Holding

Pipe fittings are a species of pipes and tubes and are dutiable under Item 26AA(iv) of the First Schedule, not under the residuary entry 68.

Summary

Bharat Forge & Press Industries manufactures pipe fittings such as elbows, bends and reducers from steel pipes and tubes on which excise duty has already been paid. The Department classified these fittings under the residuary tariff entry 68, arguing they are a distinct commercial commodity, while the appellant contended they remain pipes and tubes and should be taxed under Item 26AA(iv) of the Central Excise Tariff. The Customs Excise and Gold Appellate Tribunal upheld the Department’s view, prompting an appeal to the Supreme Court under s.35L(b) of the Central Excise and Salt Act, 1944. The Court held that unless the Department can prove the goods cannot be placed under any specific entry, the residuary entry cannot be used, and that the language of Item 26AA(iv) – "pipes and tubes (including blanks) all sorts" – comprehensively covers pipe fittings, which are merely a species of pipes and tubes with unchanged physical properties and end‑use. Consequently, the appeal was allowed and the Tribunal’s order set aside, directing modification of the assessments.

Issues considered

Whether pipe fittings such as elbows, bends and reducers fall within Item 26AA(iv) of the Central Excise Tariff and are therefore dutiable under that specific entry.
Whether the Department can validly classify the pipe fittings under the residuary entry 68 in the absence of a clear exclusion from all specific tariff items.

Legislation cited

Central Excises and Salt Act, 1944s. 35L(b)

Subjects

central excisetariff classificationpipe fittingspipes and tubesresiduary entryItem 26AA(iv)customsexcise dutyinterpretation of tariff

Judgment

BHARAT FORGE & PRESS INDUSTRIES (P) LTD.
A
v.
COLLECTOR OF CENTRALEXCISE, BARODA, GUJARAT J.._

JANUARY 16, 1990

B [S. RANGANATHAN, N.D. OJHA AND
J.S. VERMA, JJ.]

Central Excises and Salt Act, 1944: First Schedule Item -~
26AA(iv )-'Pipe fittings'-Levy of excise duty-Whether could be clas-
sified as 'pipes and tubes'-Whether a different commercial commodity.
c Steel pipes and tubes (including blanks therefor) all sorts,
whether rolled, forged, spun, cast, drawn, annealed, welded or
extruded were dutiable under Item 26AA(iv) of the First Schedule to
the Central Excises and Salt Act, 1944. The Department, however,
sought to classify 'pipe fittings' such as elbows, bends and reducers,
D manufactured by the appellants, from out of the steel pipes purchased
from the open market on payment of excise duty, under Item 68 which
was a residuary entry, on the ground that they were known in the
market differently as pipe fittin1~s, a totally different commercial com-
modity. The appellants' claim that the process undertaken by them .did
not amount to manufacture as the products turned out were nothing but
E pipes and tubes, and that they were being virtually asked to pay duty
twice over on the same prodluct, was rejected by the Appellate
Tribunal.
•
Allowing the appeal under s. 35L(B) of the Act, the Court,

F HELD: J. Unless the Department could establish that the goods
:'\-
in question could by no conceivable process of reasoning be brought !
under any of the tariff items, rE,sort could not be had to the residuary
item. This has not been done in the instant case. [62F]

2.1 The use of the words 'all sorts of' and the reference to the
G various processes by which the e>:cisable items could be manufactured set
out in Entry 26AA(iv) are comprehensive enough to encompass all sorts
of pipes and tubes. [64F]

2.2 The expression "pipe fittings" merely denotes that it is a pipe
or tube of a particular length, sj«e or shape. Pipe fittings do not cease to
H be pipes and tubes; they are only a species thereof. In order to achieve
60
BHARAT FORGE INDUSTRIES v. C.C.E. [RANGANATHAN, J.] 61

fully the purpose for which the pipes and tubes are manufactured, it is
A
necessary to manufacture smaller pieces of pipes and tubes and also to
manufacture them in such a shape that they may be able to conduct
liquids and gases, passing them through and across angles, turnings,
corners and curves or regulating their flow in the manner required.
This is done by a process of forging, welding, hammering and so on
applied to the longer tubes. There is no change in their basic physical B
properties and there is no change in their end use. They are merely
intended as accessories or supplements to the larger pipes and tubes. It
could not, therefore, be said that pipe fittings, though they may have a
distinctive name or badge of identification in the market, were not pipes
and tubes. [63B-C, 62G-63A, 64E]

Indian Aluminium Cables Ltd. v. Union of India & Ors., [1985] 3
S.C.C. 284, referred to.

3. No doubt "tubes and pipes" and "pipe fittiugs'.' fall under
different sub-items under the Harmonised Code as well as nuder the
Customs Cooperative Council Nomenclature where two expressions are D
used in contrast and the sub-classification is more detailed. That
dichotomy could not be imported into the instant case where there was
only one comprehensive and generic entry. [65B-C]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1057
of 1987. E

From the Order dated 29.12.1986 of the Customs Excise and
Gold (Control) Appellate Tribunal, New Delhi in Appeal No. ED/SB/
7 A No. 186/82-BI in Order No. 826/86-BI.

D.N. Mehta, R.C. Misra and Dr. Meera Agarwal for the F
Appellants.
"· V.C. Mahajan and R.P. Srivastava for the Respondent.

The Judgment of the Court was delivered by
G
RANGANATHAN, J. Item 26AA(iYJ of the Central Excise
Tariff reads as follows:

"Pipes and tubes (including blanks therefor) all sorts,
whether rolled, forged, spun, cast, drawn, annealed,
welded or extruded" H
62 SUPREME COURT REPORTS [1990) 1 S.C.R.

The appellants are engaged in the manufacture of pipe fittings
A
such as elbows, bends and reducers. They purchase steel pipes on
payment of excise duty prom indigenous producers from the open .....
market and they also get steel tubes by way of import. The appellants
cut the pipes and tubes into different sizes, give them shape and turn
them into pipe fittings in their factories by heating in a furnace (at a
B temperature between 66 degrees C and 900 degrees C) hammering and
pressing. The short question in this appeal is whether the pipe fittings
so produced by the petitioners also fall under Item 26AA(iv) or
whether they should be classified under tariff item 68, which is the
residuary entry.

The case of the appellants is that the products manufactured by
c them are also nothing but pipes and tubes and that they are being
virtually asked to pay duty twice over on the same product. According
to them the processes undertaken by them do not amount to manufac-
ture and no new product has come into existence as a result of the
processes employed in their factories. They say that the pipes and tubes
D retain their material and original character and use and they can also
be had only from dealers dealing in pipes and tubes. This claim of the
appellants has not been accepted by the Central Customs Excise and
Gold Appellate Tribunal and hence the present appeal under section
35L(b) of the Central Excises and Salt Act, 1944.

E The question before us is whether the Department is right in
claiming that the items in question are dutiable under tariff entry
No. 68 This, as mentioned already, is the residuary entry and only such
goods as cannot be brought under the various specific entries in the
tariff should be attempted to be brought under the residuary entry. In
otber words, unless the department can establish that the goods in
F question can by no conceivable process of -reasoning be brought under
any of the tariff items, resort cannot be had to the residuary item. We
do not think this has been done. Looking at Tariff item 26AA(iv), it
encompasses all sorts of pipes and tubes. It is also clear that it is of no
consequence whether the pipes and tubes are manufactured by rolling,
forging, spinning, casting, drawing, annealing, welding or extruding. It
G is true that initially pipes and tubes may be obtained from sheets,
billets or bars by various processes, but the process of manufacture of
pipes and tubes does not end there. In order to achieve fully the
purpose for w'1ich the pipes and tubes are manufactured, it is neces-
sary to manufacture smaller pieces of pipes and tubes and also to
manufacture them in such a shape that they may be able to conduct
H liquids and gases, passing them through and across angles, turnings,
BHARAT FORGE INDUSTRIES v. C.C.E. [RANGANATHAN, J.i' 63

corners and curves or regulating their flow in the manner required.
A
Smaller pieces of pipes and tubes differently shaped are manufactured
for this purpose. They are merely intended as accessories or supple-
ments to the larger pipes and tubes. They are pipes and tubes made out
of pipes and tubes. There is no change in their basic physical proper-
ties and there is no change in their end use. There is no reason why
these smaller articles cannot also be described as pipes and tubes. B

But, it is said, they are known in the market differently as pipe
fittings, a totally different commercial commodity. The expression
"pipe fittings" merely denotes that it is a pipe or tube of a particular
length, size or shape. "Pipe fittings" do not cease to be pipes and
tubes; they are only a species thereof. This aspect of the matter can be
illustrated by the decision of this Court in Indian Aluminium Cables c
Ltd. v. Union of India and others, [1985] 3.S.C.C. 284. In that case the
question was whether "Propcczi Rods" manufactured and cleared by
the assessee fell within Entry 27(a)(ii) of the First Schedule to the
Central Excises and Salt Act, I of 1944. That entry read as follows:
D
Aluminium

' (a) wire bars, wire rods and castings, not otherwise
specified.

It was contended, on behalf of the appellant, inter alia, that, commer- E
cially, Properzi Rods are not known as wire rods in the trade and that a
person wanting to purchase Properzi Rods asks specifically for Pro-
perzi Rods and not for wire rods. Reliance was also placed on the view
taken by this Court that words and expressions describing an article in
a tariff schedule should be construed in the sense in which they are
understood in the trade by the dealer and the consumer. The Court F
held that Properzi Rods were only a species of wire rods. It pointed
out:

~'To sum up the true position, the process of manufacture
of a product and the end use to •vliich it is put, cannot
necessarily be determinative of fo~ classification of that G
product under a fiscal schedule like the Central Excise
'-. Tariff. What is more important is whether the broad
description of the article fits in with the expressiorliused in
the Tariff. The aluminium wire rods, whether obt~ined by
the extrusion process, the conventional process or by Pro-
perzi process,, are still aluminium wire rods. The process of H
64 SUPREME COURT REPORTS [1990] 1 S.C.R.

manufacture is bound to undergo transformation with the
A
advancement in science and technology. The name of the
end-product may, by reason of new technological proces-
ses, change but, the basic nature and quality of the article
may still answer the same description. On the basis of the
material before us, it is not possible to record a positive
B finding that Properzi Rods and wire rods are treated as
distinct items in commercial parlance. Properzi Rod is a
wire rod subjected to the Properzi process and is used for
transmission of high voltage electric current."

The position is somewhat similar in the present case. As explained
C above, the goods described in the tariff, namely, pipes and tubes are
designed to meet various types of requirements. Normally pipes and
tubes are produced as long and straight pieces. But by themselves they
cannot fulfil all the needs or the end use for which th,ey are intended.
To get the maximum use out of the pipes and tubes, it is necessary not >....
only to produce long and straight pipes and tubes but also to turn out
D pipes and tubes of smaller dimensions and of different shapes and
curves such as bends, elbows, 'T' pieces, 'Y' pieces, plugs, caps,
flanges, joints, unions, collars and so on. This is done by a process of
forging, welding, hammering and so on applied to the longer tubes but
basically the items remain the same and the use also remains the same.
The ·ariff entry calls for no distinction between pipes and tubes
E mant:factured out of sheets, rods, bars, plates or billets and those
turned out from larger pipes and tubes. In these circumstances it is
difficult to say that pipe fittings, though they may have a distinctive
name or badge of identification in the market, are not pipes and tubes.
It is true that all pipes and tubes cannot be described as pipe fittings.
But it would not be correct to say that pipe fittings are not pipes and
F tubes. They are only a species of pipes and tubes. The use of the words /
"all sorts" and the reference to the various processes by which the
excisable item could be manufactured set out in the tariff entry are
comprehensive enough to sweep within their fold the goods presently
under consideration.

G A certain amount of reliance has been placed on entries in the
Harmonised Code as well as in the Customs Cooperative Conncil
Nomenclature (CCCN). We do not think that these entries and specifi-
cations are very helpful. The CCCN contains a number of entries in
Section XV, namely, heading Nos. 73.17 to 73.20. While heading Nos.
73.17 to 73.19 talk of pipes, tubes and conduits, heading No. 73.20
H speaks of "tube and pipe fittings (for example, joints, elbows, unions
BHARAT FORGE INDUSTRIES v. C.C.E. [RANGANATHAN, J.] 65

and flanges) of iron and steel". Section XVI also deals with some A
types of pipes and tubes. The position is similar under the Harmonised
Code. In Section XV, there is an equally meticulous sub-division.
Heading Nos. 73.02 to 06 deal with various types of pipes and tubes.
Then comes heading No. 73.07 which specifically talks of "tube or pipe
fittings (for example, couplings, elbows, sleeves) of iron and steel
(including stainless steel)" and proceeds to set out various subdivisions B
of these items one of which is (7307.23 & 7307.93) "butt welding
·fittings" which is the item of manufatture in the present case. It is true
that "tubes and pipes" and "pipe fittings" fall under different sub-
items under the above Codes where the two expressions are used in
contrast and the sub-classification is more detailed. That dichotomy
cannot be imported into the present context where there is only one c
comprehensive and generic entry. We cannot, therefore, derive any
assistance from those entries.

For the above reasons we are of the opinion that the view taken
by the Tribunal is not correct and that the assessee's contention that
the goods in question fall under item 26AA(iv) should be accepted. D
We, therefore, set aside the order of the Tribunal and direct the
modification of the assessments accordingly. In the circumstances,
however, we make no order as to costs.

1>.S.S. Appeal allowed.
E

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