TMI Blog1984 (4) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants have a factory at Jamshedpur in which they manufacture steel ingots and semi-finished steel with the aid of electric arc furnace from steel melting scrap. The factory went into production in 1974 and was manufacturing only steel ingots, which were made from duty paid steel melting scrap and were exempted from duty under Notification No. 66/73-C.E., dated 1-3-1973. This provided that steel ingots were fully exempt, if made from fresh un-used melting scrap on which appropriate duty had been paid provided no proforma credit or set-off have been availed of. If fresh un-used duty paid melting scrap was used, in admixture with other material, the exemption was limited to the duty paid on such steel melting .scrap, under Notification No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Notification referred to above was not admissible. In his order, the Appellate Collector held that whether classification of the scrap under Item 26AA was a mistake or not, the appellants are not entitled to the exemption under Notification No. 55/73 (presumably No. 66/73). With regard to Notification No. 42/74, the refund claim was made on the ground that the appellants had paid duty on the ingots under protest and the Central Excise Officer had allowed that the P.B. scrap received under Rule 56A is classifiable under Item 26 with effect from 21-10-1975. Their refund claim is in respect of the duty paid on the melting scrap. Because they have already received the same under Rule 56A of the Central Excise Rules, 1944, therefore, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (f) the ground for rejecting the benefit under Notification No. 42/74 was passed on the wrong presumption that proforma credit was taken by the appellant for duty paid by Tinplate Company, as the appellants did not work under Rule 56A. If they had so worked, there would have been no question of claiming exemption from duty on steel ingots; (g) by denial of exemption and refund, the appellants have been discriminated against and put to heavy financial loss at the rate of ₹ 330/- or more per M.T. (h) at the material time, the effective rate under Item No. 26 was lower than the minimum effective rate under Item 26AA viz. ₹ 200/-(Rs. 100/- Basic+Rs. 100/- auxiliary) as against minimum ₹ 330/-(Rs. 165/- Basic+Rs. 165/- au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom, inter alia, iron or steel products, which have already paid the appropriate duty under Item 26A A, is wholly exempted, if no set-off of duty has already been obtained. The Government has also clarified that duty on scrap is leviable at the rate for scrap and not the rate at which profoma credit was claimed. From Paras 4 and 5 of the Order-in-Original, it is clear that the claim for refund was rejected because (a) the scrap had borne duty under Item 26AA and there was no exemption to ingots from duty equivalent to duty paid on goods of Item 26AA used in their manufacture ; and (b) that a clarification was sought by the appellants from government to extend the scope of Notification Nos. 42/74 and 144/75 to their scrap to grant exgratia r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. He agreed that the order of the Appellate Collector was not correct otherwise also, as no proforma credit was availed by the appellant. He, however, drew a distinction between a defective ingot which can be re-rolled and becomes Rerollable scrap , on the one hand ; and melting scrap , on the other. What is used in the present case is scrap of steel and not steel melting scrap. In the case of Universal Cables v. U.O.I., it was held that defective goods were excisable goods (1977 E.L.T. 92). In this case, duty was paid under Item 26AA as the goods were products obtained after rolling tin bars and not classifiable as scrap. He urged that Notification No. 42/74 is a set-off notification and the prescribed procedure could not be followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e words duty leviable have been used. It is also seen from Notification 54/64 that steel melting scrap, falling under Item 26, can also be obtained from iron and steel products, which have paid duty under Item 26AA, and that it is completely exempted, if no set-off was obtained. We are, therefore, unable to accept the contention of the learned Senior Departmental Representative that the words falling under Item 26 are to be read into Notification No. 42/74. All that is necessary to avail the benefit of the exemption is that the steel ingots should be made using fresh unused duty paid steel melting scrap and that the duty on the scrap has been proved to the satisfaction of the proper officer to have been paid. The appellants are claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X
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