# ANDllRA RE-ROLLING WORKS, HYDERABAD v. UNION OF INDIA & ORS

- **Citation:** [1986] 2 S.C.R. 1001
- **Court:** Supreme Court of India
- **Decided:** 1986-05-05
- **Bench:** V. Balakrishna Eradi, V. Khalid
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/andllra-re-rolling-works-hyderabad-v-union-of-india-ors-9373
- **Pages:** 7

## Headnote

Central Excise and Salt Act 1944 : s. 3 & Item No.
~ 26AA(i) First Schedule/Central Excise Rules 1944 rr. 10 & lOA
-
M.S. Rounds manufactured by re-rolling untested rails -
Excise duty - Liability of - Eff: ct of Notification No. 89/62
'
dated May 10, 1-962.
•
)-
!tea No. 26AA(i) of the First Schedule to the Central
· - Excise and Salt Act, 1944, at the relevant time provided for
)-
levy of excise duty on various semi finished steel ite11S and
all other rolled, forged or extruded shapes and sections, not
otherwise specified.
The appellant converted three thousand metric tonnes of
untested rails into M.S. Rounds of different specifications by
the process of re-rolling, in execution of the contract
entered into between him and the fifth respondent. The last
;., delivery of the finished products was effected on February 23,
1966 and the payment received. Nearly eight months thereafter,
on October 17, 1966 the Inspector of Central Excise issued
notices to the appellant under r. lOA of the Central Excise
Rules, 1944 demanding payment of excise duty on the rounds
r . .,
re-rolled.
A representation to
the Assistant
Collector
contending that the demand fo_r payment of excise duty was
illegal, since the M.S. Rounds had been re-rolled from rails
which were exempt from levy of excise duty, was rejected.
The appeal to the Collector and the revisi,~n petition to
the.Central Government were also rejected.
The appellant, thereafter filed a petition in the High
Court seeking an appropriate writ quashing the notices of
demand on the ground that the M.S. rounds in question were not
liable to be assessed to duty under item No. 26AA of the First
Schedule to the Act a~-<i that in any event the impugned demands
were time barred under r. 10 of the Rules and the resort
A
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A
B
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1002
SUPREME COURT REPORTS
[1986] 2 s.c.R.
sought to be made to the provisions contained in r. lOA was
not legal or warranted. The High Court negatived all these "
contentions and dismissed the petition.
In the appeal by certificate to this Court it was
further contended that the M. S. Rounds manufactured by the
appellant were exempted by Notification No. 89/62 dated May
10, 1962, which granted remission of the excise duty payable
under item No.
26M to the extent of the amount of duty
already paid on the articles from which the iron and steel ~
products falling under that item had been made.
Dismissing the appeal, the Court,
HELD: 1. The M. S. Rounds manufactured out of untested -{
rails by the process of re-rolling fell within the ambit of
item No. 26M(i) of the First Schedule to the Central Excise i
and Salt Act 1944, which expressly took within its scope "all
other rolled, forged or extruded shapes and sections, not
otherwise specified", and were liable to be charged to duty
under the said item. [1005 G; 1006 B]
2. The ambit of r .10 of the Central Excise Rules, 1944
is confined to cases where the demand is being made for a
short levy caused wholly by one of the reasons given iq that A
rule. It pre-supposes an assessment which could be reopened on
specific grounds within the period specified therein. The time
limit of
three months
mentioned
in that rule
has
no
applicability in cases where there has been no assessment of
duty before the .goods were removed from the factory. Such
cases are covered by the provisions of r. lOA, which is a
residuary provision authorising the demand and collection of
any deficiency in duty or of any other sum of any kind payable
under the Act or the rules without any limit of time. [1006 D;
F-H)
Assistant Collector of Central kcise, Calcutta Dimicm
.,. Rations! Tobacco Collpmy of India Led.• [1973] l S.C.R. 822
and n.L Kohli and Ors • .,. Acn.1 Products Led., [1985) 2 s.c.R.
832, referred to.
3. It is only if the appropriate amount of duty had
already been paid on the article which formed the raw material
for manufacture of the product covered by itea No. 26M, th.at
l
•
ANDHRA RE-ROLLlNG WORKS v. U.0.1.
[ERADl, J,]
1003
th

## Text

1001
ANDllRA RE-ROLLING WORKS, HYDERABAD
v.
UNION OF INDIA & ORS.
MAY 5, 1986
[V. BALAKRISHNA ERADI AND V. KHALID, JJ.]
Central Excise and Salt Act 1944 : s. 3 & Item No.
~ 26AA(i) First Schedule/Central Excise Rules 1944 rr. 10 & lOA
-
M.S. Rounds manufactured by re-rolling untested rails -
Excise duty - Liability of - Eff: ct of Notification No. 89/62
'
dated May 10, 1-962.
•
)-
!tea No. 26AA(i) of the First Schedule to the Central
· - Excise and Salt Act, 1944, at the relevant time provided for
)-
levy of excise duty on various semi finished steel ite11S and
all other rolled, forged or extruded shapes and sections, not
otherwise specified.
The appellant converted three thousand metric tonnes of
untested rails into M.S. Rounds of different specifications by
the process of re-rolling, in execution of the contract
entered into between him and the fifth respondent. The last
;., delivery of the finished products was effected on February 23,
1966 and the payment received. Nearly eight months thereafter,
on October 17, 1966 the Inspector of Central Excise issued
notices to the appellant under r. lOA of the Central Excise
Rules, 1944 demanding payment of excise duty on the rounds
r . .,
re-rolled.
A representation to
the Assistant
Collector
contending that the demand fo_r payment of excise duty was
illegal, since the M.S. Rounds had been re-rolled from rails
which were exempt from levy of excise duty, was rejected.
The appeal to the Collector and the revisi,~n petition to
the.Central Government were also rejected.
The appellant, thereafter filed a petition in the High
Court seeking an appropriate writ quashing the notices of
demand on the ground that the M.S. rounds in question were not
liable to be assessed to duty under item No. 26AA of the First
Schedule to the Act a~-<i that in any event the impugned demands
were time barred under r. 10 of the Rules and the resort
A
B
c
D
E
F
G
H
A
B
c
D
E
F
G
H
1002
SUPREME COURT REPORTS
[1986] 2 s.c.R.
sought to be made to the provisions contained in r. lOA was
not legal or warranted. The High Court negatived all these "
contentions and dismissed the petition.
In the appeal by certificate to this Court it was
further contended that the M. S. Rounds manufactured by the
appellant were exempted by Notification No. 89/62 dated May
10, 1962, which granted remission of the excise duty payable
under item No.
26M to the extent of the amount of duty
already paid on the articles from which the iron and steel ~
products falling under that item had been made.
Dismissing the appeal, the Court,
HELD: 1. The M. S. Rounds manufactured out of untested -{
rails by the process of re-rolling fell within the ambit of
item No. 26M(i) of the First Schedule to the Central Excise i
and Salt Act 1944, which expressly took within its scope "all
other rolled, forged or extruded shapes and sections, not
otherwise specified", and were liable to be charged to duty
under the said item. [1005 G; 1006 B]
2. The ambit of r .10 of the Central Excise Rules, 1944
is confined to cases where the demand is being made for a
short levy caused wholly by one of the reasons given iq that A
rule. It pre-supposes an assessment which could be reopened on
specific grounds within the period specified therein. The time
limit of
three months
mentioned
in that rule
has
no
applicability in cases where there has been no assessment of
duty before the .goods were removed from the factory. Such
cases are covered by the provisions of r. lOA, which is a
residuary provision authorising the demand and collection of
any deficiency in duty or of any other sum of any kind payable
under the Act or the rules without any limit of time. [1006 D;
F-H)
Assistant Collector of Central kcise, Calcutta Dimicm
.,. Rations! Tobacco Collpmy of India Led.• [1973] l S.C.R. 822
and n.L Kohli and Ors • .,. Acn.1 Products Led., [1985) 2 s.c.R.
832, referred to.
3. It is only if the appropriate amount of duty had
already been paid on the article which formed the raw material
for manufacture of the product covered by itea No. 26M, th.at
l
•
ANDHRA RE-ROLLlNG WORKS v. U.0.1.
[ERADl, J,]
1003
the manufacturer will be entitled to a proport!.onate remission
-f of the duty on the latter product. Inasllllch as the untested
rails in the instant case were exempt from duty and no amount
whatever had been paid by way of duty on the said article out
A
of which the M.S. Rounds were manufactured, the benefit of the
notification No. 89/62 dated May 10, 1962 could not be claimed
B
by the appellant. [1005 G-H; 1006 A-BJ
+
ClVlL APPELLATE JURISDICTION : Civil Appeal No. 56 of
1972.
From the Judgment
Andhra Pradesh High Court
and Order dated 5. 11. 1970 of the
in w. P. No. 3354 of 1968.
~
Anil ll. Divan, D.N. Misra, Ashok Sagar and P.K. Rama
'~Narain for the Appellant.
Gobind Das, P. P. Rao, Miss Halida Khatun, R.N. Poddar
c
and A.K. Ganguli for the Resondents.
D
The Judgment of the Court was delivered by
BAIAXRISHNA ERADI, .J. This appeal has been preferred
~against the judgment of the High Court of Andhra Pradesh dated
November 5, 1970 on the strength of a certificate of fitness
E
granted by the High Court.
The
appellant is a firm carrying on business of
'Re-rolling' having its factory at Moosapet near Sanatnagar,
tHyderabad. A contract was entered into between the appellant
and the 5th respondent, whereby the appellant undertook to
convert 3000 metric tonnes of second class untested rails into
M.S. Rounds of different specifications by the process of
Re-rolling. Accordingly, the quantity of 3000 metric tonnes of
second class untested rails was supplied to the appellant by
the 5th respondent during the period between 29.4.1964 to
23.2.1966 and
the appellant duly executed the work and
'd7livered the M.S. Rounds and received the Re-rolling charges
in accordance with the terms of the agreement. The last
-{delivery of
the
finished products
was
effected by
the
appellant on 23. 2. 1966.
F
G
Nearly eight months thereafter, on October 17, 1966
the
H
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1004
SUPREME COURT REPORTS
[19861 2 s.c.R.
Inspector of Central
Exci~~, Ameerpet issued notices to the
appellant dated October 17, 1966 demanding payment of excise'°
duty on the Rounds Re-colled by the petitioner from untested
rails. The demand notices were purported to have been issued
under Rule 10-A of the
c~ntral Excise Rules, 1944. The
appellant filed a written representation to the Assistant
Collector, Central Excise, Hyderabad contending that the
demand for payment of excise duty on the M. s. Rounds was
illegal since they had been Re-rolled from rails which weret
exempt from levy of excise duty.
The Assistant Collector by his order dated January 17,
1967 rejected the said contention. However, while doing so, he
gave a direction to the Inspector of Central Excise to revise~
the demands in accordance with the rates of duty which were
current during the different periods. Pursuant thereto, thre~
revised demand notices dated March 18, 1967 were issued to the
appellant. The appellant thereupon preferred an appeal to the
Collector, Central Excise, Hyderabad. But that appeal was
rejected by the Collector and the demands were confirmed. A
Revision Petition filed by the appellant to the Central
Government also met with the same fate. Thereafter the
appellant filed a Writ Petition in the High Court of Andhra
Pradesh seeking an appropriate writ quashing the notices of)._
demand on the ground that the M.S. Rounds in question were not
liable to be assessed to duty under Item No. 26-AA of the
First Schedule of the Central Excise and Salt Act, 1944
(hereinafter cal led 'the Act') and that in any event the
impugned demands were time barred under Rule 10 of the Central
Excise Rules, 1944 and the resort sought to be made to thet
provisions contained in Rule 10-A was not legal or warranted.
Neither of the aforesaid contentions found favour with the
High Court and accordingly, the Writ Petition was dismissed•
Hence this appeal by the appellant.
The description of goods given in Column No. I of the
First Schedule to the Act against Item No. 26-AA(i) as it
stood at the relevant time was in the following terms .
" Semi finished steel including blooms, billets,';-
slabs, sheet bars, rods, coils, wires, joists,
girders,
angles,
channels,
tees,
beams,
zeds,
trough, pilling and all other rolled, forged or
ANDllRA RE-ROLLING WORKS v. U.O. I.
[ERADI, J.]
1005
extruded
shapes
and
sections;
not
otherwise
specified."
In execution of
the contract entered into between the
appellant and the 5th respondent, the appellant had converted
3000 metric tonnes of untested rails into M. S. Rounds of
different specifications by the process of Re-rol' tng. This
undoubtedly aioounted to manufacture. Since Item No. 26-AA(i)
t expressly takes within its scope "all other rolled, forged or
extruded shapes and sections, not otherwise specified", the
M. S. Rounds manufactured by the appellant by the process of
Re-rolling were clearly liable to excise duty under the said
item.
We find no substance in the contention urged on behalf of
·~ the appellant that the M. S. Rounds manufactured by it were
covered by the exemption granted by the Notification No.
89/62, dated May 10, 1962. The relevant portion of that
Notification was in the following terms :-
"The Central Government hereby exe~ts with effect
from 24th April,
1962 iron and steel products
falling under item No. 26-AA of the First Schedule
to the Central Excise and Salt Act, 1944 if made
from another article falling under the said item
and having al ready paid the appropriate aioount of
duty, from so 1D1Ch of the duty of excise as is
equivalent
to
the
duty
payable
on
the said
article."
The effect of this Notification was only to grant a partial
remission of the excise duty payable under Item No. 26AA of
the First Schedule to the exten~ of the appropriate aioount of
duty which was already paid on the articles from out of which
the steel products falling under Item No. 26-AA had been made.
In the case before us the M. s. Rounds were manufactured by
Re-rolling untested rails on which no excise duty whatever had
been paid. It is only if the appropriate amount of duty had
already been paid on the article which formed the raw-material
for manufacture of the product covered ·,
Item No. 26-AA, that
the manufacturer will be entitled to a proportionate remission
of the duty on the latter product. Inas1Dlch as
the untested
rails were exempt from duty and hence no amount whatever had
A
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1006
SUPREME COURT REPORTS
(19861 2 s.c.R.
been paid by way of duty on the said article from out of which ~
the M.S. Rounds were manufactured, it is obvious that the
benefit
of
the
Notificat ton
cannot
be
claimed
by
the
appellant.
We have therefore, no hesitation to uphold the view
B
expressed by the High Court that the M. S. Rounds manufactured
by the appellant fell within the ambit of Item No. 26-AA and
were liable to be charged to duty under the said item.
t
The next point urged on behalf of the appellant is that
the demand for duty was bad since it was made beyond the
c
period of three ioonths which is the time limit specified in
Rule 10 of the Central Excise Rules, 1944. The High Court has -(
categorically found that ln the present case no assessment or
·
levy of duty had been made at the time when the goods were 1
reiooved from the factory of the appellant. As pointed. out by
this Court in Assistant Collector of Central Excise, Cal01tta
D
Division v. National Tobacco Coqiany of India Ltd., [ 1973] 1
S.C.R. 822 Rule 10 pre-supposes an assessment which could be
re-opened on specific grounds within the period specified
therein. The relative scope and applicability of Rules 10 and
10-A were considered in detail by this Court in the said
decision and it was explained "that Rule 10 should be confined ..l
E
to cases where the demand ls being made for a short levy
caused wholly by one of the reasons given in that rule so that
an assessment has to be reopened". The said decision has been
followed in the recent pronouncement in the case of D.R. Kohli
and Ors. v. Atul Products Ltd., [1985] 2 s.c.R. 832.
F
Applying the tests laid down in the aforesaid rulings it
is clear that the time limit of three months specified in Rule1
10 has no applicability at all in the present case since there
has been no assessment of duty before the goods were reiooved
and it is not a case of short levy occasioned by any of the
reasons specified in the said Rule. The case ls, therefore,
G
covered by the provisions of Rule lOA, which is a residuary
provision authorising
the demand
and
collection of
any
deficiency in duty or of any other sum of any kind payable to
Central Government under the Act or the Rules without any
~
limit of time. Hence the High Court was clearly right in
H
ANDHRA RE-ROLLING WORKS v. U.O. I.
[ERADI, J.]
1007
rejecting the contention of the appellant that the demand
+ notices issued to it under Rule
10-A were illegal and
unsustainable.
'nle appeal accordingly fails and is dismissed with costs.
P.s.s.
Appeal dismissed.
-f
A
B