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TMI Blog1987 (3) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate excise authorities. Rule having been issued, we cannot refuse to adjudicate the matter on the ground of availability of alternative remedy. We have, therefore, heard this matter and now proceed to judgment. 3. The petitioner manufactures wheels, tyres and axles of railways. The buyers of these products are the Indian Railways. Apart from selling wheels, tyres and axles for Railway wagons, the petitioner also sells and supplies wheels and axles as a composit unit. These are forged products. Before supplying these items to the Railways, these forged items are machined and polished by the petitioner. That brings about the rub falling for consideration before us. The stand of the petitioner is that forged steel products fall within the ambit of Tariff Item 26AA(ia) of the Central Excise Rules (sic). The stand of the revenue is that these products after the stage of forging obviously fall within Tariff Item 26AA(ia) and dutiable as such. The further stand of the revenue is that after machining and polishing these items, a new product comes into being, and therefore, the new machined and polished tyres, axles, etc., fall within the ambit of Tariff Item 68 and separately dutiable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; ** ** ** (ia) Bars, rods, coils, wires, joists, girders, angles, other than slotted angles, channels, other than slotted channels, tees, beams, zeds, trough, piling and all other rolled, forged or extruded shapes and sections, not otherwise specified." Item 68 was residuary item and read as follows :- "68. All other goods, not elsewhere specified, but excluding - (a) alcohol, all sorts, including alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics; and (c) dutiable goods as defined in Section 2(c) of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955). Explanation :- For the purposes of this item, goods which are referred to in any preceding item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay duty in terms of Tariff Item 68 as well. The order of the Collector in this behalf was not challenged. We, therefore, need not go into the legality of the order of the Collector in that behalf on wheel set. It must be upheld as such. 7. The real controversy in this application is whether wheels and tyres are liable to duty in terms of Tariff Item 68 also. A basic tenet in the matter of exigibility of the excise duty is that whenever an independent article comes into being, it becomes liable to levy of excise duty. In this behalf the contention of the petitioner is that by machining and polishing no separate item of article is brought into being. According to the petitioner, the polishing and machining is insignificant and that the forging of wheels and tyres is not complete until it has been machined and polished in accordance with the requirements of the Railways. According to the petitioner, the wheels and tyres passed through rough machining process to remove excess metal/surface defects. According to the petitioner, only some of the articles passed through inspection and get despatched. According to the revenue, the tyres and wheels have to undergo considerable machinin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems. In 1985, the Central Excise 'Tariff Act, 1985 was enacted. This came into being in April, 1986. The Central Excise Tariff Items have been made comprehensive in accordance with the international trade practice. The Statement of Objects and Reasons read as follows : "STATEMENT OF OBJECTS AND REASONS Central Excise duty is now levied at the rate specified in the First Schedule to the Central Excises and Salt Act, 1944. The Central Excises and Salt Act, 1944 originally provided for only 11 items. The number of items has since increased to 137. The levy, which was selective in nature to start with, acquired a comprehensive coverage in 1975, when the residuary Item 68 was introduced. Thus barring a few items like opium, alcohol, etc., all other manufactured goods now come under the scope of this levy. 2. The Technical Study Group on Central Excise Tariff, which was set up by Government in 1984 to conduct a comprehensive inquiry into the structure of the Central Excise Tariff has suggested the adoption of a detailed Central Excise Tariff based broadly on the system of classification derived from the International Convention on the Harmonised Commodity Description and Coding Syste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock". Thus this classification makes it absolutely clear that parts of railway or rolling stock are items entirely distinct from steel forged items. The finished wheels may appear to be a stage subsequent to forging, but the import of classification of goods clearly is that rolling stocks are entirely different from forged items. 10. It was submitted that the classification [of] items introduced in 1986 can have no relevance to classification [of] items prior to it. The submission appears to be attractive but only to a very limited extent. The new pattern is on the basis of international trade and practice and has been done in order to reduce confusion and ambiguity in the international market. Following of the international pattern shows that on the international canvas, machined and polished steel goods have for long been considered to be items different from forged items. It thus clearly shows that forged items are different from rolling stock. Wheels become wheels only when they are machined and polished. In my view, therefore, the machined and polished wheels, axles, tyres, etc., are separate identifiable goods and are liable to payment of excise duty under Tariff Item 68 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., to the Railways since 1962. The petitioner had been filing classification lists in terms of Tariff Item 26AA. The revenue knew very well what the petitioner was doing and for about 17 years this pattern of payment of duty was carried on. The petitioner bona fide believed that the polishing and machining of the goods did not bring about a new excisable item. These amply show that the revenue also was of the same view; otherwise it would not have accepted the classification list or would have called upon the petitioner to file a different classification list in terms of Tariff Item 68. It is true that the revenue has now woken up and is of the view that machined and polished wheels, tyres and axles fall within Item No. 68. But if the revenue can be of that view now, how can the petitioner be hauled up for suppression or mis-statement of facts or fraud being of the same view. In that view of the matter, I am clearly of the view that there was no fraud, collusion, suppression or wilful mis-statement of facts. These not having been established, the proviso cannot come into play. Secondly, from the facts brought on record there is nothing to show that there was any intent to avoid pay ..... 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