Exemption for re-rolled steel depended on tax having been paid on the specific raw material used in manufacture.

An exemption for re-rolled steel products applied only if the specific raw material used in the final manufacturing stage had already suffered tax. The court treated scrap, ingots/billets, and re-rolled products as distinct stages in the production chain, and held that tax on scrap alone was insufficient because scrap was not the immediate raw material for the finished products. As no finding showed that the ingots or billets used for re-rolling had suffered tax, the assessee was held not entitled to exemption and the tax revision failed.

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Issues: Whether re-rolled steel products were entitled to exemption under the Government Orders only when the raw material used for their manufacture had already suffered tax.

Analysis: The exemption under the relevant Government Orders was conditional. The condition required that the tax must have been levied on the sale or purchase of the raw material from which the finished products were obtained. The production chain was treated as consisting of distinct stages, namely scrap, ingots/billets, and re-rolled products. For the final re-rolled products, it was not enough that the scrap stage had suffered tax, because scrap was not the immediate raw material for the finished re-rolled products. The material that had to suffer tax was the ingots or billets actually used for re-rolling into rounds, angles and flats. On the facts, there was no finding that the ingots and billets used as raw material had suffered tax.

Conclusion: The assessee was not entitled to exemption, and the tax revision failed.

Final Conclusion: The exemption was confined to the stage where the relevant raw material had borne tax, and the impugned assessment and appellate order were left undisturbed.

Ratio Decidendi: An exemption granted for finished products conditional upon tax having been levied on the raw material applies only when the specific raw material used in the final manufacturing stage has suffered tax.

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