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2016 (8) TMI 389 - AUTHORITY FOR ADVANCE RULINGS

2016 (8) TMI 389 - AUTHORITY FOR ADVANCE RULINGS - 2016 (340) E.L.T. 422 (A. A. R.) - Liability of duty - processing of secondary raw materials (steel scrap of difference and variable composition) into blended steel scrap - Held that:- the input is unprocessed steel scrap and output is blended steel scrap. The blended steel scrap is produced with required chemical composition by mixing various Low manganese and High manganese scraps and is fit to be used as raw material in the manufacture of var .....

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osing its identity and new commodity i.e. blended stainless steel scrap coming in existence. - Therefore, when said unprocessed steel scrap undergoes above process, a new product saleable in the market, which is having a distinct identity and use, comes into existence and is known in the commercial market by a different name. Further, blended steel scrap possesses higher utility than the unprocessed scrap steel. Therefore, applicant’s contention that the production of blended steel scrap by .....

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n opposed by the Revenue. It is noticed that blended metal scrap is covered under Chapter Head No. 72044900 in the First Schedule – “Others – Ferrous waste and scrap” under the Central Excise Tariff Act, 1985. - Ruling No. AAR/CE/ 19 /2016 In Application No. AAR/44/CE/14/2015 - Dated:- 15-7-2016 - V.S. Sirpurkar (Chairman), Shri S.S. Rana and Shri R.S. Shukla, JJ. For The Applicant : Shri Badrinath NR, Advocate For The Department : Shri Amresh Jain, Authorised Representative Ruling T. T. Recycli .....

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arily on the basis of chemical / composition of the scrap e.g. High Manganese and Low Manganese. The different grades of metal scrap will then be identified from analyzing the collected steel scrap based on chemical composition test report issued by the third party lab and sizes as per each shape by manual process and steel scrap will be segregated by manual process with the help of conveyor and overhead crane after analyzing process. Segregation mainly will be done in three categories i.e. High .....

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rt the blended loose scrap into cube form for the direct supplies into the furnace. This process of blending and baling is carried out by manual as well as mechanical process with the help of specially trained workers operating special purpose cranes and machines to carry out this operation along with skilled workmen and supervisors. This process is to ensure that the eventual mix shows precisely the chemistry / composition, which is required / usable by the foundries and steel mills as a raw ma .....

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its manufacturing activity. 2. Questions raised by the applicant before this Authority is as under: 1. Whether processing of secondary raw materials (steel scrap of difference and variable composition) into blended steel scrap is liable for payment of Central Excise duty under the provision of the Central Excise Act, 1944? 2. Whether produced blended metal scrap can be classified under Chapter 72044900 of the Central Excise Tariff Act, 1985? 3. Revenue inter-alia submits that activity proposed .....

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ocess of production of blended steel scrap from unprocessed steel scrap that it involves a number of steps. The input is unprocessed steel scrap and output is blended steel scrap. The blended steel scrap is produced with required chemical composition by mixing various Low manganese and High manganese scraps and is fit to be used as raw material in the manufacture of various products of steel. Further, blended steel scrap is not put to the same use to which the unprocessed steel scrap is put and .....

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eel scrap undergoes above process, a new product saleable in the market, which is having a distinct identity and use, comes into existence and is known in the commercial market by a different name. Further, blended steel scrap possesses higher utility than the unprocessed scrap steel. Therefore, applicant s contention that the production of blended steel scrap by processing unprocessed scrap steel amounts to manufacture under the Central Excise Act, 1944, is correct. 5. The law is settled by way .....

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nto a new commodity commercially known as a separate and distinct commodity having its own character and use, manufacture takes place. 6. Applicant has aptly relied on the decision of Hon ble Supreme Court in the case of Mamta Surgical Cotton Industries, Rajasthan Versus Assistant Commissioner (Anti- Evasion), Bhilwara, Rajasthan (2014 (4) TMI 593 -SC). In this case, the appellant was manufacturing surgical cotton from raw cotton. Hon ble Supreme Court held that said process is manufacture as su .....

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at commercially it can no longer be regarded as the original commodity but recognized as a new and distinct article. In the instant case, after going through the various steps that are carried out by the assessee for getting surgical cotton from raw cotton, we can certainly say that cotton has undergone a change into a new commercially identifiable commodity which has a different name, different character and different use. The process of transformation is not merely processing to improve qualit .....

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and use. 7. The case before us is akin to case of Mamta Surgical Cotton Industries. In the instant case, blended stainless steel scrap is manufactured from unprocessed steel scrap. This blended scrap is called by a different name. It also has a different use and character. Further, unprocessed steel scrap loses its original form. Therefore, ratio of said Hon ble Supreme Court judgment is applicable to the present case. 8. Further, applicant submits that this Authority held that the process of c .....

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ansforming of their raw materials, namely, metal scrap of assorted sizes grades, composition etc, into metal scrap of specific grades which is directly usable for manufacture of stainless steel. Therefore what emerges from the processes would be a product having distinct identity and use, different from the raw material from which it is made…… 9. Revenue submits that above ruling in case of M/s ELG India Private Limited was that the conversion of various grades of stainless steel s .....

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vance ruling of the Authority is binding in the case of one transaction only and the parties involved in respect of that transaction and for other parties, the ruling will be of persuasive nature. The Authority, however, has clarified that this is not to say that a principle of law laid down in a case will not be followed in future. This decision of the Authority in Cyril Eugene Pereira, In re. (supra) has been taken note of by this Court in Union of India & Anr. V. Azadi Bachao Andolan & .....

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