TMI Blog1990 (12) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... ues involved in all the appeals being common are taken up for issue of a consolidated common order. 2. During the period from 01-08-1983 to 27-02-1986, the Tariff Item 25 covered Iron and Steel, and products thereof, definitions of the various products among others, viz. Hoops, Strips, Flats and Bars were incorporated. For the period from 01-08-1983 to 27-02-1986, under the revised Central Excise Tariff Act, 1985, Chapter 72 was introduced, and the definitions were incorporated verbatim as Chapter notes. From 01-03-1988, Chapter 72 was further revised with Chapter notes containing broad description of Flat Rolled Products and definitions of such products were incorporated under the Tariff sub-headings, the categories of products like - Hoops, Strips, Flat were listed, but no statutory definition for these items were given. The bone of contention between the assessee and the Department is to determine the category under which these items should be classified. 3. The main issues involved are that the Appellants are having an Iron and Steel Re-Rolling Mill which is commonly known as Section/Merchant Mill. The products manufactured have a thickness: (a) less than 3mm and widt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained in the revised Tariff Item 25. The Appellants contend that definitions of Strips, Hoops, Flats contained in the Tariff Item 25, have been verbatim incorporated in Chapters 72 and 73 of the Central Excise Tariff Act and the ratio of the Tribunal s decision in the classification of the products should be adopted in respect of the disputed items. According to the definitions statutorily provided under Chapter 72 of the Central Excise Tariff Act, 1985, their product is not a Strip, Flat, Hoops. The definition of these is as follows :- (a) STRIPS: Hot or cold-rolled products, rolled approximately in rectangular cross-section, of thickness usually 10 millimetres and below with milled rolled, trimmed or sheared edges and supplied in coil or flattened coil(straight length) form but excludes hoop and skelp. (b) FLATS: Finished products, generally of rectangular cross-section, having rolled edges only (square or slightly rounded) of controlled contour and of thickness 3 millimetres and over, width 400 millimetres and below and supplied in straight lengths and includes flat bars with bulb that has swelling on one or two faces of the same edge and a width of less than 400 mil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which do not conform to the definition at (ii) above in the form of :- - coils of successively superimposed layers, or - straight lengths, which if of a thickness less than 4.75mm are of a width measuring at least ten times the thickness or if of a thickness of 4.75mm or more are of a width which exceeds 150mm and measures at least twice the thickness. Flat rolled products include those with patterns in relief derived directly from rolling (for example, grooves, ribs, chequers, tears, buttons, lozenges) and those which have been perforated, corrugated or polished provided that they do not thereby assume the character of articles, or products of other headings. Flat-rolled products of a shape other than rectangular or square, of any size are to be classified as products of a width of 600mm or more, provided that they do not assume the character of articles or products of other headings." The definition of Flats, Hoops and Strips, have not specifically been provided in the revised Chapter 72 which came into force with effect from 01-03-1988. The statutory definitions which were prevailing prior to revision of Chapter 72 will have to be taken for classifying a product as Hoo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at product of thickness 3 mm width less than 400 mm Flat rolled products under S.H. 7211.19 as Flats . - do - 4. Flat products of thickness above 5mm and width less than 600mm. Flat rolled products under S.H. 7211.11 as Flats. Under S.H. 7228.30 as Other bars and roads of other alloy steel. 5. Flat products of other alloy steel of width less than 600mm not further worked than hot rolled and thickness less than 5mm. Flat Rolled products under S.H. 7226.91 as Flats . Under S.H. 7228.30 as Other bars and rods of other alloys steel 6. Flat products of other alloy steel of width less than 600mm not further worked than hot rolled and thickness above 5mm. Flat rolled products under S.H. 7226.91 as Flats . -do- The appellant feeling aggrieved with the said Order-in-Original filed appeal before the Collector of Central Excise (Appeals), New Delhi, who has rejected the appeal of the appellant as per Order-in-Appeal." The Appellants mention that the learned authorities below have failed to appreciate that revised Chapters 72 and 73 came into force w.e.f. 1-3-1988. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectangular cross-section, of thickness usually 10mm and below, with milled, rolled, trimmed or sheared edges and supplied in coil or flattened coil (straight length) form but excludes hoop and skelp." In view of the said statutory provisions, the products produced by the appellant of uneven thickness and uneven width, having neither rectangular cross-section nor rolled edges of controlled contour, could not be classified as Flat covered under Heading 7211.11 because to qualify as Flat it should be generally of rectangular cross-section having rolled edges only (slightly rounded) of controlled contour, of thickness 3mm or over, width 400mm or below. The products of the appellant as admitted by the adjudicating officer is of uneven thickness and uneven width and do not have rolled edges of controlled contour. Such a product does not qualify the definition of Flat . The Order-in-Original classifying such product as Flat and the Order-in-Appeal upholding such classification are basically erroneous and merit to be set aside. That the authorities below have also failed to appreciate that the appellant had a small re-rolling Section/Bar Mill. Such mill can neither produce a prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 3mm in thickness and less than 125mm in width not rectangular in cross-section but uneven in shape, size and length with no shearing of the edges and not coiled - Test report on stray sample without showing date thereof and copy not furnished to assessee not acceptable - Classification of the product under Item 26AA(ia) of Central Excise Tariff upheld. In respect of the Appeal in M/s. Ajanta Steel Corporation, Shri K.K. Patel, Ld. Advocate, stated that his arguments will be the same as those advanced by Shri P.S. Bedi. 6. In reply, Shri L.P. Asthana, Ld. Jt. C.D.R. stated that after introduction of the Tariff definitions the criteria for deciding the classification on trade parlance becomes irrelevant. The earlier decisions of the Tribunal in the absence of definitions went by the Mill in which the products were manufactured and the dimensional aspects were not considered. But with effect from 1-3-1988, the Chapter Notes for the definitions for flat-rolled products have to be read with the Chapter Heading. He relied on the following case laws :- (i) 1986 (25) E.L.T. 473 (S.C.) - M/s. Atul Glass Ltd. and Others v. C.C.E. and Others; (ii) 1983 (13) E.L.T. 1607 (S.C.) - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip under Heading 7211.39. (iii) Flat product with thickness 3mm and over but less than 5mm as flat under Heading 7209.10 as flats. These classifications have been upheld by the Collector (Appeals). That in commercial parlance these are known by the above mentioned terms and cases cited as delivered by Tribunal or Bombay High Court are in personam and not in rem and individual cases have to be decided on merits. 7. After the period 28-02-1988 from 01-03-1988 onwards, the Department has filed Appeals in 10 cases wherein they disputed the Order of the Collector (Appeals) in classifying the flat-rolled product having thickness less than 3mm and width between 75mm to 200mm as Bar, while it has to be classified as Strips , that as per the definition of Strips, the word Flattened Coil has been clarified in bracket as straight length, and therefore strips can be in coils as also in straight length and accordingly rolled products of thickness below 3mm and width above 75mm but below 200mm would be correctly classifiable as strips and not Bars and classifiable under Heading 7211.39. 8. In his rejoinder, Shri P.S. Bedi, the Ld. Consultant, in addition to the arguments that he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute. 9. Smt. Vijay Zutshi, Ld. C.D.R. who was arguing for the Department, made a request for advancing some more arguments in support of the Department, the Bench permitted her to put forth her arguments. In support of the decisions of the Tribunal relied upon by the Appellants in Order No. 267 to 283/87-B dated 22-04-1987 - M/s. Steel Corporation of Punjab and Others v. C.C.E., Chandigarh, the Tribunal has gone by the book on U.S. Steel particulars - The making, shaping and treating of Steel . In adopting the dimensional specifications, the Ld. Jt. C.D.R. argued that ISI Specifications should be given preference to American and British Standard Specifications. She cited the following references as applicable in support :- (i) 1977 (1) E.L.T. (J-199) - U.O.I. and Others v. M/s. Delhi Cloth and General Mills Co. Ltd. and Others. (ii) 1983 (12) E.L.T. 338 (Bom.) - M/s. Devidayal Rolling Refineries Pvt. Ltd. v. A.V. Borkar, Supdt. Central Excise Others. (iii) 1983 (12) E.L.T. 736 (A.P.) - M/s. Nutrine Confectionery Company Ltd. v. Asstt. Collector of Central Excise, Nellore.; (iv) 1988 (38) E.L.T. 169 (Tribunal) - M/s. Bhartia Electric Steel Company Ltd. v. C.C.E.; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he distinction between the disputed items, it is necessary to see definitions of Hoops, Strips, Flats and Bars. In the Tariff Item 25 under the Explanation, these terms have been defined and for the period from 01-03-1986 to 29-02-1988 under Chapter 72 these very definitions have been incorporated for the sake of easy reference, their definitions already referred to supra, are abstracted as under :- PRODUCT DEFINITIONS PRIOR TO 1-8-1983 THROUGH EXECUTIVE INSTRUCTIONS VIZ. BOARD LETTERS C. N0.139/43/77-CX 4 Dated 13-4-1982 READ WITH F.NO. 139/43/77-CX4 DTD. 17-06-1982. STATUTORY DEFINITION W.E.F. 1-8-1986 UNDER ITEM 25 OF FIRST SCHEDULE. 1. 2. 3. HOOPS : Means a hot-rolled flat product in rectangular cross-section of thickness less than 3mm and width less than 75mm. Means a hot-rolled flat product in rectangular cross-section of thickness less than 3mm and width less than 75mm. STRIPS : Means a hot and cold-rolled product and rolled approximately in rectangular cross-section of thickness usually 10mm and below with mill rolled, trimmed or sheared edges and supplied in coil and flattened coil (strai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. STRIPS : Hot or cold-rolled products, rolled approximately in rectangular cross-section, of thickness usually 10mm and below with mill, rolled, trimmed or sheared edges and supplied in coil or flattened coil (straight length) form but excludes hoop and skelp. - Not Provided- FLATS : Finished products, generally of rectangular cross-section having rolled edges only (square or slightly rounded), of controlled contour and of thickness 3mm and over, width 400mm and below and supplied in straight lengths and includes flat bars with bulb that has swelling on one or two faces of the same edge and a width of less than 400mm. - Not Provided- BARS : Bars (including flats) and Rods (including wire rods) :- Products of solid section which do not conform to the entirety of any of the definitions at (vii), (viii), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii) and (xix) above, and which have cross-section in the shape of circles segments of circles, ovals, isosceles triangles, rectangles, hexagons, octagons or quadrilaterals with only two sides parallel and the other sides equal. Products which do not conform to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis :- I have examined the case and it is observed that the three flat product in question do not fall in the category of Bar under Heading 7209.10 and 7211.10 and 7211.39. As per definition of Hoops, it is not a rolled flat product in rectangular cross-section of thickness less than 3mm and width less than 75mm. The product of the party with this dimension do not at all attract classification bar and is rightly classifiable as Hoops. The flat product with thickness less than 3mm in thickness and width over 75mm is classifiable as strips as it is supplied in flattened coil and has approximately rectangular cross-section. The words approximately rectangular cross-section are very important to determine its classification as strip. It is with mill rolled edges. It is immaterial of the strips do not have trimmed or sheared edges to have uniformity. Even mill rolled edges would qualify the product as strip. The vertical rolls are not necessary for edge rolling of flat product. Edge rolling can be and is achieved by the party by possessing the section of the product through edging passes while rolling. Similarly flat is a finished product generally of rectangular cross-section wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forms of 6 to 7 feet and therefore the appellants argument that the mills are not equipped to manufacture product as held in the impugned orders do not hold good; I also observe that mill is named after the products it rolls, for instance, bars and structural mills where bars and structures, are rolled is named so. Similarly a strip is a mill where strips are rolled and since pattis/pattas is a strip, the appellants were rolling the same in a strip mill . I also find that the tariff description does not lay down any specification of bars and flats in regard to width and thickness etc. and therefore, the classification of these products has to be based on the consideration as to how these are known commercially and in trade parlance. In regard to this, I also observe that in commercial and market parlance, the products of thickness of less than 3mm and width of less than 125mm are known as flats. Further as per glossary of terms relating to iron and steel products from the Indian Standard 1956-62, a bar has been defined as rolled or forged products of variable length, usually square, rectangular, hexagon or circular in cross-section whereas a flat has been defined as hot or cold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mm and width 75mm rolled in a mill which can neither control the Contours, width and thickness is classifiable under Tariff Item 26AA(ia) and upheld by the Bombay High Court, reported in 1988 (33) E.L.T. 684 and similar decision held by the Tribunal, reported in 1987 (30) E.L.T. 527, Steel Corpn. of Punjab Others v. CCE, Chandigarh which has been upheld by the Supreme Court reported in 1989 (39) E.L.T. 175 (SC). These decisions relate to the period prior to 01-08-1983 when definitions were not in force, yet as seen from the abstract supra, these definitions before and after 01-08-1983 have not changed till 01-03-1988. All the products which do not conform to the definitions of either Hoop, Strip, Flat, come under the residuary Item Bar, as per the statutory definitions with effect from 01-08-1983. Likewise, for the period covering 28-02-1986 to 29-02-1988 under Chapter 72, these definitions were incorporated in the Chapter notes with no change in the wordings and was a verbatim reproduction of the definitions under T.I. 25 of the earlier Tariff in vogue between 01-08-1983 to 27-02-1986. The same ratio as applicable to the products under T.I. 25 will apply to the products under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Central Board of Excise Customs, on the definitions of the products, the nature of the Mill in which produced, and the books on the Iron and Steel products and these definitions had not undergone any change, why then the product should not continue to be the same product even after statutory definitions were incorporated in the Tariff, with no counter-evidence put forth by the Department, it has to be held that these decisions are maintainable and their ratios applicable. The Department has not contested these issues on the facts and have produced no concrete evidences to counter the arguments of the Appellants. Therefore, on the basis of the analysis made, the Appeals are allowed. (B) THE SECOND SET OF APPEALS RELATE TO THE PERIOD AFTER 01-03-1988 : With the restructured Chapter Heading 72, these relate to 56 Appeals, the Appellants contention has already been retraced in Para-4 of this order. The Collector (Appeals) has made the following observations :- In all these cases, the appellants are manufacturing hot-rolled flat products of iron and steel, of varying thickness and of width which have been classified by the Assistant Collector with effect from 01-03-198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has observed that as old definitions stand substituted by the new definitions given in the Chapter Note of Chapter 72 effective from 1-3-1988, for the purpose of classification of their products, these definitions are to be considered and as per Chapter Note 1(k) of Chapter 72 the term Flat rolled products has been defined, the classification of the goods is to be done in accordance with this definition provided in the tariff. The Assistant Collr. has further observed that since flat products manufactured by the appellants having thickness less than 4.75mm have also width measuring at least ten times the thickness or if of a thickness of and above 4.75mm have width exceeding 150mm, these fall in the category of falt-rolled products as defined in Chapter Note 1(k) and hence are classified accordingly." She has contended that the Tariff with effect from 01-03-1988 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 when 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 01-08-1983 to 29-02-1988 and the period from 01-03-1988, the appeals filed by the Appellants (assessee) are allowed. 11. The next set of Appeals have been filed by the Revenue. Their contentions have already been set forth in Para-7 supra. The Collector (Appeals) has held that the product having thickness less than 3mm and width between 75mm to 200mm is not classifiable under Heading 7211.39 as Strips, as for classification as Strips, it should be in the form of Coil or flattened coil , which is not the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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