TMI Blog1987 (3) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and same was captively consumed for re-mE.L.T.ing or, in other words, scrap was re-cycled. No duty was paid on the scrap generated and used in the factory. The learned Consultant for the appellants pointed out that the duty was demanded for the period from 1-5-1979 to 4-6-1981 and that show cause notice was issued in the matter on 25-1-1982. He has pleaded that the demand was time-barred. He has stated that the longer period for recovery of the duty has been invoked in terms of Rule 9(2) read with Section 11A of the Central Excise Act, 1944. He has cited 1984 (18) E.L.T. 319 in the case of Lallubhai Amichand Ltd., Bombay v. Collector of Central Excise, Bombay, wherein, according to him, it has been held that once an activity was in the k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of Rs. 50/- per metric tonne in the rates of basic duty specified against Serial Number 4(b) of the table annexed to the notification (relating to steel castings), these castings should be manufactured out of old iron or steel mE.L.T.ing scrap or a combination of such scrap out of old iron with fresh unused duty paid steel mE.L.T.ing scrap on which duty has not been paid steel castings made the reform will not be eligible for the concessional rate prescribed in the aforesaid notification. Clarification : The internal scrap generated is in the nature of circulating scrap arising in the course of manufacture of steel castings as well as machining of steel castings. The basic raw material is either old iron or steel mE.L.T.ing scrap or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dutiable again - Section 2(f) of Central Excise Act - Item 26B of Central Excise Tariff and Rule 173 of the Central Excise Act, 1944 when steel scrap is mE.L.T.ed and cast into ingots and other forms in the appellants factory further steel scrap is generated, which is produced out of scrap. Since the original scrap is duty paid under Item 26B of Central Excise Tariff, therefore, duty is not leviable on the fresh scrap arising in the production of steel ingots and castings under the same item as no article has emerged which would amount to manufacture under Section 2(f) of the Central Excises Act. Therefore, imposition of penalty under Rule 173Q of the Central Excise Rules, was not impossible." He has stated that steel mE.L.T.ing scraps ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods falling under T.I. 26AA of the CET and had presented the classification list for that item and that the department was not able to know as to what were their by-product and intermediary product unless declared. He, in short, has held that the appellants produced the goods in question without any intimation to the department and the department was kept in the dark. It is not denied that the appellants were manufacturing castings. The Central Excise authorities who exercised jurisdiction over the appellants factory must have visited the factory for various purposes and it is expected that they would have examined the process of manufacture of castings and the knowledge of manufacture scrap can be attributed to the authorities. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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