Sai Overseas Imports And Exports vs Union Of India And Ors.
1992 Latest Caselaw 521 Del

JUDGMENT

Sat Pal, J.

(1) Since the point raised in all these writ petitions is common, the same are being disposed of by this Judgment.

(2) In all these writ petitions the petitioners have challenged the rate of assessment of import duty on stainless steel circles, manufactured- from strips by the respondents at 225^ under heading 73.15(2) as according to the petitioners the duty on the goods ought to have been assumed under notification No. 77- Cus., dated 18th June, 1977 or under heading 73.33/40 at 100.%

(3) For the purpose of examining the points raised in these writ petitions, the facts of Cwp 2305/81 are set out hereinbelow.

(4) The petitioner imported 24.864 M.T. of stainless steel circles. The respondents in terms of Heading 73.15(2) in Part Iii of the 1st Schedule of the Customs Tarrif Act (for short called 'the Act'), demanded from the petitioner duty at the rate of 225% on the value of the imported goods. The said duty was imposed at the rate of 200 % ad valorem and 25% auxiliary. According to the petitioner the duty on the aforesaid goods could be levied under notification No. 77-Cus. dated 18th Tune, 1977, or in the alternative under heading 73.33/ 40. The levy of duty at 225 % has been challenged in these writ petitions.

(5) The writ petition came up for hearing on 6th October, 1981 before a Bench of this Court and rule was issued. On the application for stay it was ordered that the petitioners be permitted to clear and take delivery of the goods on payment of the admitted duty i.e. 35 % ad valorem and 10 % auxiliary duty and for the disputed duty by executing a bond for the entire amount of disputed duty and in addition giving a bank guarantee for 50/, of the disputed duty. Thereafter, an application for amendment of the writ petition was moved and the said application was also allowed on 10th May, 1982. In the amended writ petition the petitioner also challenged the Custom Tarrif Amended Bill 1982 which sought to amend the heading 73.15 with retrospective effect from 1st January, 1981. During the pendency of the writ petition the petitioner also filed an additional affidavit on 23rd August, 1982 wherein it was stated that no counter affidavit has been filed by the respondents in this writ petition but in other connected petitions a counter affidavit has been filed and the respondents have taken the stand that the goods imported are sheets in view of the definition of sheets given in Note "(n)" of Chapter 73 of the Act. The petitioner, therefore, submitted in this additional affidavit that it had become necessary for them to place on record the material to show that the goods imported by the petitioners are not manufactured from sheets but are punch/manufactured from strips. In support of this averment, the petitioner filed a copy of the contract between the petitioner and the supplier which was submitted by the petitioner to the department and had been duly attested by the department. The averments made in this additional affidavit have not been controverter by the respondents.

(6) Before dealing with the contentions advanced by the learnt Counsel for the parties it will be necessary to reproduce the relevant headings as they stood at the relevant time, which are as follows : Heading Sub-heading No. and Standard Central No. description of Rate of Excise article duty Tariff Item (1) (2) (3) (4) 73.12 Hoop and strip, of iron 40% 26AA or steel, hot-rolled or cold rolled. 73.13 Sheets and plates, of iron or steel, hot- rolled or cold-rolled. (1) Not elsewhere 40% specified (2) Tinned sheets and 405 plates. 73.15 Alloy steel and high carbon steel in the forms mentioned in Heading Nos. 73.06/07 to 73.14: (1) Not elsewhere specified. 300% (2) Coils for re-rolling, 300% bars (including bright bars), rods, wire rods, wire, circles, angles, shapes and sections, strips, sheets and plates, of stainless steel. 73.33/40 Other articles of iron or steel: (1) Not elsewhere specified 150% 26AA (2) Of stainless steel 300% or 68

(7) Here it will also be relevant to refer to note l(m) and l(n) of Chapter 73 which is reproduced herein below :

(M)"hoop and strip" (Heading No. 73.12) : rolled products with sheared or unshared edges, of rectangular section of a thickness not exceeding 6 millimeters, of width not exceeding 500 millimeters and of such dimensions that the thickness does not exceed one-tenth of the width, in straight strips, coils or fattened coils :

(N)"sheets and plates" (Heading No. 73.13): rolled products (other than coils for re-rolling as defined in paragraph (k) above) of any thickness and, if in rectangles, of a width exceeding 500 millimeters : Heading No. 73.13 is to be taken to apply, inter alia, to sheets plates which have been cut to non-rectangular shape, perforated corrugated, channelled, ribbed, polished or coated provided that they do not thereby assume the character of articles and of products falling within other Headings.

(8) Mr. Lokur, the learned Counsel for the respondents, raised a preliminary objection that these writ petitions are covered by a Division bench judgment of this Court in Super Traders v. Union of Indian, 1983 E.L.T. 258 (Delhi). In this Judgment the contention of the writ petitioners in those cases that heading 73.15(2) applies to alloy steel and high carbon steel in the forms of sheets and not of circles was rejected by the Division Bench on the ground that in terms of note I (n) of Chapter 73 circles are also included under heading 73.13 as the said note clearly says that heading 73.13 is to be taken to apply, inter alia, to sheets or plates which have been cut to non-rectangular shape'. The learned Counsel, therefore, submitted in the present case also the goods imported are stainless steel circles and as such they will be covered under heading 73.15(2).

(9) Mr. Ravinder Narain, the learned Counsel for the petitioner, however, contended that the abovementioned Judgment is not applicable to the facts of the present cases as the goods imported in these cases is stainless steel circles manufactured from strips and not from sheets. He, therefore, submitted that under note l(m) under Chapter 73 "hoop and strips", (heading 73.12) means rolled products with sheared or unshared edges of rectangular section and circles have not been included in this definition whereas in terms of note I (n) under the same Chapter it is clearly stated that heading 73.13 is to be taken to apply, inter alia, to sheets or plates which have been cut to non-rectangular shapes and the words "non-rectangular shape" were interpreted by this Court in the case of Super Traders (supra) to include sheets of circular shape. Since strip under heading 73.13 does not include stainless steel circles nor it include stainless steel "non-rectangular shape" but only of "rectangular section", heading 73.15(2) will not apply in this case as one of the condition precedent for application of heading 73.15(2) is that the steel alloy and high carbon steel is to be in the forms mentioned in heading 73.06^07 to 73.14 and the relevant heading being 73.12 in this case does not include stainless steel in the shape of circles as explained hereinabove. He. therefore, submitted that these cases could be classified under the heading 73.33/40 which pertains to "other articles of iron or steel."

(10) We have perused the relevant provisions of the Act mentioned herein above and the Judgment in the case of Super Traders "(supra) and are of the view that the contention raised by Mr. Ravinder Narain, the learned Counsel for the petitioner, has force. A reading of heading 73.15 clearly shows that the condition precedent for application of this heading is that the steel alloy and high carbon steel is to be in the forms mentioned in heading Nos. 73.06/07 to 73.14 and out of these headings 73.12 is the relevant heading as it pertains to 'hoop and strips' of iron or steel hot-rolled or cold-rolled. Under the same Chapter 73 under note l(m) "hoop and strips' (heading . 73.12) mean rolled products with sheared or unshared edges of rectangular section of thickness not exceeding 6 millimeters, of width not exceeding 500 millimeters and of such dimensions that the thickness does not exceed one tenth of the width, in straight strips, coils or flattened coils. From this definition it is clear that hoop and strips of shape other than rectangular section have not been included in this definition. As stated hereinabove the point raised in the case of Super Traders (supra) was about the stainless steel sheets in the shape of circles. Though under heading 73.13 read with note l(m) of the same Chapter, sheets and plates means rolled products in rectangles, but reading the said note further that heading 73.13 is to be taken to apply, inter alia, to sheets or plates which have been cut to non-rectangular shapes also, this Court held in that case that circle being in non-rectangular shape were covered under the said heading.

(11) But in the present cases, heading 73.12 read with note l(m), apply only to strips in rectangular section and the words "non-rectangular shape" have not been included in this note. Since the word "non-rectangular shape" or circles have not been mentioned in the definition of hoop and strips, the heading 73.15(2) cannot be made applicable to the goods in question. The only heading which applies to the goods in question will be heading 73.33/40 i.e. "other articles of iron or steel".

(12) In view of the above discussion, all the writ petitions are allowed and we direct the respondents to charge the import duty on the said goods under heading 73.33/40 and not under heading 73.15(2). Since the petitioner in terms of the order dated 6th October, 1981 had taken delivery of the goods on payment of duty at the rate of 35% ad valorem and 10 per cent auxiliary and for the disputed duty they had executed a bond and had also furnished in addition a bank guarantee for the 50/o of the disputed duty, we order that on the balance duty payable by the petitioners by classification of the goods under heading 73.33/40, the petitioners would be liable to pay interest at the rate of 17.5% per annum from the date the duty became payable till it is paid or recovered. The respondents are also entitled to encash the bank guarantee to the extent of further duty payable by the petitioners. We, however, leave the parties to bear their own costs.