TMI Blog1995 (8) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... eged in the show cause notice dated 27-2-1991 that during the period from 1-3-1986 to 31-12-1990, these goods cleared under the description of waste and scrap attracted product rate of Central Excise duty. The Collector of Central Excise, Calcutta-I who adjudicated the matter, came to a finding that the goods cleared under the description of waste and scrap, had not gone for the purposes of remelting and had been used as the product. On limitation, he relied upon the Gujarat High Court decision in the case of Torrent Laboratories Pvt. Ltd. v. Union of India - 1991 (55) E.L.T. 25 (Guj.) = [1991 (32) ECR 381 (Guj.)]. After giving due allowance to the damaged sheets which were packing materials, he demanded Central Excise duty of Rs. 2,59,655.54 and imposed a penalty of Rs. 25,000/-. 3. The matter was posted for hearing on 11-7-1995 when Sh. Arshad Hidayatullah, Senior Advocate with Sh. S.P. Kampani, Consultant appeared for the appellants. Sh. Somesh Arora, SDR represented the respondents. 4. Sh. Hidyatullah, the learned Sr. Counsel stated that the appellants were bringing duty paid mild steel sheets and other metal goods and after utilising in the process of manufacture, the remn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f (1) Rajasthan Worsted Spinning Mills v. Collector of Central Excise [1990 (47) E.L.T. 483 (Tribunal)] (2) Collector of Central Excise v. Jagdamba Electronics [1993 (68) E.L.T. 144 (Tribunal)] and (3) Collector of Central Excise v. Maradia Steel Pvt. Ltd. [1992 (59) E.L.T. 59 (Tribunal)]. 6. In rejoinder, the learned Senior Advocate stated that the various cases cited by the learned DR related to the refund of duty while in the present case, the demand under Rule 57-I of the Central Excise Rules, 1944 (hereinafter referred to as the `Rules ) was the issue. He stated that sub-rule (2) of Rule 57-I of the Rules was not applicable and only sub-rule (1) of Rule 57-I was relevant. 7. We have carefully considered the matter. M/s. Siemens Limited were engaged in the manufacture of switch boards, panels and parts thereof (final products), falling under sub-heading Nos. 8536.90, 8537.00 and 8538.00 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the `Tariff ). They were bringing duty paid goods - iron and steel CR sheets, Aluminium and copper bars, rods, sections etc. (inputs) falling under sub-heading 7209.20, 7604.30 and 7403.19 of the Tariff, and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Paper Book) that waste and scrap is normally used for recovery of metal by remelting. From the Invoice at page 50 of the paper book, it is seen that even crimpled/rejected sheets in different sizes had been taken as waste. In the case of Tata Iron Steel Company Ltd. v. CCE (supra), the Hon ble Supreme Court had held that a sub-standard article is not scrap as understood in commercial parlance or trade circle. Under these circumstances, could it be said that the part of the input which is not useable by the appellants (or is not used by them) for the manufacture of their final product, but is disposed of to outside buyers and is useable by them as such without re-melting, for the purpose of Rule 57A, has been used in or in relation to the manufacture of their final product. 9. The Collector of Central Excise, Calcutta I who had adjudicated the matter, had come to a finding that the assessee had not been able to adduce any evidence to show that the metal cuttings removed as waste and scrap, had really gone for the purpose of re-melting, and that they were capable of being used otherwise than as melting scrap. Accordingly, he held that they did not satisfy the definition of was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be used for producing finished products. They were a marketable commodity as known to commerce and were such as to make them worthwhile to trade in. It is no body s case that they were not goods as understood in commercial parlance, and/or were not marketable. They were not waste or rubbish which had been thrown up in the course of manufacture, were not merely refuse given out in the course of manufacture, as was the case with the dross and skimmings in Union of India v. Indian Aluminium Company Ltd. [1995 (77) E.L.T. 268 (SC)]. The sheet cuttings, aluminium, copper ends, etc. were also not in the nature of manufacturing loss, as was the case in M/s. Multi Metals Ltd. v. Assistant Collector of Central Excise, Kota [1992 (57) E.L.T. 209 SC]. 13. The learned DR representing the respondent, had relied upon the Tribunal decisions in the cases of LML Ltd. v. CCE [1989 (44) E.L.T. 119 (Tribunal)] and Bajaj Auto Ltd. v. CCE [1995 (75) E.L.T. 382 (Tribunal)]. In the case of LML Ltd. after discussing the various provisions of the Modvat Scheme, the Tribunal held that `off cuts could not be treated as waste and scrap. Although the definition of waste and scrap had subsequently undergone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rous waste and scrap falls under Heading 72.04 under sub-section I of Chapter 72 pertaining to Primary materials etc. and is clubbed with remelting scrap ingots of iron and steel. Subsequent Headings 72.07, 72.08 describe the goods as products. There is, therefore, substantial force in the learned DR s submission that if the so-called `waste and scrap is usable as sheet, it cannot be termed as waste and scrap. If it is cleared, debit must be made at the rate of duty payable on sheet subject to any other provision of law. 14. The appellants have contended that the demand was barred by the period of limitation. The show cause notice is dated 27-2-1991 and the period involved is from 1-3-1986 to 31-12-1990. In this case, we are not dealing with the taking of the credit of duty paid on inputs. The inputs were brought into the factory, and the credit of duty paid thereon was taken on the basis of their declaration that the said inputs will be used in or in relation to the manufacture of their final product. Under sub-rule (1) of Rule 57-I where credit of duty paid on inputs has been taken on account of an error, omission, etc. a notice could be served within 6 months from the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nputs had been disposed of in the manner not specified, the date on which the credit was taken, is of no relevance and accordingly the time limit in the first situation had not been built in the second situation. This is understandable also as there is no time limit within which the inputs are to be used or disposed of after availing of and utilising the credit beyond the period of 6 months of their receipt. In the case before us, the duty leviable on that part of the inputs which had not been used in or in relation to the manufacture of the final product, has been demanded within the extended period of limitation, under the proviso to Section 11A(1) read with the Rule 57-I of the Central Excise Rules. In the circumstances of the case, we do not find any infirmity in the order passed by the Collector of Central Excise, Calcutta. 15. In the classification list, general description of waste and scrap was mentioned. There was no description of the nature of the goods sought to be classified as waste and scrap. The classification list under Rule 173B of the Rules is required to be filed by the assessee before the removal of the excisable goods. Approval of the classification list is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of Rule 57-I(1) which had suffered amendment on 6-10-1988. In the case of Collector of Central Excise v. Memory Steel Pvt. Ltd. [1990 (47) E.L.T. 704 (Tribunal)] the matter related to the wrong availment of Modvat credit on bazaar scrap of iron and steel. In the case of Collector of Central Excise v. Bharat Containers Pvt. Ltd. [1990 (48) E.L.T. 520], the matter related to the filing of the vague declaration with a description `sundry inputs. The Tribunal had observed that when the credit has been taken wrongly or it is in excess of the eligibility, it is a case of erroneous credit which can be recovered by a demand. 18. In the present case before us, we are concerned with the disposal of the inputs and not taking of the credit. When the inputs were received, the cre- dit was taken; however, a part of the inputs were disposed of without reversal of the credit and on payment of lesser amount of duty applicable to waste and scrap. This duty applicable to waste and scrap was much lower than the credit already availed of by the recipient, the present manufacturer before us. 19. The appellants have also relied upon a number of other judgments and we have generally looke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the finished product is not possible and should not be looked for. Although there is no reference by the appellants of any loss or wastage of the type discussed by the Hon ble Supreme Court above, in the interest of justice, relief to the extent of shearings and trimmings in the nature of wastages should be extended, for which the appellants are directed to file their claim with the Adjudicating authority. This being a question of fact, the Adjudicating authority may reconsider the matter on this limited point and extend the relief to the extent permissible in the light of the Supreme Court observations cited above. We do not however, consider that for this limited exercise, the order should be set aside and the matter should be remanded . 21. Taking all the relevant considerations into account, except to the extent of relief as discussed in para 20 above, we find no merit in the appeal in so far as the demand of Central Excise duty is concerned. In so far as the penalty amount is concerned, keeping in view the issues involved, we set aside the penalty amount of Rs. 25,000/-. Subject to above, the appeal is otherwise rejected and we order accordingly. - - TaxTMI - TM ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
