TaxTMI 
TaxTMI 
1995 (4) TMI 135
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....;The further facts of the case are that the assessees are manufacturers of `Tensile Steel Strappings and Steel Seals; after obtaining of Central Excise Licence for manufacture of Seals and whereas no licence had been obtained for the manufacture of the other item namely, `Tensile Steel Strappings' manufactured by them. They had filed a classification list claiming various items of Seals as falling under Chapter sub-heading 8308.90 attracting Central Exicse duty at the rate of 15% ad valorem and had claimed the steel strappings to be nothing other than steel strips on which the appropriate Central Excise duty liability had already been discharged at the point of its procurement. They had also stated that since they receive duty paid steel strips out of which steel strappings are manufactured, they had claimed their final product as non- excisable in terms of an order passed by the Assistant Collector of Central Excise, Hyderabad I Division, Hyderabad vide his order dated 14-7-1983. It is alleged that the Assistant Collector had approved the classification for seals, whereas he had not spelt out the dutiability or otherwise of the steel strappings. It is further alleged in the show c....
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....ot cause injury to the persons during handling. After ensuring that the holes are totally eliminated, the strips are passed through a looper which is a compensator for variation of guages and which ensures that the line runs continuously. Thereafter, it is passed through a sheet grinder wherein sufrace defects of the raw mterials are eliminated. The sheet grinder also ensures that the unevenness of the surface due to welding done at any stage are totally removed. The strips, thereafter, undergo slitting operation wherein the widths of the raw materials are reduced to smaller widths. This is done according to the requirements of the customers and according to their production programme. Normally strappings of widths varying from 18 mm to 48 mm are manufactured. The slit strappings are thereafter passed through a spool feeder where it is rewound into a coil. The said coil subsequently undergoes side-trimming. The side-trimming is done generally to avoid unevenness of the widths of the material that could have caused during slitting operations. If the width is uneven such portions are cut off and the cut ends welded. Thereafter, the edge conditioner which is known as a process of debu....
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....the form, of royality and various overheads results, in a value addition of about 200% at the cost of the C.R. Strips resulting in the end product viz. Tensile Strapping. Therefore, it is alleged that cold rolled steel strips are different from final product namely. Tensile Strappings. In this context, the show cause notice refers to the `British Tensional Strapping Association`s booklet` which also refers to the definition of steel strips given in the Tariff, and also definition of the term stripping as found in the literature. It is alleged that the product is highly sophisticated stripping used in the modern packing industry and it is a part of packaging system and therefore, it is cold rolled steel strips. It is also alleged in the show cause notice that the assessee has misguided the department on this aspect of the matter and also by citing wrong citations. Therefore they have been called upon to explain as to why final product should not be classified under Chapter sub-heading 7308.90 of the Central Excise Tariff chargeable at the rate of 15% ad valorem and also explain as to why duty on the value of clearance of Rs. 58,81,650 for the period 1-3-1986 to 19-2-1987 should not ....
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....ribunal. They had also relied on the ISI Specification 5872-1973 which referred to the product cold rolled steel strips. Therefore, they had submitted that their final product complied with the specification laid down in the ISI for cold rolled strips and, hence, there is no question of treating the goods as new products. 6. The Learned Collector after due consideration of the reply upheld the assessee`s contention in the following words as follows : - "1 will first deal with the question of assessment of goods under chapter sub-heading 7308.90 As already explained earlier and as contained in the show cause notice, the cold rolled steel strips which are received from SAIL, MMTC or imported are first sent to M/s. Nagarjuna Steels Ltd. or some other unit for converting them into cold rolled steel strips. These cold rolled steel strips are cleared from the respective job workers' units on payment of appropriate Central Excise duty and there after they are brought to the party's premises viz; M/s. Nagarjuna Singnodes Ltd. Rudraram. As already explained these strips are subjected to the processes which ultimately results in the end product viz; Tensile Steel Strappings. In th....
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....trip which is free from any defects whatsoever, and painting, waxing and infrared treatment and heating only provide the material a smooth and clearer surface etc. for easy handling, these processes do not bring about any change in the material viz. strips in order to call it by any different name, identity or usage in the market. Before commencement of the manufacture of the product these finished box strappings were imported by the company, while assessing these strappings Madras Custom House as well as Hyderabad Collectorate classified them as cold rolled steel strips only. In fact, Assistant Collector Hyderabad-I Division has gone into the whole question and after detailed examination of the product passed an Order confirming the product as cold rolled steel strips. I do not find any further material to warrant a change of classification. Hence I hold the processes do not involve the provisions of Section 2(f) of the Central Excises and Salt Act." 7. The Revenue is aggrieved with the above findings and it is contended that the process of manufacture reveals that special characteristics are imparted to the cold rolled strips when they are subjected to heat treatment, and....
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....llector. He further argued that the order is without due consideration and hence requires to be set aside. He pointed out to the Chapter sub-heading 7308.90 and submitted that the articles of iron & steel were more akin to be brought under this chapter heading. The ld. JDR strongly placed his reliance on the pamphlet of `British Tensional Strapping Association` which had been relied by the Revenue to make out a case for a different product as is known in the market. He submitted that once the product has undergone several changes by a series of manufacturing processes then the product does not continue to remain as cold rolled strips and that it requires to be classified as a different product within the categary of iron and steel in the residuary sub-heading. He submitted that the goods are no longer strips under Chapter Heading 72 and hence they are more appropriately classifiable under chapter sub-heading 7308.90. He submitted that the ld. Collector reliance on Interpretative Rule 3(a) does not arise in the present facts and circumstances of the case and, therefore, the order requires to be set aside and allegations made in the Show Cause Notice to be upheld. 10. The Lea....
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....ortion is cut manually using a hand cutter and removed as scrap. 10. EDGE CONDITIONING : (DEBURRING) : The burr (uneven edge) generated during slitting is smoothened by passing the strip through a set of rolls. 11. REWINDING : After the deburring operation the strips are wound into coils on spools which are mounted on the shaft of the rewinder. 12. SPOOL FEEDER : The spools from the rewinder are removed and placed on the spool feeders which feed the strips to the line. 13. SPOT WELDER : Spot welder is used to keep the continuity of the strip in the line by spot welding the trailing end to the incoming end of the coils. 14. LOOPER CONTROLLER : A set of gravity looper pulleys helps the line running continuously during the spot welding operation. 15. TENSIONER : This drive maintains proper tension on the strips during operation so as to avoid twisting of the strips of the line. 16. HEAT TREATMENT : Heat treatment is administered through a lead bath by which the impurities get removed and the strips become malleable so that they do not break during usage as a result of brittleness. Depending on the end use of strips, the afores....
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....e. He submitted that the processes are carried out by them only with a view to add tensile strength to product as it was being used for packing heavy articles. He admitted that some portions of the product were being used in T.V. industries for the purpose of strapping the TV tubes to prevent the effect of any possible explosion of the TV tubes, as these strappings provide tension and gripping. He also referred to page 981 of HSN Notes to butteress his argument that the goods fall as products of `Iron & Steel' but would be rightly classifiable under chapter sub-heading 7211.31 only. He further submitted that the pamphlet relied by the department is an advertisement material and the same cannot be accepted as evidence, besides the goods, not having been manufactured as per that specification, and therefore, such reliance is not helpful to the Revenue. He submitted that the basic characteristics of the strip are not changed by virtue of various processes carried out by them. He relied on the ruling rendered by the Gujarat High Court in the case of Zaverchand Gaekwad (P) Ltd. v. Union of India as reported in 1992 (61) E.L.T. 225 wherein it has been held that the steel strips remain th....
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....he said literature. It is assessee's contention that the goods are as per ISI Specification and it satisfies the criterion laid down for cold rolled strip and, therefore, despite such processes the item continues to remain as cold rolled strip as classifiable under 72. The assessee, however, admit that there are different uses of the item and it is not merely used as a packing material but also used in the TV sets, and it is known differently in the trade in respect of such manufacture. It is also their admission that the item is not being treated as cold rolled strips but as Tensile Steel Strappings. As can be examined from the order of the ld. Collector we notice that the ld. Collector has not gone into these details and also not given a detailed examination of the literature as well as allegations of the Revenue and the submissions of the assessees. We also notice that the ld. Collector has straightway proceeded to apply interpretative Rule 3(a) and dealt with the classification issue before dealing with the question of excisability and on perusal of order we are convinced that the order suffers from application of mind. The trade and commercial understanding to the product is t....
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.... also being marketed under a different name for different purposes. 18. These processes cause a substantial change in character, name and use is evident from the pamphlet of British Tensional Strapping Association, and this evidence cannot be sidetracked because the way a product is manufactured and marketed is an important consideration and a valid one for our purpose and both are referred to therein (Annexures I and II). The ISI Specifications only relate to those grades of cold rolled steel strips (tensional steel strappings) which are for general packaging purposes and not for such specialised purposes for which the appellants products in question are meant to be used. Secondly the Central Excise Tariff is not aligned with ISI but is broadly based on HSN and if the tariff distinguishes between galvanised and non-galvanised and the cold rolled and hot rolled ones, we have to keep that in view. The HSN refers to thin flat products which may be subjected to subsequent manufacture and finishing; and in the Chapter Note (C) of Chapter 72 (page 981) various proccesses and treatments have been indicated. These may be utilised for simply finishing treatments or for conversaion ....