LAXMI ROLLING MILLS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN these 3 appeals arising out of 3 adjudication order passed by the Commissioner, Central Excise, Kanpur, the common issue involved is whether the exemption under Notification No. 202/88 -CE is available to the finished goods manufactured by all the appellants.

(2.) SHRI A.P. Mathur, learned Advocate submitted that all the three appellants manufacture bars and rods of mild steel from rerollable waste and scrap obtained from Railways who auction their old and discarded rails, wheels, fish plates, etc.; that the Commissioner under the impugned orders has confirmed the demand of duty and imposed penalty holding that the purchase from Railways through auction cannot be treated to be duty -paid inputs; that the Commissioner had reached the conclusion without verifying the facts from Railways whether at the time of purchase Rails, wheels, etc. these were duty -paid or not; that admittedly these materials were purchased by the railways from the manufacturers who had paid the duty at the time of clearance; that these rails, wheels and sleepers after long use had worn out and become unserviceable but they had not lost their duty -paid character and accordingly these goods cannot be treated as one on which duty has not been paid; that in Vivek Rerolling Mills v. CCE, Chandigarh, 1994 (73) E.L.T. 660, the Appellate Tribunal held that the impugned material has to be considered as old and unserviceable rerollable scrap and that after amendment of Notification No. 202/88 by Notification No. 33/92 -CE, dated 1 -3 -1992 the benefit of Notification will be available to the manufacturers. The period involved in all these appeals is after amendment of the Notification. He further submitted that as held by the Appellate Tribunal in the case of Nagpur Rerolling Mills v. CCE, Nagpur, 2000 (39) RLT 37, the onus is on the Revenue to prove that the inputs were not duty -paid; that the Revenue has not discharged the onus and as such the goods purchased by the Appellants from the Railways through auction cannot be treated as non -duty paid material.

(3.) COUNTERING the arguments Shri R.K. Sharma, learned SDR, submitted that rails, sleepers and wheels, etc. are purchased by Railways for their own use; that after these products have been used by the Railways, no central excise duty is attracted at the time of their sale in auction as rerollable scrap; that the onus to prove that inputs are duty -paid is on the Appellants. Reliance was placed on the decision in the case of CCE, Meerut v. Electro Steel Castings Ltd., 1999 (114) E.L.T. 243 wherein it was held that the discarded items are not the product of manufacturing process; they are not excisable and there is no evidence on record that at any stage any central excise duty has been paid thereon. The learned SDR mentioned that the same reasoning will apply to the rails, wheels and sleepers as these were also discarded after being used by Railways. He also placed reliance on the decision in the case of Indian Plastics Ltd. v. CCE, Bolpur, 2000 (70) ECC 242 (T). In that case the Larger Bench of the Appellate Tribunal referred to the decision in the case of Machine Builders v. CCE, Bolpur, 1996 (83) E.L.T. 576, wherein it was held that the correct view is that "the words 'inputs are clearly recognisable as being not duty -paid' comprehend all inputs on which it is patent that duty has actually not been paid for any reason i.e. rate of duty is stated to be nil rate in the Schedule to the Tariff Act, or the inputs are wholly exempt from duty or for any other reason." Finally, he submitted that the decision in the case of Nagpur Rerolling Mills is distinguishable, inasmuch as in that case the inputs were purchased from open market and unlike the present matters it cannot be said that these were known to be non -excisable goods. He, further, mentioned that in the present matters it is not in dispute that the finished product had been manufactured out of used rails, wheels, and sleepers, etc. which do not suffer any duty being non -excisable.