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1997 (7) TMI 295

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..... ation No. 208/83-C.E., dated 1-8-1983 when the inputs were ship breaking scrap. It was alleged in the show cause notice dated 30-8-1988 that during the period 1-8-1983 to 31-8-1985, the appellants had purchased ship breaking scrap from various ship breakers and traders which were clearly recognisable as non-duty paid. The matter was adjudicated by the Additional Collector of Central Excise, Ahmedabad, who observed that the inputs for ship breaking scrap were non-duty paid and that the scrap generated out of the such ship was not eligible to the benefit of exemption Notification No. 208/83-C.E. 2. We have heard Shri P.S. Bedi, Consultant who submitted that they had purchased the ship breaking scrap from open market and in the explanation t .....

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..... to break the old imported ships/vessels without collecting the Additional/CVD duty (which is equivalent to the excise duty levied on the indigenous materials). 5. That you are surprised at the Government failing in its duty to collect its revenue, including Excise Duty, by the easy way of collecting same at source, i.e. Ship breakers and after few years chase several hundred of re-rollers located throughout the country. 6. That the Government had never warned either by Press Notes of Notifications that they could not collect the additional duty of customs/CVD on several old ships imported by the ship breakers for dismantling and the Re-rollers buying such scraps/plates would have to pay Excise Duty on their finished products rolled with .....

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..... ing non-duty paid shall be deemed to be inputs on which the duty had been paid. The ship breaking scrap arose out of the ships imported and it could not be said that the scrap generated from the ship breaking was lying in the country. The adjudicating authority had discussed at Page 6 of his order as under : The assessee s contention is that, the scrap Ship breaking scrap" purchased from the market is deemed to be duty paid but this contention is also not acceptable in view of the fact that during the relevant period ship breaking scrap attracted duty liability and the invoices showed that the re-rollable scrap purchased by the assessee from the various ship breakers and traders was scrap of condemned ship. I find no reasons to accept t .....

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..... A of the Central Excises and Salt Act, 1944 and the penal provisions under Rule 173Q ibid, have been correctly invoked in view of the specific findings of mis-statement and suppression of facts as discussed earlier. 8. We find that the Karnataka High Court at Bangalore in the case of Engineering Systems Pvt. Ltd. v. Union of India reported in 1992 (57) E.L.T. 12 (Karnataka) had held that if the Additional Collector is deemed to be a Collector by virtue of the definition in the rules, then he may exercise the powers of a Collector notwithstanding any specific conferment of power by the Department in terms of Section 11A or any other provisions of the Act, the duties and functions required to be performed by the Additional Collector. Para .....

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..... low : 12. We have heard both the sides, examined the contentions and gone through the records. The dispute in all the three appeals is whether the benefit of Notification No. 208/83-C.E., dated 1-8-1983 is admissible in respect of M.S. round bars cleared by the respondents during the period from 1-1-1984 and which were manufactured out of re-rollable scrap supplied by M/s. Vizag Shipping Metal Processors, Vizag and M/s. Ushodaya Shipping Pvt. Ltd., Vizag. The Assistant Collector of Central Excise has observed that re-rollable scrap used in the manufacture of M.S. round bars has arisen out of breaking up of old ships. He has held that the ship breaking unit did not pay Central Excise duty on the re-rollable scrap under Central Excise Ta .....

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..... e present case, the ship breaking units paid customs duty on the ship under Heading 89.04 and additional duty of customs under Item 68 of the Central Excise Tariff. The inputs which arise out of the ship breaking fell under Central Excise Tariff Item 25 and such inputs in the present case have not discharged the Central Excise duty under that Tariff Heading. What the ship breaking units have paid is the additional duty of customs equivalent to Central Excise duty on the ship under Tariff Item 68 of the Central Excise Tariff. Therefore, the inputs are clearly recognisable as non-duty paid for the purpose of this Notification. The condition laid down in the proviso to the aforesaid notification is not, therefore, fulfilled. Hence, the benefit .....

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