P.C. Jain, Member (T)

1. Brief facts of the case are as follows :

1.1 On 30-6-1984 the Preventive Staff paid a surprise visit to the appellants' factory and found them engaged what the department calls in the manufacture of cold rolled steel strips falling under T.I. 25 of the CET without obtaining L-4 licence and without following Central Excise formalities. On an enquiry, partner of the appellant firm informed that they were purchasing hot rolled strips of 10 gauge from the market and subjecting it to rolling in rolling machines after washing and pickling with sulphuric acid. In this process the thickness of the strips was reduced to 13 guage. The cold rolled strips so produced by the appellants were cleared to other units for the manufacture of cycle parts.

1.2 The preventive officers found that such strips of 13 guage weighing 1990 Kgs. valued at Rs. 11,000/- were available in the factory. They were seized by the officers since they were believed to be liable to confiscation.

1.3 The appellants vide their letters 4-12-1984 and 5-12-1984 furnished information showing clearance of such strips from February 1983 to January 1984 as 3,34,647.00 kg. valued at Rs. 18,40,913.12p.

1.4 It was alleged by the department that the appellants had engaged themselves in the manufacture of cold rolled strips without taking Central Excise licence and had removed the said goods without payment of duty to the tune of Rs. 2,38,844.32p during the period February 1983 to January 1984. A show cause notice was, therefore, issued as to why the seized goods be not confiscated, aforesaid duty be not demanded and penalty be not imposed under Rule 173Q.

1.5 On adjudication, the Collector has upheld the allegations, confiscated the seized goods with an option to redeem them on payment of fine of Rs. 3000/- in lieu of confiscation. He has also demanded the aforesaid duty of Rs. 2,38,844.32p for having cleared the cold rolled strips produced by them out of hot rolled strips during the period February 1983 to January 1984. He has also imposed a penalty of Rs. 1,00,000/- under Rule 173Q for contravention of Rules 9(1), 52A, 53,173B, 173F, 174 and 226.

1.6 The aforesaid order has been impugned in appeal before the Tribunal.

2.0 Learned consultant, Shri Raghbir Singh Saini, in the first instance has submitted that the basic issue whether the cold rolled strips produced out of hot rolled strips purchased from the market and presumed to be duty paid would again be liable to duty or not, is no longer in controversy. He points out to Tribunal's decision in the cases of -

(1) Atma Steel Private Ltd. v. CCE Chandigarh 1988 (36) E.L.T. 129 (Tribunal) and

(2) Steel Strips Ltd. v. C.C.E. 1988 (38) E.L.T. 507 (Tribunal)

In both these decisions it has been held that cold rolled strips manufactured out of duty paid hot rolled strips are not liable to pay duty again. Relevant Para 9 from the judgment of Tribunal in the case of Atma Steel is reproduced below :-

"9. The tariff classes all strips in one category. Therefore, all strips whether hot rolled or cold-rolled are, for purposes of law, one commodity subject to duty under one head or sub-head. Exemptions providing one concession to hot-rolled strips and another to cold-rolled strips do not alter this fundamental basis. Once a strips has paid the 'strip' duty under Sub-item (iii) of Item 26AA it will never have to pay that duty again whatever shape or form it is changed into, as long as it remains in the same 'strip' category of the tariff and no process and no alteration in the nature or name or any other thing can attract to it the duty of a strip. That was the law at the relevant time; (it is no longer the law now). The action of the Collectorate to levy on the cold-rolled strip the duty under Sub-item (iii) of Item 26AA which it had once paid (as a hot-rolled strip) is not sanctioned by the law and is void. The Collector's order is quashed."

2.1 Similarly, in Tribunal's judgment in Steel Strips, supra, the Tribunal obse