1. The questions arising for decision in this appeal originally a Revision application to the Government of India are what is the rate of duty applicable in case of appellants' product manufactured without going through the process of ingots being manufactured and whether Notification No, 121/69-C.E., dated 29-4-1969, amending Notification No. 133/65-C.E., dated 20-8-1965 should be held retrospectively applicable w.e.f. 20-8-1965.
2. Facts material for decision of this appeal are : that appellants are inter alia engaged in manufacture of Steel billets with the aid of electric furnace out of old iron or steel melting scrap or fresh unused steel melting scrap on which appropriate duty has already been paid.
According to appellants, the standard rate of duty according to Tariff for the appellants product at the material time 1-3-1966 to 30-1-1967 was as under : (i) Semi-finished steel including billets.
Rs. 50 per metric tonne plus the excise duty for the time (ia) All products falling under item like Rs. 50 per metric tonne plus bars etc.
the excise duty for the time being leviable on steel ingo Parties agreed that according to Tariff Item No. 26, at the material time Steel Ingots had to suffer duty at the rate of Rs. 75/- per metric tonne. Notification No. 133/65-C.E., dated 20-8-1965 so far as material for this appeal exempted Iron and Steel Products falling under T.I.26AA of the First Schedule to the Central Excises and Salt Act, 1944 from so much of the duty of Excise leviable thereon as was in excess of the duty specified in the corresponding entries in column-3 of the table annexed to the Notification, subject to condition set out therein. Parties agreed that for the present appeal, the relevant item is at Sl. No. 1 of the Table, which is extracted below :---------------------------------------------------------------------------Sl.
Description Duty per ConditionNo. m.t.---------------------------------------------------------------------------(1) (2) (3) (4)---------------------------------------------------------------------------1.
All forms of semi-finished Rs. 50.00 If made from Steel ingotssteel falling under sub- on which the duty at theitem (i) of Item No. 26AA. appropriate rate has al- ready been paid.
Notification No. 121/69-C.E., dated 29-4-1969 amended Notification No.133/65-C.E , dated 20-8-1965 by inserting an Explanation at the end.
The Explanation inserted is reproduced below : "Explanation. -For the purpose of this notification any Steel products specified in column (2) of the above table shall be deemed to have been made from Steel ingots on which the duty at the appropriate rate has already been paid, if such products are manufactured with the aid of electric furnace and from either of the following materials or a combination thereof, namely:- (ii) fresh unused steel melting scrap on which the appropriate amount of duty of excise, if any, leviable has been paid." The appellants for the relevant period paid duty at the rate of Rs. 125/- per metric tonne. They applied to the Assistant Collector of Central Excise for refund claiming that as in their new method of manufacturing Billets directly from scrap iron with the aid of Electric furnace without manufacturing ingots, ingots are not at all manufactured, they are not liable to pay duty leviable on ingots and are only liable to pay Rs. 50/- per metric tonne (Rs. 75/-). The appellants' demands worked out to Rs. 33,499.65. The Assistant Collector of Central Excise, Mangalore issued show cause notice dated 21-11-1975 calling upon the appellants to show cause why claim for refund be not rejected' After following the usual procedure and by order dated 18-5-1976, the Assistant Collector rejected the claim. The order was upheld in appeal by the Appellate Collector of Customs & Central Excise, Madras by his order dated 8-8-1978.
3. Though a number of grounds were raised in the Memo, of Appeal, at the hearing of the appeal, Shri Daya Sagar, learned Consultant first wanted to rely on Notification No. 75/62-C.E., dated 24-4-1962, but on the respondent's Counsel Shri v. Lakshmi Kumaran raising doubt about the notification being in force at the relevant time, Shri Daya Sagar took time to verify the position. On 7-8-1984, he agreed that this notification had been rescinded on 1-3-1964. He therefore gave up this part of his claim. Shri Daya Sagar then next argued that Tariff Item No. 26AA, extracted above spoke of duty at the rate of Rs. 50/- per metric tonne plus Excise duty for the time being leviable on steel ingots. In the process of manufacture employed by the appellants Steel Ingots did not at all come into existence. Ingot stage is skipped in the manufacture of billets. There is no taxable event justifying the levy of duty on ingots. Therefore, Excise duty for the time being leviable on Steel ingots would not be included in determining duty leviable on the appellant's goods. This argument need not detain us long because the same is squarely covered by Supreme Court decision in J.K. Steel Ltd. v. Union of India and Ors.-1978 E.L.T. J 355 relied on by the learned S.D.R. for the respondent. In para 4 of the majority decision, the Supreme Court interpreting an identical provision, held as under : "The word 'plus' in the context indicates that the rate of duty consists of 2 parts : one part is ad valorem duty and the other is the excise duty calculated according to the formula given. In other words, both duties have to be levied." It may be mentioned that similar argument was advanced before the Supreme Court and in para-6 of the judgment, the Supreme Court observed that duty so described is relatable to hypothetical steel ingot if it had been manufactured and removed at the same time as the steel rods were manufactured and removed (that was a case of Steel rods). In view of this directly applicable Supreme Court decision, this argument fails.
4. Though in the grounds of appeal and before the lower authorities some other Notifications Nos. 27/69-C.E., dated 1-3-1969 and 118/67-CJE., dated 17-6-1967 were mentioned or argued, before us no argument regarding these notifications was advanced. Shri Daya Sagar was granted leave to raise a new ground and place reliance on Notification No. 121/69-C.E., dated 29-4-1959. The ground was allowed to be urged being a legal ground. This notification, as already mentioned above, amended Notification No. 133/65-C.E., dated 20-8-1965 by introducing an Explanation at the end. Shri Daya Sagar, learned Consultant argued that the Explanation added to Notification No.133/65-C.E., dated 20-8-1965 was declaratory and created a deeming fiction by which products manufactured with the aid of Electric Furnace from the materials mentioned in the amending Notification were deemed to have teen made from Steel Ingots on which appropriate duty had been paid. Shri V. Lakshmi Kumaran, learned S.D.R. stoutly repelled this argument and explained that the retrospective effect to the explanation from 20-8-1965 would create an anomaly inasmuch as the other product goods, would become liable to two rates of duty and the appellants would get extra benefit to which they were not entitled. He said that at the material time Steel Ingots were liable to duty and not exempt. A manufacturer manufacturing the product by going through steel ingots process would have to pay more duty than a manufacturer skipping the steel ingots manufacturing process if the notification was made retrospectively applicable. He also submitted that notification was subordinate legislation and the retrospective effect to the same could not be given in the absence of provision in the main Statute giving specific powers to apply the notification retrospectively. In support of his argument Shri Lakshmi Kumaran relied on the following decisions :The Cannanore Spinning and Weaving Mills Ltd. v. The Collector of Customs and Central Excise, Cochin and Ors (ii) Aryodaya Spg. and Weaving Co. Ltd. v. Union of India and Ors.-1981 E.L.T. 274 (Gujarat); (iii) M/s. Kirloskar Cummins Kothrud, Pune-G.O.I. Order in Review No. 521-B/81, dated 21-10-1981 = 1982 E.L.T. 698 (G.O.I.);J.B. Cotton Spinning & Weaving Mills and Anr. v. Union of India andOrient Paper Mills, Brajrajnagar v. Collector of Central Excise, Calcutta-1983 E.L.T.The Titaghur Paper Mills Co. Ltd. and Anr. v. State of Orissa and Ors-1980 Tax Law Reports The Explanation dated 29-4-1969 in Notification No. 133/65-C.E., inserted by the amending notification cannot be said to be declaratory.
In Cannanore Spinning and Weaving Mills Ltd. (Supra), the Supreme Court was concerned with an amendment introduced by a subsequent notification dated September 28, 1963 which introduced meaning of the term 'Hanks' w.e.f. 1-10-1963. The Supreme Court said that the definition could not be made use of for the purpose of main notification dated 15-9-1962.
The Gujarat High Court in Aryodaya Spg. and Weaving Co. Ltd. (Supra) in respect of an Excise matter has held that under Rule 8 of the Central Excise Rules, 1944, the Central Government has no power to make Rules granting exemption with retrospective effect.
5. From the arguments advanced, it appears to us that retrospective application of the amending notification w.e.f. 20-8-1965 would confer on the appellants exemption in respect of their goods to the extent of duty paid on ingots retrospectively. The foregoing decisions do not permit such interpretation or retrospective application. In the view we have taken it is not necessary to deal with other precedents cited by the learned S.D.R.6. Shri Lakshmikumaran submitted that the respondent would have no objection if the amending notification were made retrospectively applicable with effect from 1-3-1969 to the date on which duty on ingots multiplication was done away with through an exemption notification. This concession is mentioned only to be rejected. We cannot arbitrarily apply the amending notification retrospectively with effect from 1-3-1969. It is either from 20-8-1965 (which argument we have rejected) or from 29-4-1969-the date of coming into force of the notification. We hold the amendment has prospective effect from 29-4-1969.
7. As a result of the foregoing discussion, the appeal fails and is dismissed.
8. The question in this appeal concerns the duty chargeable on cast steel billets manufactured from steel and steel melting scrap directly and not through the normal intermediary stage of steel ingot. It relates to refund of Rs. 33,499.65 P.9. The prevailing rates of duty at the relevant time 1-3-1966 to 31-3-1977 were :Item 26 Steel Ingots including steel melting Rs. 75/- per M.T. scrap.Item 26AA Iron or Steel products, the following, namely, (i) Semi-finished steel including Rs. 50 per M.T. plus blooms, billets...slabs, hoe the excise duty for the bars time being leviable on steel ingots.
There was also an Exemption Notification No. 133/65 prescribing an effective rate of Rs. 50/- per M.T. to all forms of semi-finished steel falling under T.I. 26AA (i) "if made from steel ingots on which the duty at the appropriate rate has already been paid." Another Notification No. 70/62 exempted products under Item 26AA if made from steel ingots on which appropriate duty has been paid from so much of duty as equivalent to duty leviable under Item 26. On 29-4-1964 an Explanation was added to Notification No. 133/65 which provided, inter alia, that the steel products in column (2) shall be deemed to have been made from steel ingots on which duty has already been paid if manufactured with the aid of electric furnace from old scrap or duty paid melting scrap.
10. The appellants contend that till 1965 billets were always manufactured only out of steel ingots. For the first, time, they set up a sophisticated plant to produce billets by a process of direct casting. At first, they claimed that the cast steel billets should be treated as steel ingots and charged duty at Rs. 75/- per M.T., but this was not agreed to and Rs. 125/- per M.T. was charged. Later they stated that the duty on billets was Only Rs. 50/- and not Rs. 125/- and since no ingots came into being, ingot stage duty of Rs. 75/- per M.T. was not chargeable and claimed refund. These contentions were negatived hence the Revision Application dated 22-1-1979 transferred by the Government of India and being dealt with as an appeal.
11. There is no denying that in the then existing situation, ingot stage duty could be postponed and recovered along with the billet or other product stage duty, as contended by the appellant. This has to be seen in the nature of a facility to integrated steel plants manufacturing ingots as well as semis and/or other products, as duty would otherwise be collectable on the ingots, before being taken for conversion; or on the portion of ingot lost in the course of conversion into semis or other products. It, however, postulated the coming into being of an ingot; though at the stage of the billet, the duty chargeable being Rs. 50/- per M.T. plus the duty leviable on the hypothetical ingot (Rs. 75/- per M.T.) weighing the same as the billet.
In the present case, at no stage is there an ingot and the raw material is scrap and steel melting scrap (presumably duty paid under T.I. 26) so the question of any hypothetical ingot duty ought not to arise. It is significant that letter GBEC F. No. S5/1/69- CX. 1, dated 16-4-1969 states that Notification No. 27/69 was issued with a view to ensuring exemption from ingot duty for castings, made with the aid of electric arc furnace from duty paid fresh unused melting scrap and/or old melting scrap. It states "since the castings are generally made straight from the molten metal without passing through the ingot stage, it could be argued that they would not be eligible for exemption from ingot duty, under Notification No. 26/69. A similar doubt could arise in the case of billets or other semis which some of electric furnace units are making straight from the molten metal. The intention is that such castings or billets etc. made with the aid of electric arc furnaces without passing through the ingot stage should pay duty at the rates prescribed under Notification No. 133/65 for such products if made from duty paid steel ingots. A doubt has been expressed that Notification No. 27/69 permits the exemption from ingot duty only from the tariff rate of duty leviable on the product and not from the effective rate prescribed under Notification No. 133/65. Necessary amendment to Notification No. 133/65 is being made to remove the doubt.
Notification No. 27/69 is also being rescinded since it will no longer be necessary." From this instruction it is clear that there were ambiguities and doubts with regard to the rate at which cast billets should be taxed and it is clear that the exemption from ingot duty should be given to such products if made from the specified raw materials.
12. In the subject case the product, though rectangular in shape like a billet was a cast product like an ingot and Shri Daya Sagar argued that the products are semis or castings and not billets. When ingot duty is under Tariff Item 26 it would be absurd to recover it under Item 26AA when no ingot ever came into existence. Besides, Notification No. 53/64 dated 1-3-1964 exempts ingots made from unused steel melting scrap or any material on which duty has already been paid.
13. The ambiguity referred to in para 4 has to be seen in the context of amendment on 29-4-1964 (69 ?) to Notification No. 133/65 adding the Explanation. This deeming fiction regarding ingots was necessary in order to clarify the ambiguity. It could not introduce into the meaning of the notification or the tariff item itself, anything that was not already implicit or inherent in the statute. According to the very decision relied upon by the learned Departmental Representative, (1981 E.L.T. 355), in case there is any ambiguity or doubt, the benefit must go to the taxpayer. It may further be pointed out that in that case it was never contended that the rods in question had come into being directly as in this case, without going through the intermediary ingot stage. Besides, that was a case where Section 3 of the Customs Tariff Act, 1975 provides for a levy of the excise duty which would be leviable on a like article, if produced, or on the class or description of articles to which the imported billets belong, if not produced in India. The present case is not one of countervailing duty but of actual excise duty. It is also necessary to keep in mind that the addition of an Explanation has been preferred to the legislative device of adding a proviso, which would have been prospective. Whenever any new liability is cast on the taxpayer by the addition of an Explanation, it is specifically made clear that it would be prospective. In this case, there has been no such stipulation.
14. The learned S.D.R. had conceded that from 1-3-1969 the exemption from, or non-payment of, ingot duty could be granted retrospectively for a period after 1-3-1969 to coincide with issue of Notification 27/69 till when the requirement for producing proof of payment of ingot duty was in force, so that the appellant could be on par with other manufacturers from whom ingot duty was being recovered. There is no room for equity in taxation and if the interpretation could be changed in this manner, there is added reason for extending the benefit beyond that date, for the reasons given by me. Besides, if no ingot duty was leviable in the peculiar circumstances of the case, the question of any benefit vis-a-vis any other manufacturers benefiting after 1-3-1969 only, does not arise.
15. For these reasons, I would find sufficient force in the ground of appeal as well as the arguments of the learned Consultant and would set aside the impugned order and allow the appeal, with consequential relief, except to the extent barred by limitation.
In accordance with the decision of the majority, the appeal is rejected.