UNIVERSAL CONTAINERS Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) APPELLANTS are manufacturers of metal containers. Metal sheets, coils and strips are the inputs for such manufacture. Certain amount of metal waste arises in the course of manufacture of metal containers. Whether such waste would be eligible for exemption under Notification 91/88, dated 1 -3 -1988 and Notification 171/88, dated 13 -5 -1988 is the issue raised in this appeal. When the case went before a Division Bench of two Members for hearing on 7 -4 -2000, that Bench referred this case to a Larger Bench on account of conflict between the decisions in the case of CCE v. Universal Containers - 1999 (108) E.L.T. 573 and Amar Steel Container Corporation v. CCE - 1999 (35) RLT 805. Accordingly, this Larger Bench has been constituted to consider the issue.

(2.) EXEMPTION under notification 91/88, dated 1 -3 -1988 is worded as under:

(3.) THE learned Counsel for the appellant submits that Clause (ii) under column (4) is applicable to their case and not Clause (i) as held in the impugned order. He explained that metal sheets, coils and strips which are received as input are first cut to required lengths and shapes for the manufacture of parts of metal containers. The parts of a metal container are body and lids (top and bottom). Waste arises either during the manufacture of body, or lids, from such cut pieces of sheets and coils or strips. He stated that for the manufacture of body of the container, sheet, after cutting to size, is folded and welded. Learned Counsel stated that, at times, during welding, folded sheets get damaged on account of holes developing at some welding points. In such cases, those bodies become unfit for use in metal container. They are, therefore, discarded. Similarly, circles are punched out from square pieces of strips for making lids. During this process certain portion of the square metal sheet gets discarded leading to creation of waste. Further, during manufacture into lids some of the punched out circles also get damaged resulting in creation of waste. Learned Counsel argued that waste in these cases are not arising directly "from goods covered by Chapter 72" particularly, the circles which are damaged during conversion to lids and sheets damaged during welding into bodies of metal containers. Instead they are manufacturing waste emerging during the manufacture of metal containers. He submitted that sub -clause (ii) of serial number 3 covered "all goods, falling within the said (Central Excise) Schedule". Therefore, these wastes are eligible for exemption under sub -clause (ii).