Notional ingot duty and prospective exemption notification ruled applicable despite direct billet manufacture from scrap.

A tariff levy on semi-finished steel billets was treated as including both the fixed component and the excise duty leviable on steel ingots, even where the billets were made directly from scrap without an intermediate ingot stage, because the duty referred to a notional ingot within the tariff structure. An amending exemption notification inserting an Explanation for products made in electric furnaces from specified scrap materials was treated as substantive and prospective only, since retrospective exemption could not be implied without clear statutory authority. On that basis, the levy was sustained and retrospective exemption was refused.

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Issues: (i) Whether duty under Item 26AA on semi-finished steel billets included the excise duty leviable on steel ingots even where the billets were manufactured directly from scrap without an ingot stage; and (ii) whether Notification No. 121/69-C.E. amending Notification No. 133/65-C.E. could be given retrospective effect from 20-8-1965.

Issue (i): Whether duty under Item 26AA on semi-finished steel billets included the excise duty leviable on steel ingots even where the billets were manufactured directly from scrap without an ingot stage.

Analysis: The tariff expression requiring payment of a fixed sum plus the excise duty leviable on steel ingots was treated as covering both components of duty. The absence of an actual ingot stage did not prevent inclusion of the ingot-duty component, since the levy was relatable to the notional or hypothetical ingot envisaged by the tariff structure.

Conclusion: The ingot-duty component was includible, and this contention failed against the assessee.

Issue (ii): Whether Notification No. 121/69-C.E. amending Notification No. 133/65-C.E. could be given retrospective effect from 20-8-1965.

Analysis: The amending notification inserted an Explanation creating a deeming rule for products made with the aid of an electric furnace from specified scrap materials. It was treated as substantive and not merely declaratory. In the absence of authority in the parent enactment to confer retrospective exemption by notification, the amendment could not be carried back to the earlier date; it operated only from its own date.

Conclusion: The amendment was prospective only and could not take effect retrospectively from 20-8-1965.

Final Conclusion: The majority sustained the levy and refused retrospective exemption, so the refund claim did not succeed.

Ratio Decidendi: A tariff levy expressed as a fixed duty plus the duty leviable on another article may validly include the notional duty on that article even if the manufacturing process skips the intermediate stage, and an exemption notification creating a deeming fiction is prospective unless retrospective operation is clearly authorised.

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