1. This petition is filed for issue of a Writ of Certiorari or any other order or direction in the nature of such a Writ calling for the records from the first respondent pertaining to order No. 822B/77 of 1977 on its file and quashing the order dated 22-12-1977 passed therein.
2. The petitioner is a Small Scale Industrial Unit registered with the Director of Industries, Government of Andhra Pradesh under Registration No. 88/SSI/INDOM/F/61 dated 24-4-1967. The Industrial Unit is owned by registered firm known as Keshavji Ravji & Co., Madras, its principal business being that of Imports and Exports. The Head Office of the firm is at Madras. It has a Branch at Bombay and a factory at Hyderabad. The Petitioner manufactures automobile ancillaries as well as stainless steel hospitalware, stainless steel utensils, surgical instruments, etc. For the purpose of manufacturing its products, the petitioner requires stainless steel sheets, strips and circles as also imported Heat Resistance Steel (H.R.S.). The petitioner imported one consignment of heat Resistance Stainless Steel strips in coils of 48' width in eight crates from Switzerland to Bombay per S. S. Schwerin. The weight of the consignment was 25,995 Kgs. The strips were of AISI 309, 26 guage, (i.e., 0.5 mm). The number, the date of Bill of Entry and the C.I.F. value of the consignment are as follows :-
E/E Cash No. 5995 dated 27-9-1971. .. Rs. 1,88,455.00.
The above-mentioned Bill of Entry was filed for clearance before the Assistant Collector of Customs (Appraising), C. Group, Bombay (the 4th respondent herein) on 1-9-1971.
3. It is alleged that by oversight the petitioner paid customs duty on the goods equivalent to 100% of the C.I.F. value of the goods, as per the assessment of the 4th respondent classifying the goods under item No. 63(20A) of the Indian Customs Tariff (I.C.T.). Later on, the petitioner realised that the goods fell under item No. 63(14) and not item No. 63(20A) of the I. C. T. In view of the notification No. 118/65 dated 20-8-1965 issued by the Government of India as amended by notification No. 138/65 dated 25-8-65 hereinafter called, the notification, the duty payable was only 10% and not 100% of the C.I.F. value. The petitioner, therefore, submitted an application dated 20-3-1972 to the 3rd respondent claiming refund of the excess amount of duty of 90% wrongly paid. The application was rejected by the 3rd respondent by his order dated 3-5-1972 on the ground that it was barred by time. The petitioner thereupon preferred an appeal before the 2nd respondent assailing the order of the 3rd respondent and the 2nd respondent by his order dated 20-3-1973 allowed the appeal and remanded the matter to the 3rd respondent for disposal on merits. After remand, the 3rd respondent by his order dated 3-4-1973 rejected the claim of the petitioner holding that the goods were 'Stainless Steel Sheets, answering the description of item No. 63(20A) of the ICT and not 'strips' answering the description of item No. 63(14) of the ICT. The petitioner again preferred an appeal to the 2nd respondent on 4-7-1973 questioning the order of the 3rd respondent. The 2nd respondent rejected the appeal of the petitioner by his order dated 9-1-1975 holding that in order to claim benefit of the notification the width of strips should not exceed 5' (125 mm). The petitioner thereupon filed a revision application before the first respondent under Section 131 of the Customs Act. Relying upon the specifications given in Brussel's Tariff Nomenclature in preference to those given by the Indian Standards Institution, the first respondent, by their order dated 20-12-1977 confirmed the order that is assailed in the Writ Petition.
4. The First Schedule to the Indian Tariff Act, 1934, hereinafter referred to as the Schedule, lists out both dutiable goods and rates of duty of customs leviable thereon under the Customs Act, 1962. Item No. 63(14) of the Schedule relates to 'Iron and steel hoops and strips, not otherwise specified' and the rate of duty of customs leviable on the said goods in the year 1971 was 40% ad valorem. Item No. 63(20A) of the Schedule relates to 'Stainless steel plates, sheets and strips' and the rate of duty of customs leviable on the said goods in the year 1971 was 100% ad valorem. Under the notification issued by the Central Government in exercise of powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962, the rate of duty on 'Cold rolled hoops and strips of stainless steel 250 mm width or more', classified under item No. 63(14) of the Schedule was reduced to 10% ad valorem. The case of the petitioner is that it imported strips of stainless steel of 250 mm width, that the goods imported were liable to customs duty at 10% ad valorem, that the goods suffered customs duty at the rate of 100% ad valorem treating the same as 'Sheets' falling under item No. 63(20A) and that it is entitled to refund of the excise duty illegally levied on the goods and collected from it.
5. The only reason assigned by the 3rd respondent in his order dated 3-4-1973 rejecting the claim of the petitioner is that it was noticed from the duty bill that the goods were assessed under item No. 63(20A) as 'stainless sheets' and not 'strips' falling under item No. 63(14). The reason assigned by the 3rd respondent is no reason at all.
6. Two reasons are given by the 2nd respondent in his order dated 9-1-1975 rejecting the appeal preferred by the petitioner assailing the order of the 3rd respondent : (1) The notification dated 20-8-1965 applies to strips of a maximum width of 5'. (2) In the duty bill the goods were classified as 'Sheets' under item No. 63(20A). The first reason assigned by the 2nd respondent does not stand scrutiny, as there is no such limitation in the notification. On the contrary, the notification reads 'rolled strips of stainless steel of 250 mm (10') width or more are to the charged with customs duty at 10% ad valorem. The second reason assigned by the 2nd respondent is no reason, as remarked earlier while adverting to the order passed by the 3rd respondent.
7. The reasons assigned by the first respondent rejecting the revision petition of the petitioner may also be extracted :
(1) The goods are of 48' width and such goods are known as 'sheets' in the trade.
(2) The definitions of 'wide strips' and 'sheets' given by the Indian Standards Institution overlap and the distinction drawn by the ISI between 'wide strip' and 'sheet' is based only on the ground whether it is supplied in straight length or in coiled form. Also the definitions of 'strips' and 'sheets' given by the ISI (1956-1962) vary from those given in Brussel's Tariff Nomenclature and the specifications of the American Iron and Steel Institutes.
(3) According to Brussel's Nomenclature 'strip' is a rolled product of width not exceeding 500 mm and 'sheet' is a rolled product of a width exceeding 500 mm.
(4) According to the AISI, a 'sheet' has a width of 24' and over and a 'strip' has a width of under 24' (609. 6 mm approximately).
8. The impugned goods have been supplied as per AISI 309 as indicated in the invoice itself and according to the AISI specification, the impugned goods are 'sheets'.
10. In Dunlop India Ltd. v. Union of India, AIR 1977 SC 597 = 1983 ELT 1566, it was held :
'It is well established that in interpreting the meaning of words in a taxing statute, the acceptation of a particular word by the trade and its popular meaning should command itself to the authority......... It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. One the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular Entry.'
11. In India International Industries v. S.T. Commissioner, U.P., : 1981(8)ELT325(SC) , it was held :-
'It is well settled that in interpreting items in statutes like the Excise Tax Acts or Sales Tax Acts, whose primary object is to raise revenue and for which purpose they classify diverse products, articles and substances, resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them. If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment the meaning of the term in common parlance or commercial parlance has to be adopted.'
12. As already stated, the expressions 'sheet' and 'strip' were not defined in the Indian Tariff Act, 1934. The definitions of 'strip' and 'sheet' given by the Indian Standards Institution in its publication, 'Indian Standard Glossary of Terms Relating to Iron and Steel' may be usefully extracted :
'Sheet is defined as 'a hot or cold rolled flat product, rolled in rectangular cross-section of thickness below 5 mm and of width 600 mm and supplied in straight lengths.'
13. 'Strip' is defined by the Indian Standards Institution for the first time in 1965 as follows :-
'Strip - A hot or cold rolled flat product, rolled in rectangular cross-section of thickness below 5 mm and width below 600 mm and supplied in Straight Lengths.'
'Coiled strip - A hot or cold rolled flat product, rolled in rectangular cross-section and supplied in coil form.'
In the year 1968, the Indian Standards Institution amended the definition of 'strip' as follows :-
'A hot or cold rolled flat product, rolled in rectangular cross-section of thickness 10 mm and below and supplied with mill, trimmed or sheared edges.
(a) Narrow strip - Strip (other than hoop) of width below 600 mm and supplied in straight length or in coil form.
(b) Wide strip - Strip of width 600 mm and above and supplied in coil form only.'
14. In the year 1975 the distinction between 'narrow strip' and 'wide strip' was done away with by the ISI and the amended definitions of 'strip' and 'sheet' runs thus :-
'Strip - A hot or cold rolled flat product and rolled approximately in rectangular cross section of thickness usually 10 mm and below with mill, rolled, trimmed or sheared edges and supplied in coil or flattened coil (straight length) form. Usually an arbitrary width is chosen to demarcate between narrow and wide strip. The width chosen for such demarcation varies from country to country.
Sheet - A hot or cold rolled flat product rolled in rectangular section of thickness below 5 mm and supplied in straight length. The width is at least 100 times the thickness and the edges can be mill, trimmed, sheared or flame cut. A sheet can also be obtained by cutting of strips.'
15. It may be noted that the ISI is an expert body and the definitions of 'sheet' and 'strip' given by the ISI are based upon the meaning attached to the articles by those dealing in commercial parlance or by those dealing in the same during the relevant period. Any reference to the definitions of 'strip' and 'sheet' given by the American Iron and Steel Institute or contained in the Brussel's Nomenclature ignoring the meaning attached to the said articles in Indian commercial parlance or by those dealing in the said articles in our country is wholly unreasonable. The first respondent erred in treating the goods in question as 'sheets' on the ground that the goods were of 48' width and on the assumption that such goods were known as 'sheets' in the trade. The notification expressly grants concessional levy of duty on strips of stainless steel of 250 mm width (10') or more. There is no warrant for the assumption on the part of the first respondent that the goods in question were known as 'sheets' in the trade. As already stated, according to the ISI, the goods in question are 'wide strips' having been imported in coiled form.
16. The other reason assigned by the first respondent for treating the goods in question as 'sheets' is that in the invoice it is described that the goods were supplied as per AISI 309 and that according to AISI a sheet is of a width of 24' and over, while a strip has a width of under 24'. This reason is also untenable as the specification. 'AISI 309' in the invoice refers only to the chemical and mechanical properties of the goods supplied, that is, their content of chromium, nickel etc., as admitted in paragraph 12 of the counter affidavit.
17. In Union of India v. Tata Iron and Steel Co., : 1978(2)ELT439(SC) , the respondent therein manufactured among various other items, hot rolled finished steel products in rectangular cross-section of thickness varying between 1.7 mm and 6.55 mm and width varying between 16.2 mm and 311.2 mm and rolled in coils and supplied the same to the Indian Tube Company Ltd., at Jamshedpur for making tubes and also to others. The goods were subjected to Central Excise Duty under the Central Excises and Salt Act, 1944. While the respondent described its product as 'strip', the appellant and the Excise authorities treated the same as 'skelp'. 'Skelp' was subjected to higher rate of excise duty than 'strip'. Thereupon the respondent filed a Writ Petition in the Delhi High Court under Article 226 of the Constitution of India, for quashing the orders of the appellant confirming the orders of the Excise authorities. The Writ Petition having been allowed, the appellant filed an appeal to the Supreme Court of India after obtaining special leave, Their Lordships of the Supreme Court observed :
'Since the duties on strip and skelp are not the same, it is absolutely necessary to define the word skelp so that there can be no doubt or confusion in the mind either of the taxing authority or of the tax payer with regard to the tax liability qua skelp as opposed to strip. Since, however, there is no statutory definition of this controversial item different tests have naturally been resorted to by the different authorities and the same variation is discernible even in the affidavits of the appellants submitted before the High Court.
The short question, therefore, that arises for consideration is whether in the above background the High Court was right in interfering with the orders under Article 226 of the Constitution. It is not for the High Court nor for this Court to come to a conclusion on facts as to whether the product can truly come under the description of skelp. That undoubtedly would require some evidence be taken at the level of the taxing authority provided, however, there is an identifiable, uniform and determine test by which skelp can be properly distinguished from strip. In the mass of documents filed before us and the extensive arguments addressed at the bar with regard to the definitions culled from various dictionaries, handbooks and authorities, we are not at all surprised that the three authorities came to the same conclusion by depending upon their own chosen test. A particular type of strip may according to certain definitions be skelp and according to other not skelp. This, however, cannot be permitted in fiscal legislation which by all standards should adopt a clear definition of an excisable item which is incapable of giving rise to a confounding controversy as in this case unless matter is beyond doubt in view of the popular meaning or meaning ascribed to the term in commercial parlance. In absence of any clear criterion to determine what is skelp and not strip, no useful purpose would be served by even remanding the matter to the Excise authorities for a decision after taking necessary evidence. It is only when a taxing law provides for a clear and unequivocal test for determination as to whether a particular product would fall under strip or skelp it may be possible for the authorities to address itself to the evidence submitted by the parties in order to come to a decision on the basis of the test. This is, however, not possible in this case in view of the fact that there is no identifiable standard. The best way is to define the product for the purpose of excise duty in appropriate terms demarcating clearly the distinction between the two terms.
The absence of any identifiable standard would, therefore, naturally give rise to the scope for arbitrary assessment at the hands of different authorities. Whether this has happened in this case, as complained by the respondent citing the instance of the Hindustan Steel Company, Rourkela, it is not necessary for us to pursue in this appeal. We are, therefore, unable to hold that the High Court has gone wrong in granting the relief prayed for.'
18. It is also significant to note that in the aforesaid case, the Union of India very much relied upon the definitions of 'skelp' and 'strip' given by the ISI in support of their contention that the product manufactured by the respondent therein was 'skelp'. It may be recalled that the ISI defined 'wide strips' as strips of width of 600 mm and above and supplied in coiled form only. The goods imported by the petitioner in the instant case answering the said description could only be classified as 'strips' and not as 'sheets'.
19. It was also brought to my notice by the learned counsel for the petitioner and not denied by the standing counsel for the Union of India that during the years 1972-1973 and 1973-1974, the petitioner imported four consignments of heat resistance steel strips of AISI 309 in coils of width of 24' and above, that customs duty was levied on the goods at 200% ad valorem, that the petitioner claimed that the goods imported were stainless steel strips falling under Item No. 63(14) of the I C T leviable with Customs duty at 60%, that the petitioner accordingly asked for refund of the excess duty paid, that the claim of the petitioner was rejected by all the authorities and that the petitioner thereupon filed W.P. No. 823 of 1976 on the file of this Court. In support of the claim of the petitioner, reliance was placed upon the classification of 'strips' and 'sheets' given in the Indian Standard Glossary (1956-1962). Also placing reliance on paragraph 37 at page 263 of Vol. I of the Import Trade Policy for the year April, 1973 to March, 1974, issued by the Ministry of Commerce, Government of India, which run thus :
'For the purpose of interpretation of the import policy specified in Appendix 41, the meaning and definition of various steel items mentioned in the Appendix shall be the same as those contained in the latest revision of IS 1956-1962 (Glossary of Terms relating to Iron and Steel).'
It was contended on behalf of the petitioner that while classifying articles of steel imported, the meaning and definition of the said article mentioned in the I.S.I. Glossary should be adopted. On behalf of the Union of India, reliance was placed upon the classification of 'strips' and 'sheets' given in the Brussel's Tariff Nomenclature which was adopted in India and statutorily incorporation in the Customs Tariff Act, 1975. While conceding that the provisions of Customs Tariff Act, 1975 had no application as the goods were imported prior to 1975, it was, however, urged on behalf of the Union of India that the classification of the goods as 'sheets' by the Customs authorities was in conformity with the well known international commercial practice and that the view taken by the customs authorities was reasonable and not perverse. Jayachandra Reddy J., by his order dated 23-6-1977 held that the Customs authorities did not adopt any identifiable test reasonably capable of distinguishing 'sheets' from 'strip' while assessing the goods and that the specific claim put forward by the petitioner based upon the classification of 'strips' and 'sheets' and the specification thereof given by the ISI was not considered. In the result, the Writ Petition was allowed by the learned Judge and the Union of India was directed to dispose of the revision petition filed by the petitioner afresh in the light of the observations made by him. It was brought to my notice that in pursuance of the judgment of Jayachandra Reddy J., the matter had been remanded to the Appellate Collector of Customs, Bombay and that by his order dated 23-10-1980 the petitioner's claim was upheld.
20. In an unreported judgment dated 22-3-1977 of Mr. Justice Koshal of the Madras High Court in Prema Metal Works, Madras v. The Government of India, Ministry of Finance, Department of Revenue and Insurance, New Delhi (110 001) and The Assistant Collector of Customs, Appraising Department, Refund Section, Customs House, Madras (600 004) W.P. No. 3993 of 1974 D/22-3-1977, the learned Judge had to deal with the very same question raised in this Writ Petition. Cold Rolled Strips of Stainless Steel of width of more than 250 mm were imported by the assessee therein. All the authorities concerned assessed the goods treating the goods as falling under item No. 63(20A). The plea of the assessee that the goods were assessable to customs duty at 10% ad valorem as per the notification No. 118/65, dated 20-8-1965 as amended by notification No. 138/65 dated 25-8-1965, was upheld. In upholding the plea, the learned Judge relied upon the classification of 'strips' and 'sheets' and specification thereof given by ISI.
21. It was also brought to my notice that a similar claim put forward by M/s. Carat Watch Co. Ltd., Madras was allowed by the first respondent by their order dated 8-5-1972. In the said order, reliance was placed upon the classification of 'strips' and 'sheets' and the specification thereof given by the ISI for distinguishing 'strips' and 'sheets' for the purpose of concessional levy of duty under the notification. The plea of M/s. Carat Watch Co. Ltd., Madras found acceptance with the first respondent and the first respondent, while allowing the claim of M/s. Carat Watch Co., Ltd. observed :
'It is also seen that in the Brussel's Tariff Nomenclature too the dividing line between strips and sheets is at 500 mm. Item 73.12 of the B.T.N. specifies the maximum limit of width as 500 mm for strips and item 73.13 indicates that the width in excess of 500 mm would rendered the goods classifiable as sheets (or plates). The B.T.N. has not yet been adopted in India, but should yet provide guidelines for technical matters, as it is a system of classification, into the preparation of which considerable technical expertise has gone, and it is also adopted by a number of countries all over the world and particularly when it happens to be in line with the standard specifications in India.'
22. It may be noted that the classification of 'strips' and 'sheets' as given in the Brussel's Tariff Nomenclature should not have been relied upon by the first respondent as it does not conform to the classification of 'strip' and 'sheet' given by the ISI during the relevant period.
23. It was urged by Sri K. Subrahmanya Reddy, learned counsel for the Union of India, that the goods imported by the petitioner were in the shape of sheets and not in coiled form as noticed by the assessing authority. The submission must be summarily rejected as no such reference was made in any of the impugned orders passed by the respondents and no such plea was taken in the counter affidavit filed on behalf of the respondents. What is more, the description of the goods in the invoice reads, as noticed in the order passed by the first respondent, 'stainless steel resisting type of AISI 309 in coils 26 guage, 48' width'.
24. It was next urged by Sri Subrahmanya Reddy that the definitions of 'strip' and 'sheet' given by the Indian Standards Institution either in the year 1965 or in the year 1975 should be adopted for the purpose of assessing the goods in question to Customs Duty. There is no substance in this submission either. The goods in question were imported in September 1971. The meaning attached to the goods in Indian commercial parlance or by those dealing in the said articles in our country during the relevant period should guide the authorities in assessing the goods to Customs Duty, where the goods were not specifically defined in the Act.
25. It was also contended by Sri Subrahmanya Reddy that the definitions of 'strip' and 'sheet' contained in Chapter 73 of the Customs Tariff Act, 1975 might be taken as a safe guide in determining the question whether the goods imported by the petitioner were 'sheets' or 'strips'. As already stated, 'strip' and 'sheets' were not defined in the Indian Tariff Act, 1934 which was repealed by the Customs Tariff Act, 1975. It was only for the first time in the Customs Tariff Act, 1975, the expressions 'strip' and 'sheet' were defined. The argument of Sri Subrahmanya Reddy was that while construing the provisions of the repealed Indian Tariff Act, 1934, the definitions of 'strip' and 'sheet' given in the repealing Customs Tariff Act, 1975 could be safely adopted. Reliance was placed upon the decision in Jogendra Nath v. I.T. Commissioner - , wherein their Lordships observed that the definition of 'individual' occurring in the Income Tax Act could be usefully adopted. Their Lordships added :
'On a comparison of the provisions of the two Acts counsel on behalf of the appellant contended that a restricted meaning should be given to the word 'individual' in Section 3 of the earlier Act. We see no justification for this argument. On the other hand, we are of the opinion that the language employed in 1961 Act may be relied upon as a Parliamentary exposition of the earlier act even on the assumption that the language employed in Section 3 of the earlier Act is ambiguous. It is clear that the word 'individual' in Section 3 of the 1922 Act includes within its connotation all artificial juridical persons and this legal position is made explicit and beyond challenge in the 1961 Act.'
The decision relied upon by the learned counsel for the Union of india is of no assistance as 'strip' and 'sheet' were not at all defined in the repealed Indian Tariff Act.
26. Lastly it was urged by the learned counsel for the Union of India that while quashing the impugned orders of the first respondent, the first respondent might be directed to determine the question whether the goods imported by the petitioner were stainless 'sheets' or strips' and dispose of the revision petition of the petitioner afresh. In my opinion, no useful purpose will be served by remitting the matter to the first respondent after quashing the order of the first respondent, as there is no identifiable standard or test to determine clearly which product could be treated as 'sheet and not 'strip' during the relevant period.
27. In the result, Order No. 822B/77 dated 20-12-1977 passed by the first respondent dismissing the revision petition of the petitioner is quashed and the respondents are directed to refund to the petitioner the amount of excess Excise Duty collected. The Writ Petition is accordingly allowed. There shall be no order as to costs.