Machined and polished steel goods are separate identifiable goods and are liable to payment of excise duty under Tariff Item 68 besides being exigible under Tariff Item 26AA.

Uday Sinha, J.

1. The Tata Iron and Steel Company Limited (hereinafter called "the Tisco"), the petitioner in this application under Articles 226 and 227 of the Constitution has moved this Court for quashing the order of the Collector of Central Excise, Patna, dated 24.9.1982 (Annexure-2) and Annexure-3 dated 29.1.1983. By Annexure-2 the Collector adjudicated that the petitioner was liable to pay excise duty amounting to Rs. 39,97,718.14 as differential duty under Tariff Item 26AA(ia) and Rs. 1,56,81,092.25 as duty under Tariff Item 68.

2. When the case was called on for hearing, we suggested to the learned counsel for the petitioner, if he would choose to exhaust his internal remedy under the Central Excises and Salt Act, 1944 rather than press the present application under Article 226 of the Constitution. He chose to press the present application and not to waste time before the appellate excise authorities. Rule having been issued, we cannot refuse to adjudicate the matter on the ground of availability of alternative remedy. We have, therefore, heard this matter and now proceed to judgment.

3. The petitioner manufactures wheels, tyres and axles of railways. The buyers of these products are the Indian Railways. Apart from selling wheels, tyres and axles for Railway wagons, the petitioner also sells and supplies wheels and axles as a composit unit. These are forged products. Before supplying these items to the Railways, these forged items are machined and polished by the petitioner. That brings about the rub falling for consideration before us. The stand of the petitioner is that forged steel products fall within the ambit of Tariff Item 26AA(ia) of the Central Excise Rules (sic). The stand of the revenue is that these products after the stage of forging obviously fall within Tariff Item 26AA(ia) and dutiable as such. The further stand of the revenue is that after machining and polishing these items, a new product comes into being, and therefore, the new machined and polished tyres, axles, etc., fall within the ambit of Tariff Item 68 and separately dutiable as such. Thus whereas according to the petitioner, these products are dutiable only under Tariff Item 26AA(ia), according to the revenue, they are dutiable also under Tariff Item 68.

4. The petitioner was paying duty in terms of Tariff Item 26AA(ia) since 1962. They were being paid after the classification list filed by the petitioner had been approved by excise authorities. It continued as such till 1981 when the Assistant Collector, Central Excise, Jamshedpur (respondent No. 3) called upon the petitioner to show cause why it be not proceeded against for contravention of Rules 173-B, 9(1) read with Rule 173G(i) and Rule 173(i)(a) which were excisable under Tariff Item 68 on account of these products having been machined (sic). According to the revenue duty should have been paid on these goods as forged items and not on the basis of weight after machining. It is obvious that the weight gets reduced after machining. Thus, according to the Revenue, the petitioner was liable to pay differential duty in terms of Tariff Item 26AA as well as separate item in terms of Tariff Item 68. The demand notices were issued in respect of non-payment of duty during the period March, 1975 to July, 1981 and for subsequent periods also. The petitioner showed cause and contested the assertions and claim of the revenue. The Collector by his order dated 2^.9.1982 contained in Annexure-2 rejected the stand of the petitioner and held that the petitioner was liable to pay differential duty as well as duty in terms of Tariff Item 68 as alleged in the notice. The order contained in Annexure-2 was followed up by Annexure-3 whereby the petitioner was called upon to pay the duty.

5. Before setting out the submissions advanced on behalf of the petitioner, it would be apt to note the relevant provisions. Tariff Item 26AA so far as is relevant reads as follows :

"26AA. Iron or steel products, the f