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Judgment
N. Kannadasan, J.—The above writ petition is filed seeking the relief as stated therein.
The petitioner entered into a contract with TWAD board for supply of MS Pipes and supplies of various sizes for the water supply schemes at
Pudukottai, Madurai and Coimbatore. As per the contract, the petitioner has to lay down pipes for the supply of water and the pipes have to be
bent to suit the topographic conditions. In order to withstand the water pressure, instead of connecting two joints like elbows and screws, the
necessary bend has to be made in the said pipes. The petitioner classified those goods under the heading 73.05 and sub heading 7305.90 for the
classification of the Central Excise. Though the third respondent has approved the classified list initially under the said heading 7305.90 of the
heading 73.05, subsequently, a show cause notice was issued to revise the classification under the heading 7307.07. After an enquiry, the third
respondent has confirmed the demand and the appeal preferred before the second respondent was also dismissed, against which a further appeal
before the first respondent tribunal was filed. The first respondent tribunal confirmed the order of the authorities which is under challenge in the
above writ petition.
The issue to be decided in the above writ petition is as to whether the items fall within the classification 7307.00 or it falls under the classification
73.05 under sub-heading 7305.90?
The relevant headings are reproduced below for the purpose of reference:
7307.00 Tube or pipe fittings (for example, couplings, elbows, sleeves), if iron or steel 73.05 Other tubes and pipes (for example, welded, riveted
or similarly closed), having internal and external circular cross-sections, the external diameter of which exceeds 406.4 mm, of iron or steel.
7305.10 - Of iron 7305.90 - Other
The learned senior counsel for the petitioner would contend that inasmuch as the bending of pipes are mainly done at the site to suit the
specifications to lay the pipelines under the sub heading, the said components cannot be termed as ""pipe fittings"" falling under the classification
7307.00. In the light of the distinct description as set out in both the classifications viz., 7307.00 and 73.05 relating to ""tube or pipe fittings""; and
other tubes and pipes"", the said components could be construed only under the heading ""other tubes and pipes"". Learned senior counsel would
also contend that the said pipe fittings are primarily prepared at site by welding and riveting and no manufacturing process is involved and the same
are not marketable and as such, no duty could be levied. Learned senior counsel would also contend that the goods must be understood as per the
test of commercial parlance and test of marketability and no duty could be levied unless manufacturing process is involved.
In the light of the above submissions, the learned senior counsel has relied upon the decision of the Apex Court in M/s. Bharat Forge and Press
Industries (P) Ltd. Vs. Collector of Central Excise, Baroda, Gujarat, , wherein it is held that bending of pipes per se will not amount to
manufacture and no duty could be claimed. Learned senior counsel also placed reliance upon the decision of the Apex Court in M/s. Bharat Forge
and Press Industries (P) Ltd. Vs. Collector of Central Excise, Baroda, Gujarat, to substantiate that no duty could be demanded, since the product
is not marketable and it should be understood as per the commercial parlance. He would further add that inasmuch as the marketing process is not
involved, no duty can be levied. It is also contended that while classifying the goods, the product should not be classified based on scientific and
technical terms. In this connection, he has placed reliance upon the decision of the Apex Court in INDO INTERNATIONAL INDUSTRIES v.
COMMISSIONER OF SALES TAX 1981 E.L.T. 325, wherein it is held that clinical syringes could not be treated as ""glass works"".
Per contra, the learned Senior Central Government Standing Counsel appearing for the respondents would contend that all the authorities have
rendered a finding of fact to the effect that the product falls under the particular category and the tribunal by considering the definition of pipes and
tubes as given in HSN (Hormonised System of Nomenclature), held that the product has to be classified as pipe fittings, falling under tariff heading
7307 and as such, no interference is called for.
The learned Senior Central Government Standing Counsel would also contend that as per the decision rendered by the Apex Court in Collector
of Central Excise, Baroda Vs. L.M.P. Precision Eng. Co. Ltd., , entry has to be interpreted by referring to the express words in the tariff heading.
He has also placed reliance upon the decision of the Apex Court in O.K. Play (India) Ltd. Vs. Commissioner of Central Excise, Delhi-III,
Gurgaon, to the effect that the guidelines as given in HSN should be looked into considering the product as used in the trade or common parlance.
He further contended that the taxing statutes should be interpreted by literal and strict construction as found in the statues and placed reliance upon
the decision of the Apex Court in Hansraj and Sons Vs. State of Jammu and Kashmir and Others, . The learned Senior Central Government
Standing Counsel would also contend that only an appeal shall lie and the writ petition is not maintainable in law and that judicial review is not
permissible inasmuch as there is no procedural infraction in the decision making process.
I have considered the rival contentions of the learned counsel appearing on either side.
The authorities as well as the first respondent tribunal mainly proceeded on the footing that under the description pipe fittings as set out in the
HSN, the product falls under the said classification and the petitioner herein has not adduced any evidence to substantiate his claim. The decision
of the Apex Court in M/s. Bharat Forge and Press Industries (P) Ltd. Vs. Collector of Central Excise, Baroda, Gujarat, , deals with the
classification of the pipe fittings. Even though the said decision was rendered under tariff item 26AA (iv) of the erstwhile tariff, the observation cont
ained therein about the pipe fittings, cannot be ignored. The Supreme Court, while dealing with the issue in the said decision, has held that though
all pipes and tubes cannot be described as pipe fittings, has gone to the extent of holding that the pipe fittings are only species of pipes and tubes. It
is only under the said context, in the subsequent classification, the product pipe fittings is described by citing examples such as couplings, elbows,
sleeves. While describing other tubes and pipes, in the tariff classification, it is clearly described as welded, riveted or similarly closed. It is not the
case of the respondents that the petitioner joints the two pipes by using couplings, elbows or sleeves.
Even the tribunal, in paragraph-5 of its order, has observed that the item in question is formed out of portions cut at desired angles from the
pipes by welding different pieces with the ends cut at desired angles. The tribunal in the very same paragraph has also observed that the bend is
formed by reason of welding of different pieces to withstand the high pressure of water which flows from one end of the straight line pipe to the
other end of another straight line pipes so laid. Though the tribunal has observed as above, has considered the fact that functionally the pieces in
question function as joints between two pipes, classified the product at the entry 7307.00. Inasmuch as a clear description is given about the
product of pipe fittings under entry 7307.00 by citing examples such as couplings, elbows or sleeves, the tribunal is not correct in holding that the
product also functions as a joint of two pipes. On the other hand, under entry 73 .05, the pipes are described as a product which can be welded,
riveted or similarly closed. Admittedly, even as per the finding rendered by the tribunal, the process of welding is involved with regard to the
product in question. If that is so, as per the decision of the Apex Court in Collector of Central Excise, Baroda Vs. L.M.P. Precision Eng. Co. Ltd.,
and Hansraj and Sons Vs. State of Jammu and Kashmir and Others, , if literal and strict construction is given, the product will not fall under
classification 73 07.00. But on the other hand, it would fall under classification 73.0 5 under sub heading 7305.90.
The tribunal erred in defining the product as ""pipe fittings"" by considering the definition of ""pipe and tubes"" as given in HSN. The definition of
pipes and tubes"" as given in HSN is set out hereunder:-
Tubes and pipes
Concentric hollow products, of uniform cross-section with only one enclosed void along their whole length, having their inner and outer surfaces of
the same form. Steel tubes are mainly of circular, oval, rectangular (including square) cross-sections but in addition may include equilateral
triangular and other regular convex polygonal crosssections. Products of cross-section other than circular, with rounded corners along their whole
length, and tubes with upset ends, are also to be considered as tubes. They may be polished, coated, bent ( including coiled tubing), threaded and
coupled or not, drilled, waisted, expanded, cone shaped or fitted with flanges, collars or rings.
The definition of ""pipe fittings"" as out in the HSN reads as follows:-
This heading covers fittings of iron or steel, mainly used for connecting the bores of two tubes together, or for connecting a tube to some other
apparatus or for closing the tube aperture. This heading does not however cover articles used for installing pipes and tubes but which do not form
an integral part of the bore (e.g., hangers, stays and similar supports which merely fix or support the tubes and pipes on walls, clamping or
tightening bands or collars (hose clips) used for clamping flexible tubing or hose to rigid piping, taps, connecting pieces, etc.) (heading 73.25 or
73.26).
The connection is obtained:
- by screwing, when using cast iron or steel threaded fittings;
- or by welding, when using butt-welding or socket-welding steel fittings. In the case of butt-welding, the ends of the fittings and of the tubes are
square cut or chamfered;
- or by contact, when using removable steel fittings.
This heading therefore includes flat flanges and flanges with forged collars, elbows and bends and return bends, reducers, tees, crosses, caps and
plugs, lap joint stub-ends, fittings for tubular railings and structural elements, off sets, multi-branch pieces, couplings or sleeves, clean out traps,
nipples, unions, clamps and collars.
A perusal of definition of both the headings disclose that the process of welding is involved. But however, the ""pipe fittings"" proceeds to the effect
that the said heading covers fittings of iron or steel, mainly used for connecting the bores of two tubes together, or for connecting a tube to some
other apparatus or for closing the tube aperture. The abovesaid description does not find place in the definition of ""tubes and pipes"".
In the case on hand, the product is not used to connect the two pies, but on the other hand, the process of welding is involved by connecting
the pipes at desired angles in the different pieces and the pipe is bent to withstand high pressure of water which flows from one end of pipes to the
other end of pipes. Hence the definition as contained in HSN cannot be construed that the product in question can be termed as pipe fittings as
classified under 7307.00.
Apart from the above fact, the Supreme Court has repeatedly held that the tariff entries must be interpreted as per the commercial parlance
test and not in the scientific and technical terms. In connection with the above proposition of law, it is useful to refer to the decisions referred in
Indo International Industries v. Commissioner of Sales Tax 1981 E.L.T. 325 , Pharm Aromatic Chemicals Vs. Municipal Corpn. of Greater
Bombay, , Novopan India Ltd., Hyderabad Vs. Collector of Central Excise and Customs, Hyderabad, , G.S. Auto International Limited Vs.
Collector of Central Excise, Chandigarh, and National Mineral Development Corporation Ltd v. State of Madhya Pradesh 2004 (7) Supreme
372.
As regards the contention to the effect that a writ is not maintainable and only an appeal shall lie is concerned, the Apex Court and this Court in
number of decisions has taken the view that the question of alternative remedy should be raised at the earliest point of time and not at the final
hearing of the writ petition. In the instant case, the writ petition was admitted as early as in the year 1997, and in the year 2005, the writ petition is
not liable to be dismissed on this score. In this connection, it is useful to refer to a decision of the Apex Court in A.V. Venkateswaran, Collector of
Customs, Bombay Vs. Ramchand Sobhraj Wadhwani and Another, , wherein it is held as follows:-
It is true that existence of an alternate remedy is a bar to the maintainability of a petition under Article 226 of the Constitution unless there is a
complete lack of jurisdiction in the officer of authority concerned or where the order has been passed in violation of principles of natural justice, but
this rule is a rule of policy, convenience and discretion rather than that of law. Therefore, where the order levying duty at the higher rate is based on
an incorrect interpretation of the tariff entry and that too on the Board''s ruling, the alternative remedy being facility, would not operate as a bar in
exercising writ jurisdiction under Article 226 of the Constitution of India.
As regards the contention urged by the learned Central Government Standing Counsel to the effect that judicial review is not permissible,
inasmuch as the product is classified under a wrong entry, in the absence of sufficient materials, it is always open to this Court, in exercise of
powers conferred under Article 226 of the Constitution, to set aside the manifest error on the part of the authorities.
For the reasons stated above, I am of the opinion that the impugned order is liable to be quashed and accordingly, the writ petition is allowed.
No costs.