1995 (5) TMI 101 - AT - Central Excise

Summary

Issues Involved:
1. Entitlement to benefit of Notification No. 55/80 or other relevant notifications for flats manufactured from duty-paid steel ingots, semi-finished steel, and re-rollable scrap.
2. Demand of duty on scrap clearance and applicability of the extended period under Section 11A of the Central Excises and Salt Act, 1944.

Issue-wise Detailed Analysis:

1. Entitlement to Benefit of Notification No. 55/80 or Other Relevant Notifications:

The appellants manufactured flats from duty-paid steel ingots, semi-finished steel, and re-rollable scrap, and claimed set-off under Notification No. 55/80. The authorities denied this benefit, arguing that the notification does not cover products made from re-rollable scrap. The appellants contended that they followed approved classification lists and maintained proper accounts. They argued that the scrap used was duty-paid and that the intention of the legislation was to avoid double taxation on final products made from duty-paid materials.

The Assistant Collector rejected the appellants' contentions, stating that the scrap used in manufacturing did not qualify for the notification's benefits. The Collector (Appeals) upheld this decision but limited the duty demand to six months. The appellants argued that the notifications, including No. 55/80, 152/77, 76/72, and 54/64, should be interpreted liberally to include re-rollable scrap as eligible for set-off.

The Tribunal found that the appellants' interpretation was valid. Notification No. 55/80 exempts products made from duty-paid ingots or semi-finished steel but is silent on re-rollable scrap. Given the appellants' use of duty-paid materials and the government's intention to avoid double taxation, the Tribunal concluded that the notification should be interpreted to include re-rollable scrap. The Tribunal also noted that Notification No. 77/72 explicitly exempts products made from re-rollable scrap, supporting the appellants' position.

2. Demand of Duty on Scrap Clearance and Applicability of Extended Period:

The department issued a show-cause notice demanding duty on 119.750 M.T. of scrap cleared without paying duty. The appellants argued that the scrap was cut ends of bars and angles, not marketable as scrap, and thus exempt under Notification No. 54/64. They also contended that the demand was time-barred beyond six months.

The Assistant Collector rejected these arguments, classifying the scrap under Tariff Item 25 and confirming the duty demand. The Collector (Appeals) upheld the duty demand for the six-month period but denied the extended period under Section 11A, as there was no mis-statement by the appellants.

The Tribunal agreed with the appellants, noting that the cut ends of bars and angles are considered melting scrap and exempt under Notification No. 56/64. The Tribunal found that the department's classification was incorrect and that the duty demand on the scrap was unjustified.

Conclusion:

The Tribunal allowed the appeal, granting the benefit of Notification No. 55/80 and other relevant notifications for the flats manufactured by the appellants. The duty demand on the scrap was also set aside, confirming that the appellants were entitled to the exemptions claimed.