# CNION OF INDIA & ORS v. TATA IRON & STEEL CO. LTD

- **Citation:** [1975] 3 S.C.R. 418
- **Court:** Supreme Court of India
- **Decided:** 1975-01-31
- **Case number:** Civil Writ No. 1678 of 1967
- **Bench:** A. N. Ray, H. R. !(Hanna, P. K. Goswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/cnion-of-india-ors-v-tata-iron-steel-co-ltd-6408
- **Pages:** 7

## Headnote

Constitution of India, 1950 Art. 226, 227-Powus of High Court under
article 226 & 227 to interfe.re with classification ef a product by taxing a111lwrities.
Central Excise Act, 1944-Ske/p and strip necessity for idwtifiable rest in
fiscal statutes,
The respondent manufactures hot rolled finished steel products in rectangular
A
B
,cross-section of thicknes:; varying between 16.2 mm and 311.2 mm a1_1d rolled
C
in coils (hereinafter reforred to as the Product). The respondent describes the
product as Strip whereas the appellant classifies it as a Skelp. Skelp is subject
te higher excise duty than Strip.
The Assistant Collector, Central Excise treated
the product as Skelp.
On appeal to the Collector of Central Excise, he confirmed
it and in revision the Central Government also approved.
The respondent filed a Writ Petition in the High Court. The High Court
ac·~epted the contention of the respondent.
On appeal by Special Leave the
appellant contended befqre this Court : (i) That it is primarily for the Taxing
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Authorities to determine the head or nature under which any particular wmmodity fell. (ii) The Court can interfere with the decision only if it is pc:rverse.
If there were two constructions possible and if the Taxing Authority accepts one
of them the Court cannot interfere.
The respondent submitted·. (i) Assessment without application of an identifiable test is p!:rverse :md arbitrary. (ii) In the present .case. there was no identifiable test before the Taxing Authorities. There is no difference between Skelp
E
anti Strip.
Dismissing the appeal,
Hdd : There are large number of definitions out of which one can be
picked up to satisfy th1: definition of Skelp according to some authority and
another definition to fit in with the concept of strip according to another ::mthority.
Since there is no statutory definition for Skelp and Strip, different tests
hfbve been resorted to by the different authorities. The question arises whether
the High Court wa·;; right in interfering with the orders under Art. 226 of the
F
Constitu.tion. It is not for this Court to come to. the condusion on fact1.
The
absence of any identifiable standard natmally gives rise to the scope for arbitrarv
assessment at the hands of different authorities. It is not possible to hold that
the High Court has gone wrong in granting the reliefs prayed for.
(4220-F;
423C]

## Text

418
CNION OF INDIA & ORS.
v.
TATA IRON & STEEL CO. LTD.
January 31, 1975
[A. N. RAY, C.J., H. R. !(HANNA AND P. K. GOSWAMI, JJ.]
Constitution of India, 1950 Art. 226, 227-Powus of High Court under
article 226 & 227 to interfe.re with classification ef a product by taxing a111lwrities.
Central Excise Act, 1944-Ske/p and strip necessity for idwtifiable rest in
fiscal statutes,
The respondent manufactures hot rolled finished steel products in rectangular
A
B
,cross-section of thicknes:; varying between 16.2 mm and 311.2 mm a1_1d rolled
C
in coils (hereinafter reforred to as the Product). The respondent describes the
product as Strip whereas the appellant classifies it as a Skelp. Skelp is subject
te higher excise duty than Strip.
The Assistant Collector, Central Excise treated
the product as Skelp.
On appeal to the Collector of Central Excise, he confirmed
it and in revision the Central Government also approved.
The respondent filed a Writ Petition in the High Court. The High Court
ac·~epted the contention of the respondent.
On appeal by Special Leave the
appellant contended befqre this Court : (i) That it is primarily for the Taxing
D
Authorities to determine the head or nature under which any particular wmmodity fell. (ii) The Court can interfere with the decision only if it is pc:rverse.
If there were two constructions possible and if the Taxing Authority accepts one
of them the Court cannot interfere.
The respondent submitted·. (i) Assessment without application of an identifiable test is p!:rverse :md arbitrary. (ii) In the present .case. there was no identifiable test before the Taxing Authorities. There is no difference between Skelp
E
anti Strip.
Dismissing the appeal,
Hdd : There are large number of definitions out of which one can be
picked up to satisfy th1: definition of Skelp according to some authority and
another definition to fit in with the concept of strip according to another ::mthority.
Since there is no statutory definition for Skelp and Strip, different tests
hfbve been resorted to by the different authorities. The question arises whether
the High Court wa·;; right in interfering with the orders under Art. 226 of the
F
Constitu.tion. It is not for this Court to come to. the condusion on fact1.
The
absence of any identifiable standard natmally gives rise to the scope for arbitrarv
assessment at the hands of different authorities. It is not possible to hold that
the High Court has gone wrong in granting the reliefs prayed for.
(4220-F;
423C]
CIVIL APPELLATE JURISDICTION:
Civil Appeal No.
1527 of
1~~
G
Appeal by Special Leave from the Judgment & Odrer dated the
14th December, 1973 of the Delhi High Court in Civil Writ No. 1678
of 1967.
·
F. S. Nariman, Addi. Sol. Gen. of India, D. N. Mukherji~e and
R. N. Sahthey, for tllle Appellants.
H
· N. A. Palkhiala, Ravinder Narain, I. B. Dadachanji, 0. C. Mathur,
. K. J. John and K. R. lhaveri, for the Respondent.
· ·
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II' UNION v. TATA IRON & STEEL co. (Goswami, J.)
419
The Judgment of the Court was delivered .byGoswAMI, J. This appeal is by special leave from the judgment
of the 1Jelhi High Court m a writ app11cauon there under amc!e 226
of the (.;onstitut1on.
The respondent manufactures
various · other
items hot rolled finished steel products in rectangular cross-section of
thickness varying between 1.7 mm and 6.55 mm and width varying
between 16.2 mm and 311.2 mm and rolled in coils which it supplies
to the Indian Tube Company Limited at Jamshed-pur for making tubes
and also to others. Tim article is subjected to Central Excise Duty
under the Central Excises and Salt Act, 1944 (hereinafter called the
Act). The dispute between the respondent anld the appellants is that
while the former describes the said manufactureld pi:oduct as
strip
the appellants .classify it as skelp.
This difference in classifying the
product differently results in fiscal misfortune to the respondent since
skelp is subjected to a higher Central Excise Duty than strip.
It may be stated that 'during the period from April 24, 1962 to
February 28, 1964, the respondent described its product as skelp and
it was subjected then to a lower rate of duty.
From February 19,
1964, the respondent chimed that the aforesaid product be classified
as strip since there hat! been a levy of higher duty /for skelp. The
Assistant Collector, Central Excise, Jamshedpur, whb is the primary
taxing authority, the Collector of Central Excise, Patna, in appeal,
and the Central Government in revision rejected the contention of the
respondent by successive orders, each authority upon its own test
of the definition of the product as skelp. That led to the successful
writ application of the respondent in the High Court resulting in this
appeal.
In the forefront of his argument the learn<o'd Additional Solicitor
General for the appellants relying upon two decisions of this Court,
aamely, The Collector of Customs, Madras v. K.
Ganga
Setty (1)
and V. V. Iyer of Bombay v. lasjlt Singh, Collector of Customs and .
Another, (2) submitted that "it is primarily for the taxing authorities to
determine the heads or entry under which any particular commodity
fell; but that if in doing so, these authorities adopted a construction
which no reasonable person could adopt i.e., if the construction was
preverse then it was a case in which the Court was competent to interfere. Jn other wort:ls, if there were two constructions which an entry
could reasonably bear, and one of them which was in favour of Revenue was adopted, the Court has no jurisdiction to interfere merely
because the other interpretation favourable to the subject aoneals to
the Court as the better one to adont". On the other hand with equal
emohasis Mr. Palkhivitla for the respondent submitted that an assessment without the anolicatirm of an idf\ntifiable test is nothine but
perverse and arhitrarv.
He: submits that in the nresent ca•P- the.re
was no identifiable test before the taxing authorities by which the
(1) [1963] 2 s. c. R. 277 ..
(2) [197311s.c.c.148.
420
SUPREME COURT REPORTS
[1975] 3 S.C.R.
product of the respondent coul\i b~ held to be ske~p and not stri~
subjecting the respondent to a heavier duty. Accordmg t? the learned counsel there is no difference between sklep and stnp, the two
items being interchangeable.
It may be noted for our purpose that und~r section 3 of t.he Act
Central Excise Duties are leviable on all excisable goods which are
produced or manufactured in l n\:lia at the rates set out in the First
Schedule. Item No. 26AA in that Schedule relates to iron and steel
products and mentions in sub-item (iii) therein fiats, skelp and strips
showing the rate of duty in the third column.
Und~r rule 8 of the
Central Exci~.e Rules,, 1944, made under section 37 of the Act, the
Central Government may from time to time by notification in the official gazette exempt, subject to such conditions as may be specified
in the notification, any excisable goods from whole or any part of the
duty leviable on such goods. In exercise of the power under this rule
the Central Government has made such exemptions in the rates of
duty as have· made it higher on skelp than on strip.
Before we proceed further we may notice how the various Excise
authorities dealt with the matter at dtfferent stages. The first order
is that of the Assistant Collector of Central Excise, Jamshedpur, which
was on June 17, 1964. According to him "skelp is the name used
in reference to a plate of wrought iron or steel use'rl for making pipe
or tubing by rolling the skelp into shape and lap welding or revetting
edges together and strip is a term used, to describe a fiat rolled product
of smaller cross-section than sheet or bar." He accordingly adopted
the definition given in Marymen's Dictionary of Metalurgy. The order
of the Collector of Central Excise in appeal made on October 24/29,
1964, shows that the authority note(! the
definition
of strip
as
follows:-
·
"Hot or cold rolled finished steel product in ·rectangular
cross-section of thickness below 5 mm and of width below
800 mm and supplied in straight length''.
This definition is substantially in conformity with the one given by
the Indian Standards Institution (ISI). The appellate authority held
that "since the products have not satisfieli the above specifications,
they have been correctly classified as 'skelp' by the Assistant Collector .... ". Jhen comes the order in revision of the Central Government of August 18, 1967 .. Inter alia it was held that "the pr<*:luct does
have bevel edges peculiar to skelp and not found in strips. Under the
~ircumstances, there is no doubt what~_ver that the product in qm:stion
1s· correctly classified as skelp".
From the above three orders it is clear that the authorities were
~ot at a!l ~e~tain abou! a uniform .definition of 'skelp' distinirnishing
1t from stnp . Extensive arguments were advanced at the bar with
regard to the definitions of these two words. We may, therefore, look
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UNION v.'IRON & STEEL co. (Goswami,].)
421
at the various definitions to which our attention has been drawn. Since
the appellants largely upon the definitions given by the Indian Standards Institution, "an expert body", we will first note these definitions.
The ISI's definitions of strip and skelp as given in IS
19 5 6-1962
(amen,tled upto July 1968) are as follows:-
8
Upto 1965 the ISI gave no description of 'Strip. It had defined skelp
in 1962 as follows :-
c
D
"Skelp
Hot rolled narrow strip with rolled (square, slightly round
or bevelled) edg''.
Strip
A hot or cold rolled flat product, rolled in rectangular cross
section of thickness 10 mm and below and supplied with
mill, trimmed or sheared edge.
(a) Narrow stripstrip (other than hoop) of width belaw
600 mm and supplied. in straight length or in coil form.
(b) Wide StripStrip of width 600 mm above and suplied in coil form only."
Upto 1965 the ISi gave no description of strip.
It had defined skelp in 1962 as follows :-
"Hot rolled strip with square or slightly bevelled edges,
used for making welded tubes" •
. E
In 1968 the ISI's definition of skelp stands as follows :-
F
G
H
"Hot. rolled narrow strip with rolled (square, slightly round or bevelled)
edge."
Strip was defined by the ISi for the first time in 1965 as follows:-
"Coiled StripA hot or cold rolled flat product, rolled in rectangular cross
section and supplied in coil form.
Strip
A hot or cold rolled flat product, rolled in rectangular cross- ,.
section thickness below 5 mm and of width below 600mm an4
supplied in straight lengths''.
The ISI's definition of strip given in 1968 is as follows :--
"A hot or cold rolled flat product, rolled in rectangular
cross-section of thickness 10 mm and below and supplied
with mill, trimmed or sheared edges.
(a) Narrow strip-Strip (other than hoop)
of
width
below 600 mm and supplied in straight length or in
coil form.
(b) Wide strip-Strip of width 600 mm and above and
supplieli in coil form only".
Anne1ure 'J' submitted by the respondent along with its rejoinder
affidavit in the High Court at page 101 of the record, gives various
422
SUPREME COURT REPORTS
{1975] 3 s.c.R.
definitions of ship take'n from various dictionaries and treatises such
A
as Hornor J. G. Dictionary of Terms, page 323, year 1952; Brandt
D.J.C.-Manufacture of Iron & Steel, pages 318 and 319, year 1953;
Henderson J.C.-MetaUurgical DictiQnary, page 192, year
19'53;
-Backert A.0.L. A.B.C. of Iron & Steel, page 1912, year 1925-5th
edition; Chamber's Technical Dictionary, year 1967. Similarly definition of strip is also given from these Dictionaries and books. It is
B
also pointed out that there is no category of skelp mentioned in Brnssels Nomenclature. British Stantlards 2094!, Part 4; 1954, defines
skelp as follows :-
"Hot rolled strip with square or slightly bevelled edges
used for making welded tubes".
Chamber's Tedm.ical Dictionary Revised Edition (ReC
printed 19541) defines skelp as follows :-
"SkelP'--(P. 77:5) Mild steel strip from which tubes are
mo.Ide by drawing through a bell at welding temperature; to produce 111p welded or butt welded tubes".
We may not add to the list but are satisfied that there are a large
number of definitions out of which one can be picked up to satisfy the
definition of skelp according to some authority and another definition
to fit in with the concept of strip according to another authority. Since
the duties on strip and skelp are not the same, it is absolutely necessary to define the worti skelp so that there can be no doubt or confusion in the mlnd of either of the taxing authority or of the tax payer
with regard to the tax liability aua skelp as opposed to strip. Since,
however. there is no statutorv definition of this
controversial :Item
different tests have naturally been resorted to by the different authorities anrl the same variation is discernible . even in the affidavits of
the appellants submitted before the High Court.
The short question, therefore, that arises for consideration is whether in the above background the High Court was right in interfrring
with the orders under ai;ticle 226 of the Constitution. It is not for
· the High Court nor for this Court to come to a conclusion on facts
as to whether the 'product can truly come under the description of
skelp. That undoubtedly would require some evidence be taken at the
Ie~el of the taxing authority provided, however, there is an identifiable,
uruform and determinate test by wjich skelp can be properly distinguished from strip. In. the mass of documents filed before us and the
extensive arguments addressed at the bar with regard to the definitions
culled from various Uictionaries, hand-books and authorities, we are
not at all surprised that the three authorities came to the same conclusion bv deoending uoon their own chosen tests.
A oarticular type
of strio mav accordine: to certain definitions be skein 11nd accorrllr11? to
others not skelt>.
This. however. c~nnot be oermittP<t in a fi•r:i11eitls1atio" which bv all stand~rcls shoulcl arloot a clear cif'finition of 11~1 excisable item which is incapable of giving rise to a confounding controD
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UNION V, TATA IRON & STEEL co. (Goswami, J.)
423"
versy as in this case unless the matter is beyond doubt in view of the
popular meaning or meaning ascribed to the term in commercial parlance.
ln absence of any clear criterion to detennine what is skelp
and not strip, no useful purpose would be served by even remanding
the matter to the Excise authorities for a decision after taking necessary evitlence.
It is only when a taxing law provides for a clear and
unequivocal test for determination as to whether a particular product
would fall under strip of skelp it may be possible for the authorities
to address itself to the evidence submitted by the parties in order to
come to a decision on the basis of the test. This is, however, not possible in this case in view of the fact that there is no identifiable standard. The best way is to define ·the product for the purpose of excise
duty in approximate terms demarcating clearly the distinction between
the two terms.
The absence of any identifiable standard would, therefore, naturally give rise to the scope for arbitrary assessment at the hands of
different authorities.
Whether this has happeneti in this case,
as
complained bv the respondent citing the instance of the Hindustan
Steel Company, Rourkela, it is not necessary for us to pursue in this
appeal.
We are, therefore, unable to hold that the High Court has
gone wrong in granting the reliefs prayed for.
The appellants strenuously emphasised upon the test relied upon
in the Revisional order as to skelp having bevelled edges which, according to them, is peculiar to skelp and not to strip. But this does not
bear scrutiny as on the counter-affidavit of the Union of India in the
High Court at page 57 of this record it shows that "as regards tested
Hot rolled strips, the edges are never looked into, they can be bevelled,
square or have Mill edge" (emphasis added). This is an admission of
the appellants that strips may also have bevelled edges.
·
The two decisions relied unon hv the annellants do not come totheir aid in this case since there is no identifiable standard or test to
determine clearly which product can be skelp and not strip. In Gartga
Setty's case (supra) the controversy arose with regard to whether "feed
oats" fell within item 42 (fodder) or within item 32 (grain) of particular circular.
Dealing with the matter this Court observed as follows:-
" .... any particular species of grain cannot be excluded
merely because it is capable of being used as cattle or horse
feed".
The decision of the Customs authorities, therefore, this Court held,
could not be characterised as perverse or mala fide calling for int01.-
ference. Similarly following Ganf!a Setty's case (supra) in Jas;it Sin~i{s •
case (suora) the conclusion and findin!!s of the Customs authorities
were accented as reasonable.
Jn both the abovt- cases therP- were
definite tests bv which the· particular article could be held to fall un~er
one item and not under the other and the construction of the authorities
..
4l4
SUPREME cou&r· ll.EPmtTS
[1975] 3 s.c.R.
with TC~ to the scope of the })l\rt.icwar::entries was, therefore, held
to be reaSonable and ·not calf'mg for interference by the court The
question that arises in the instant case is of a contple;ely different nature
as pointed, out above there being no j(lehtifiable test reasonably capable
of distingaiflhing skelp from strip.
In the result the appeal fails and is disfllissed with costs.
. P.H.P.
AppeaL dismissed .
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