JUDGMENT

BHARUCHA, J. :—These appeals may be disposed of by a common judgment inasmuch as the Customs. Excise and Gold (Control) Appellate Tribunal allowed the appeal in the case of M/s. Steel Strips Ltd. (Civil Appeal No. 438 of 1989 before us) following its judgment in the case of M/s. Atma Steel Pvt. Ltd. (Civil Appeal No. 3524 of 1986 before us).

2. The assesses make cold rolled steel strips from hot rolled steel strips. The applicable entry of the Central Excise Tariff is Tarrif Item No. 26AA, which deals with "Iron or steel products the following, namely :

xxx xxx xxx

(iii) Flats, skelp and strips

xxx xxx xxx"

For the relevant period, being March 1982 to February 1986, an Exemption Notification was in operation in regard to steel strips, being notification No.55/80 dated 13th May, 1980, as amended, issued under rule 8 of the Central Excise Rules, 1944. It exempted galvanised strips and other than galvanised strips from so much of the basic excise duty leviable thereon as was in excess of Rs. 850/- per metric tonne and Rs.350/- per metric tonne respectively. It then referred to "other cold-rolled strips" and "other hot-rolled strips" and exempted them from so much of the basic excise duty leviable thereon as was in excess of Rs. 650 per metric tonne and Rs.450 per metric tonne respectively.

3. It was the case of the Excise authorities that cold rolled strips were obtained by the assessees by a process of manufacture and were entitled to exemption from so much of the basic excise duty leviable thereon, namely, Rs. 1350/- per M.T., as was in excess of Rs. 650/- per M.T. In other words, the effective rate of excise duty that the assessees were obliged to pay, according to the Excise authorities was Rs.650/- per M.T. In this behalf, the strips of the assessee M/s. Atma Steel were confiscated and a penalty imposed. The assessee Atma Steel appealed to the Tribunal and the tribunal allowed the appeal.

4. The contention of the Excise authorities is that hot rolled strips, upon which excise duty had admittedly, been paid, underwent a process of manufacture at the hands of the assessees which resulted in the production of cold rolled strips, upon which excise duty had to be paid at the effective rate of Rs.650/- per tonne. We find no evidence upon the record in regard to what happens to hot rolled steel strips before cold rolled steel strips are produced.

5. The lacuna is sought to be made up by learned counsel for the Excise authorities by referring to a publication of the Indian Standards Institution and the specification therein for cold rolled carbon steel strips for general engineering purposes. Para 0.3 of the Foreword thereto, which is relied upon, states: "Cold rolled steel strip is produced by cold rolling descaled hot rolled strip between plain rolls to obtain a bright surface, closely controlled gauge, thinner gauges and a variety of tempers." Reliance is also placed upon the 8th Edition of a book entitled "The Making, Shaping & Treating of Steel" by Harold E. Mcgannon. Section 6 thereof deals with the principal methods for cold working and, in relation to cold rolling, it states : "Cold working by cold rolling consists of passing unheated, previously hot-rolled bars, sheets or strip (cleaned of scale) through a set of rolls, often many times, until the final size is obtained". The methods and effects of cold rolling wide strips are discussed in detail in Chapter 32 of the book. The relevant part of Chapter 32 is Section 2, dealing with Principles of Cold Reduction, and it states this :

"Cold rolling is a generic term applied to the operation of passing unheated metal through rolls for the purpose of reducing its thickness; producing a smooth, dense surface; and, with or without subsequent heat treatment, developing controlled mechanical properties. Any single one or combination of these three effects may be the reason for cold rolling of a particular product. Actually, in terms of modern nomenclature of the steel industry, col