the judgment has listed this type of products in column 1. the present type of goods come within si. no. 4 of the table which gives description 'flat products of thickness above 5 mm width less than 600 mm'. the assistant collector had classified as 'flat rolled products' under sub-heading 7211.11 as 'flat' as against claiming under sub-heading 7214.90 as 'other bars and rods of non-alloy steel'. but the tribunal after noting all the submissions has given finding which appears at page 108 of the report as follows:- "she has contended that the tariff with effect from 1-3-1988 defines 'flat rolled products' under chapter note 1(k) of chapter 72 and such flat-rolled products are to be classified under the respective heading depending on the width, thickness, and she does not find any force in the appellants' plea for classification as 'other bars and rods', as defined under chapter note 1(m) of chapter 72, when they conform to the definition under note 1(k). in considering the submissions, it is seen that chapter 72 has been recast. flat rolled products are defined in note 1(k), bars and rods, hot-rolled irregularly wound coils are defined in 1(1) and other bars and rods under 1(m). tariff heading 72.08 to 72.12 relate to flat rolled products of different categories, and the sub-headings under each category is further categorised as per the dimensions as plates, sheets, strips, and hoops. it is pertinent to note that the definitions contained in the tariff entries prior to 1-3-1988 have not been incorporated except plates and hoops in a notification no. 170/88, dated 13-5-1988. the question to be decided is whether the products are to be regarded as hoops, strips or flats as claimed by the department or other bars and rods as claimed by the appellants. it will be helpful to refer to the hsn chapter 72, to see how these products are distinguished. explaining the production of finished products, it is stated that semi-finished products and in certain ingots are subsequently converted into finished products. these are generally sub-divided into flat products (wide flats, including "universal plates, wide coils", sheets, plates and strips) and long products (bars, rods, hot-rolled in irregularly wound coils, other bars and rods, angles, shapes, section and wire). flat rolled products defined in note 1(k) and the central excise tariff is a verbatim reproduction. these definitions have already been taken note of in para 4. the criteria among other specifications is that the cross-section is to be rectangular, the bars have cross-section of circles, ovals also rectangular, etc., the other bars and rods are residuary items. it is the contention of the appellants that their products are re-rolled in section/bar mills and such mills can neither produce a product of rectangular cross-section nor do they have any arrangement for re-rolling, slitting or trimming edges. their product has uneven thickness of uneven width, when definitions given in chapter note 1(k) under chapter 72 for flat rolled products are not found applicable to their products, the other appropriate heading would be the residuary heading as 'other bars and rods'. the chapter 72 as it stands revised has brought all the flat rolled products under a broad category. therefore, it cannot be stated that there has been a departure in the categorisation of various products calling for a revision. there seems to be no reason as why the definitions of strip, hoop etc. should not be adopted from the earlier tariff which are also based on standard specifications. presently the choice has to be made between the flat-rolled products and other item viz. bars and rods when the appellants' product does not have rectangular cross-section and^has uneven thickness and width, the residuary entry is preferred, especially wlien in the earlier decisions of the tribunal their product has been held to be a bar. therefore, on both these sets of appeals covering the period from 1-8-1983 to 29-2-1988 and the period from 1-3-1988, the appeals filed by the appellants (assessee) are allowed." 8. on perusal of the above paragraph of the judgment, we notice that the tribunal has already considered note 1(k) of chapter 72 and also hsn explanatory notes under the said chapter and has overruled the classification adopted by the assistant collector and confirmed the classification claimed by the appellants. it has been brought to our notice that this judgment of the tribunal rendered in the case of calcutta steel industries has since been confirmed by the hon'ble supreme court. we notice that the issue of classification having been considered in great depth and analysed by the tribunal and the appellants' contention having been upheld for classification of the present category of goods under sub-heading 7214.90 as 'other bars and rods of non-alloy steel', we are inclined to follow the ratio of the judgment by allowing the appeals. in view of the judgments of the tribunal and the same having been confirmed by the hon'ble supreme court, the impugned orders are set aside and appeals allowed.

Judgment:
1. All these appeals arise from common order passed by the Collector (Appeals), New Delhi against each of the appellants demands were raised by issue of show cause notice in respect of 'rolled flat products of Iron & Steel, having thickness above 5 mm and width less than 150 mm', manufactured by them and in which they had filed revised classification lists effective from 20-5-1988 classification under sub-heading 7214.90 as 'other bars and rods' and full exemption under Notification No.202/88, dated 20-5-1988. However, the Assistant Collector by Order-in-Original has rejected their claim and has classified the goods in question under sub-heading 7211.11 of the Tariff as 'flats', attracting duty at Rs. 3857- per MT plus SED. He has also confirmed the demands for duty according to various periods indicated in the show cause notice. It was contended before the Collector by the appellants that the goods cannot be considered as 'flats' as the same were not so understood in common trade parlance and they are also sold in the market as 'flats'. They also submitted that the goods in question did not specify the definition of 'flat rolled products' as provided in Chapter Note (k) to Chapter 72 and hence it cannot be classified under svib-heading 7211.11.

2. However, the Collector (Appeals), did not agree with the submissions and has held that the appellants are having Rolling Mills and are engaged in the manufacture of 'flat products' in question by the process of rolling are of width less than 600 mm. She has observed that the appellants are selling the product as flats only and that its thickness exceeding 5 mm and width measuring at least twice the thickness. Therefore, in terms of Chapter Note (k) of Chapter 72, the item is required to be considered as flat rolled products of iron or non-alloy steel of a width of less than 600 mm falling under sub-heading 7211.11.

3. It is the contention of the appellants that the item is known in the market as flat. They also relied on Circular No. 20/89, dated 26-5-1989 issued by the Board clarifying that the flat rolled products were classified prior to 1-3-1988 as 'flats' and they did not confirm entirely to the dimensions specified in Note 1(k) to Chapter 72 would not in order. The classification of these product should be determined according to these characteristics and dimensions and in accordance with the meaning assigned to various expressions in the relevant Chapter notes. It is stated that the flat rolled products of thickness exceeding 5 mm of which width does not exceed 150 mm are classifiable only under sub-heading 7414.90 as 'other Bars & Rods'. They points out that Chapter Note (k) which defines flat rolled products includes only those rolled products of which thickness should be less than 4.75 mm are of a width measuring at least ten times the thickness.

of thickness of 4.75 mm or more are of a width which exceeds 150 mm & measures at least twice the thickness. It is stated that the product of the appellant is of thickness exceeding 5 mm & width not exceeding 150 mm and as such the goods are not covered by Note (k) of the Tariff of Chapter 72. It is stated that the products which are not covered by definition (ij), (k) or (I) are covered by Note (m) under sub-heading 7214.90 of the CET.4. We have heard Shri N.C. Sogani and Shri A.L. Mathur, the learned Advocates for the appellants and Shri S. Nunthuk, the learned DR for the Revenue.

5. While reiterating the grounds taken by the appellants in their appeal memo and written submissions, the learned Advocate also drew attention to the judgment rendered in the case of Calcutta Steel Industries v. Collector of Central Excise, as reported in 1991 (54) E.L.T. 90, wherein the classification of various type of flats and various dimensions were considered including the present dimensions.

The claim of the appellants in respect of present type of goods as can be seen from page 107 of the report at SI. No. 4 referred to the description of the goods flat products of thickness above 5 mm width less than 600 mm. This SI. No. was claimed by the lower authorities as flat rolled products under sub-heading 7211.11 as 'flat' while the appellants claim was under 7214.90 as 'other bars and rods of non-alloy'. It was submitted that the Tribunal at page 108 have decided the case in favour of the appellants for classification after examining both the HSN as well as Chapter Note 1(k) of Chapter 72.

6. The learned DR submits that the Chapter Note 1(k) is clear and therefore, the appellants contention is required to be confirmed.

7. On a careful consideration of the submissions, we notice that in the judgment of Calcutta Steel Industries v. Collector of Central Excise, the Tribunal in Para 10 appearing at 107 of the judgment has listed this type of products in Column 1. The present type of goods come within SI. No. 4 of the Table which gives description 'flat products of thickness above 5 mm width less than 600 mm'. The Assistant Collector had classified as 'flat rolled products' under sub-heading 7211.11 as 'flat' as against claiming under sub-heading 7214.90 as 'other bars and rods of non-alloy steel'. But the Tribunal after noting all the submissions has given finding which appears at page 108 of the report as follows:- "She has contended that the Tariff with effect from 1-3-1988 defines 'Flat Rolled Products' under Chapter Note 1(k) of Chapter 72 and such Flat-rolled Products are to be classified under the respective heading depending on the width, thickness, and she does not find any force in the Appellants' plea for classification as 'Other Bars and Rods', as defined under Chapter Note 1(m) of Chapter 72, when they conform to the definition under Note 1(k).

In considering the submissions, it is seen that Chapter 72 has been recast. Flat rolled products are defined in Note 1(k), Bars and Rods, hot-rolled irregularly wound coils are defined in 1(1) and other Bars and Rods under 1(m). Tariff Heading 72.08 to 72.12 relate to flat rolled products of different categories, and the sub-headings under each category is further categorised as per the dimensions as Plates, Sheets, Strips, and Hoops. It is pertinent to note that the definitions contained in the Tariff entries prior to 1-3-1988 have not been incorporated except Plates and Hoops in a Notification No. 170/88, dated 13-5-1988. The question to be decided is whether the products are to be regarded as Hoops, Strips or Flats as claimed by the Department or other Bars and Rods as claimed by the Appellants. It will be helpful to refer to the HSN Chapter 72, to see how these products are distinguished. Explaining the production of finished products, it is stated that semi-finished products and in certain ingots are subsequently converted into finished products. These are generally sub-divided into flat products (wide flats, including "universal plates, wide coils", Sheets, Plates and Strips) and long products (Bars, Rods, Hot-rolled in irregularly wound coils, other bars and rods, angles, shapes, section and wire). Flat rolled products defined in Note 1(k) and the Central Excise Tariff is a verbatim reproduction. These definitions have already been taken note of in Para 4. The criteria among other specifications is that the cross-section is to be rectangular, the bars have cross-section of circles, ovals also rectangular, etc., the other Bars and rods are residuary items. It is the contention of the Appellants that their products are re-rolled in Section/Bar Mills and such mills can neither produce a product of rectangular cross-section nor do they have any arrangement for re-rolling, slitting or trimming edges. Their product has uneven thickness of uneven width, when definitions given in Chapter Note 1(k) under Chapter 72 for Flat rolled products are not found applicable to their products, the other appropriate heading would be the residuary heading as 'Other bars and rods'. The Chapter 72 as it stands revised has brought all the Flat rolled products under a broad category. Therefore, it cannot be stated that there has been a departure in the categorisation of various products calling for a revision. There seems to be no reason as why the definitions of Strip, Hoop etc. should not be adopted from the earlier tariff which are also based on standard specifications. Presently the choice has to be made between the flat-rolled products and other item viz. Bars and Rods when the appellants' product does not have rectangular cross-section and^has uneven thickness and width, the residuary entry is preferred, especially wlien in the earlier decisions of the Tribunal their product has been held to be a Bar. Therefore, on both these sets of Appeals covering the period from 1-8-1983 to 29-2-1988 and the period from 1-3-1988, the appeals filed by the Appellants (assessee) are allowed." 8. On perusal of the above paragraph of the judgment, we notice that the Tribunal has already considered Note 1(k) of Chapter 72 and also HSN Explanatory Notes under the said chapter and has overruled the classification adopted by the Assistant Collector and confirmed the classification claimed by the appellants. It has been brought to our notice that this judgment of the Tribunal rendered in the case of Calcutta Steel Industries has since been confirmed by the Hon'ble Supreme Court. We notice that the issue of classification having been considered in great depth and analysed by the Tribunal and the appellants' contention having been upheld for classification of the present category of goods under sub-heading 7214.90 as 'other bars and rods of non-alloy steel', we are inclined to follow the ratio of the judgment by allowing the appeals. In view of the judgments of the Tribunal and the same having been confirmed by the Hon'ble Supreme Court, the impugned orders are set aside and appeals allowed.