As per case facts, the appellant, M/S. STP LIMITED, manufactured coal tar products and sought excise duty exemption for these products, claiming they fell under the "tar" category of Tariff ...
No Acts & Articles mentioned in this case
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PETITIONER:
M/S. STP LIMITED
Vs.
RESPONDENT:
COLLECTOR OF CENTRAL EXCISE, PATNA & ORS.
DATE OF JUDGMENT: 02/12/1997
BENCH:
S.P. BHARACHA, SUHAS C. SEN
ACT:
HEADNOTE:
JUDGMENT:
THE 2ND DAY OF DECEMBER, 1997
Present:
Hon'ble Mr. Justice S.P. Bharucha
Hon'ble Mr. Justice Sushas C.Sen
S. C. Birla, Subrat Birla, Ms. Vipin Gupta, Advs. for the
appellant
K.N.Bhat, Additional Solicitor General, K.N.Bajpai,
R.N.Verma, V.K.Verma, Advs. with him for the Respondents.
J U D G M E N T
The following Judgment of the Court was delivered:
SEN, J.
The appellant is a Company engaged in manufacture of
coal tar products. An exemption notification was issued by
the Central Government exempting tar falling under Tariff
Item 11 of Central Excise Tariff from the whole of excise
duty leviable thereon. Tariff Item No.11 is:
"-------------------------------------------------------
Item Description of Goods Rate of duty
-------------------------------------------------------
11. COAL (EXCLUDING LIGNITE)
AND COKE ALL SORTS,
INCLUDING CALCINED
PETROLEUM COKE: ASPHALT,
BITUMEN AND TAR-
(1) Coal and coke not else- Ten rupees per metric
where specified tonne.
(2) Petroleum coke, other Twenty per cent ad
than calcined petroleum valorem plus two
coke. rupees per metric
tonne.
(3) Calclined petroleum Twenty per cent ad
coke valorem.
(4) Asphalt and bitumen Two hundred rupees
(including cutback per metric tonne.
bitumen and asphalt)
natural or produced
from petroleum or
shale.
(5) Tar distilled from coal One hundred rupees per
or lignite and other metric tonne.
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mineral tars, including
partially distilled tars
and blends of pitch with
creosote oils or with other
tar distillation products.
-----------------------------------------------------------
The Exemption notification is as follows:
"Tar is exempt from duty TAR
121/62-CE, dt. 13.6.62
In exercise of the powers conferred
by Rule 8 (1) of the Central Excise
Rules. 1944, falling under Item 11
with effect from the 24th April,
1962 from the whole of the excise
duty leviable thereon".
The appellant's case before the excise authority was
that its products were fully exempt from excise duty by
virtue of the above notification. The case of the
Department on the other hand, is that the goods manufactured
by the appellant did not come within the ambit of Tariff
Item 11. Therefore, there is no question of granting any
exemption from excise duty to these production. The dispute
ultimately went to the Tribunal. The Tribunal, after hearing
the parties and taking into consideration. the report of
the Chemical Examiner, came to the conclusion that some of
the goods manufactured by the appellant came within the
ambit of clause (5) of Tariff Item 11 and, therefore, were
exempt from excise duty. The Tribunal, however, held that
no relief could be given to the assessee in respect of some
of the products in view of an earlier decision in the case
of Indian Aluminium Co. Ltd. vs. Collector of Customs Cochin
1988 (38) ELT 68 (Tribunal). The relevant part of the order
of the Tribunal is as under:
"We do not see any reason to deviate from the above-
referred to decision. Respectfully fowling the same.
We uphold the classification of items at serial nos. 3
to 8 under item 68, OET. Notification No.121/62
applied only to tar falling under Item No.11(5).
Therefore, it does not apply to the subject pitches."
The goods mentioned in Serial Nos. 3 to 8 of the
Chemical Examiner's Report were as under:
-----------------------------------------------------
Sl. No Description Gift of the results
in the of the products results of chemical
classi- test
fication
list.
-----------------------------------------------------
1. xxx xxx
2. xxx xxx
3. Soft Pitch The sample is coal tar
pitch
4. Soft Medium Pitch -do-
5. Hard Pitch -do-
6. Hard Medium Pitch -do-
7. Special Hard Pitch The sample is coal tar
pitch
8. Electrode Pitch The sample has the
characteristics of coal
tar pitch
--------------------------------------------------------
The Tribunal did not give any separate reasons of its
own for coming to its decision but merely followed the
judgment of another Bench of the Tribunal in the case of
Indian Aluminium Co. Ltd. v. Collector of Customs, Cochin,
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1988 (38) E.L.T. 68 (Tribunal). In that case, it was held
that coal tar and coal tar pitch were two separate
commodities. Technical literature showed that pitch was
obtained from distillation of coal tar. No evidence had
been produced to show that from the pitch, which was the
residuary product of distillation of tar, any further
distillation product could be obtained. The coal tar
comprised of many constituents and if any part of these
constituents were removed by distillation. then some
constituents would remain in it This tar could be considered
as partially distilled tar and remaining identificable
constituents could be distilled out of it. So far as the
pitch was concerned. No further identificable products
were obtained from the same on distillation for it to be
considered as partially distilled tar.
It was further held that the term "partially distilled
tar" as used in Item 11(2) of the central Excise Tariff had
not been defined in any technical book. Therefore, it had
to be understood in the context of distillation process and
coal tar as stated above. There was no reason for
considering coal tar pitch as partially distilled tar. it
was an item distinct from coat tar or partially distilled
tar.
On behalf of the respondents, strong reliance was
placed on this judgment and it was contended that what the
appellants had manufactured was various types of pitch which
did not come within the ambit of Tariff Item 11(5) and,
therefore, did not qualify for exemption.
On behalf of the appellant our attention was drawn to
adjustment of this Court in the case of Steel Authority of
India limited v. Collector of Excise Bolpur. West Bengal
1997 (91) E.L.T. 529 (S.C.) where it was held that the
exemption notification exempted 'tar' falling under Item 11
of the First Schedule to the central Excises and Salt Act.
1944. The meaning of 'tar' had to be gathered from the
Tariff description given in clause 5 of Tariff Item No.11.
An inclusive definition had been given to 'Tar' which
included "partially distilled tars and blends of pitch with
craosote oils or with other tar distillation products".
Therefore, 'tar' would include everything which has been
included in the extended definition. Having regard to the
wording of the Notification and also the wording of the
Tariff Item No.11. the product of the assessee (PCM)
qualified for the benefit of the Exemption Notification.
On behalf of the respondent, a distinction was sought
to be drawn between tar and products made out of pitch. The
contention is that what the appellants had manufactured were
not tar distilled from coal. These products also could not
be regarded as blends of pitch with creosote oil.
Therefore, these products could not given the benefit of the
exemption notification.
We are unable to uphold this contention. The Tariff
heading speaks of "Asphalt, Bitumen and Tar". "Tar" has been
given an expanded definition in clause (5). Tar distilled
from coal or lignite or any other mineral will come within
the ambit of this definition. The inclusive clause,
thereafter, extends the definition to partially distilled
tars and blends of pitch with creosote oils or with other
tars and blends of pitch with creosote oils or with other
tar distillation products, It is not in dispute that pitch
is obtained by distillation of tar. It has been argued on
behalf of the respondents that the residue of distillation
of tar is pitch. We fall to see this fine distinction.
Pitch is brought about by distillation of tar. If the
contention of the respondent is to be upheld, it will have
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to be held that even though pitch is brought forth by
distillation of tar. It is not "tar distillation product".
We are unable to uphold this distinction for another
reason. According to "Webster Comprehensive Diction
International Edition "coal tar" means "the black viscid
pitch distilled from bituminous coal. and yielding a large
variety of organic compounds used in the making of dve
stuffs explosives flavoring extracts, drugs, plastics etc."
Therefore, in a sense coal tar itself is a variety of pitch
By distillation of coal tar, a type of pitch is obtained.
That must come within the phrase 'tar distillation product'
Moreover, if there is any doubt in the construction of any
provision of taxing statute, that doubt must be resolved in
favour of the assessee.
In the premises. We are of the view that the appeal
must succeed.
The judgment under appeal is set aside on the point in
dispute. The appeal is allowed, there will be no order as
to costs.
The landmark Supreme Court judgment in M/S. STP LIMITED vs. COLLECTOR OF CENTRAL EXCISE, PATNA & ORS., delivered on December 2, 1997, provides crucial insights into Central Excise Duty Exemption and the complex nature of Coal Tar Products Taxation. This significant ruling, available on CaseOn, addresses the classification and taxability of various coal tar products, particularly in the context of exemption notifications under the Central Excise Tariff.
The petitioner in this case was M/S. STP LIMITED, engaged in the manufacture of coal tar products. The respondent was the Collector of Central Excise, Patna & Ors. The bench comprised Hon'ble Mr. Justice S.P. Bharucha and Hon'ble Mr. Justice Suhas C. Sen.
The core issue revolved around whether the various coal tar products manufactured by M/S. STP LIMITED, specifically different types of pitch, qualified for an excise duty exemption under Notification No. 121/62-CE, dated June 13, 1962. This notification exempted 'tar' falling under Tariff Item 11 of the Central Excise Tariff from the whole of the excise duty.
The relevant legal framework was Tariff Item 11 of the Central Excise Tariff, which specifies various coal-derived products and their respective rates of duty. Specifically, sub-item (5) of Tariff Item 11, which includes "Tar distilled from coal or lignite and other mineral tars, including partially distilled tars and blends of pitch with creosote oils or with other tar distillation products," was central to the dispute. The exemption notification (121/62-CE) explicitly granted full exemption to 'tar' falling under this Item 11.
Previous judgments were also considered, particularly:
The appellant argued that its products were fully exempt based on the notification. The Department, however, contended that the goods did not fall under Tariff Item 11. The Tribunal, after reviewing a Chemical Examiner's report, agreed that some of the appellant's products (Soft Pitch, Soft Medium Pitch, Hard Pitch, Hard Medium Pitch, Special Hard Pitch, and Electrode Pitch) were indeed "coal tar pitch" and "coal tar products." However, following the precedent set in the Indian Aluminium Co. Ltd. case, the Tribunal denied exemption for "pitches," asserting that the notification applied only to 'tar' falling under Item 11(5) and not to 'pitch'.
The Department strongly relied on the Indian Aluminium case, arguing that the manufactured pitches were distinct from 'tar' as defined in Item 11(5), and thus ineligible for exemption. The appellant, however, highlighted the Steel Authority of India judgment, emphasizing the inclusive definition of 'Tar' in Tariff Item 11(5), which specifically mentioned "blends of pitch" and "tar distillation products." They contended that pitch, being a product of tar distillation, should be covered.
The Supreme Court found the distinction drawn between tar and pitch by the Tribunal to be overly fine and unsustainable. The Court reinforced the principle from the Steel Authority of India case that the meaning of 'tar' should be interpreted broadly, in line with its inclusive definition under Tariff Item 11(5). Since pitch is obtained by the distillation of tar, it logically falls within the ambit of "tar distillation products." The Court also referenced Webster's Comprehensive Dictionary, International Edition, which defines "coal tar" as "the black viscid pitch distilled from bituminous coal." This further supported the view that coal tar itself is a variety of pitch, and pitch obtained from the distillation of coal tar would be considered a 'tar distillation product'.
For legal professionals seeking rapid comprehension of such nuanced rulings, CaseOn.in offers 2-minute audio briefs, providing a concise yet thorough analysis of key judgments like M/S. STP LIMITED vs. COLLECTOR OF CENTRAL EXCISE, PATNA & ORS., which can significantly aid in understanding complex classifications and interpretations.
Crucially, the Court reiterated a fundamental principle of taxation law: if there is any doubt in the construction of a taxing statute, that doubt must be resolved in favour of the assessee. Given the ambiguities surrounding the distinction between tar and pitch in the context of the exemption, the benefit of doubt was extended to M/S. STP LIMITED.
The Supreme Court concluded that the appellant's products, which were various types of pitch derived from coal tar distillation, fell within the inclusive definition of 'tar' under Tariff Item 11(5) of the Central Excise Tariff. Consequently, the Court held that the products were eligible for the excise duty exemption granted by Notification No. 121/62-CE. The judgment under appeal was set aside, and the appeal was allowed.
This judgment serves as an important precedent for several reasons:
Lawyers and students studying excise law, statutory interpretation, and taxation principles will find this judgment invaluable for understanding how courts approach complex classification issues and apply established legal maxims.
All information provided in this article is for informational purposes only and does not constitute legal advice. While efforts have been made to ensure accuracy, readers should consult with a qualified legal professional for advice on specific legal issues.
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