CCE Vs. BHAWANI SHANKER CASTING LTD.

JUDGEMENT

(1.) IN this appeal, filed by the Revenue, the issue involved is whether the Respondents, M/s. Bhawan Shanker Castings Ltd. are required to discharge their duty liability under Section 3 of the Central Excise Act or under Section 3A of the Act.

(2.) SHRI U. Raja Ram, learned DR, submitted that the Respondents manufacture Non -alloy steel ingots/billets in their induction furnace; that they filed an application dated 29.3.97 opting to work under Rule 96ZO(3) of the Central Excise Rules, 1944; that the Respondents again under their letter dated 15.1.97 intimated the Commissioner that they had obtained an order worth Rs. 1 crore for supply of castings to Rail Coach Factory and as they would ordinarily be producing steel castings and may produce ingots also, they would be discharging their duty liability w.e.f, 16.1.98 under Section 3 of the Act after availing Modvat Credit of the duty paid on inputs; that the Commissioner under the impugned Order has directed the Respondents to pay duty under Section 3A for the period from 1.9.97 to 31.3.98 on the basis of Annual Capacity of Production determined under the Order dated 22.9.98; that the Commissioner has, further, ordered that w.e.f. 1.4.1998 to 31.3.2000 the Respondents would discharge duty liability under Section 3 of the Act as per the rate of duty specified for the period. The learned DR, further, submitted that Notification No. 30/97 -CE(NT) dated 1.8.97 provided that the notification shall not apply to an induction furnace unit which ordinarily produces castings or stainless steel products but may also incidentally produces Non -alloy Steel ingots and billets; that the Commissioner has not gone strictly by the language of the Notification as the Commissioner adopted the criteria of predominance by weight which is neither supported by the wording of the notification nor the Commissioner has quoted any authority for such reliance; that the production of ingots and other items was 475.89 M.T., and 446.840 M.T. respectively during the period from 2/98 to 3/98; that as such difference in quantities of both ingots and castings is very less and even then the Commissioner has held that the Respondents had produced ordinarily ingots and incidentally castings during the period 1.9.97 to 31.9.98. The learned DR finally submitted that Explanation to Sub -rule (3) of Rule 96ZO exclude the provisions of Sub -rule (3) only towards induction furnace unit which ordinarily produces castings or stainless steel products but may also incidentally produces non -alloy steel ingots and billets; that this Explanation does not excludes the provisions of Sub -rule (1) of Rule 96ZO to be applicable to such unit; that as the Respondents are manufacturing non -alloy steel ingots which has been notified under Section 3A of the Central Excise Act they are liable to pay Central Excise duty under the said Section and not under Section 3 of the Act.

(3.) OPPOSING the appeal, Shri Sudhir Malhotra, learned Advocate, submitted that when the provisions of Section 3A of the Act were brought into operation the Board had issued Circular No. 325/41/97 -CX dated 25.7.97 wherein it has been clarified in Para 21 that if a manufacturer produces castings or stainless steel products and also incidentally produces mild steel ingots or billets, such manufacturer would not be covered under Section 3A and accordingly such manufacturer would pay normal excise duty under Section 3 on all his products including ingots and billets of mild steel; that it is also mentioned in Para 21 that such manufacturer will be eligible to take Modvat Credit on the inputs used in the manufacture of mild steel ingots or billets; that during the period 4/98 to 3/2000 they manufactured ingots 297.47 M.T. as against 880.643 M.T. castings and 1230 pieces of axel boxes and 376 sets of buffer during the financial year 1998 -99, and ingots weighing 15.44 M.T. and 699.379 M.T. castings in addition to axel box and bolts during 1999 -2000; that accordingly the Commissioner has correctly held that during April 1998 to March 2000 they have produced primarily not notified goods and only incidentally produced notified goods; that it has been held by the Supreme Court in the case of Kailash Chander v. UOI, AIR 1961 SC 1346 that 'ordinarily' means in the large majority of cases but not invariably; that the word 'incidentally' signifies subordinate action.