COMMISSIONER OF CENTRAL EXCISE Vs. SUMANGALA STEELS

JUDGEMENT

(1.) M/s. Sumangala Steels are engaged in the manufacture of MS ingots and MS billets, out of imported as well as indigenous MS scrap by charging scrap into the electric are furnace along with specified quantities of ferro -alloys. Central Excise officers conducted a preventive patrol on 03.03.1993 and intercepted a lorry loaded with 31 nos. of MS billets, described in the gate pass as MS ingots. The goods and the lorry were detained, the factory of the assessees was visited on 04.03.1993, registers were verified, which revealed that lorry intercepted on 03.03.1993 had left from their factory. Statements of various persons wee recorded and records were also seized. Investigations revealed that the assessee had indulged in suppression of receipt of MS scrap, and suppression of production and clandestine clearance of MS billets and ingots and had also wrongly availed Modvat Credit on billets which had not been declared in the Modvat Credit declaration. Show cause Notice, dated 31.08.1993 was issued proposing recovery of duty of Rs. 50,18,000/ - on billets and ingots and MS runner and MS risers cleared without payment of duty, proposing disallowing of Modvat Credit of Rs. 1,00,00,26,360 taken on MS billets and also in respect of scrap not received; proposing confiscation of seized billets and proposing imposition of penalty on the company as well as on the Managing Directors, Manager and Assistant of the company, and the driver of the lorry intercepted on 03.03.1993. The commissioner of Central Excise dropped the charge of irregular availment of Modvat Credit utilised for manufacture of MS billets (Rs. 93,26,613) but disallowed Modvat Credit of Rs. 3,11,256 on scrap short received and scrap removed without credit reversal, (the Revenue has filed Appeal No. E/1082/1996 against the dropping of the charge covering the amount of Rs. 93,26,613/ -) confirmed the duty demand as raised, confiscated the billets seized on 03.03.1993 and appropriated the security amount of Rs. 30,000/ - towards the value of the billets which had been released provisionally on execution of a bond, confiscated lorry carrying the billets and also imposed penalty of the following amounts on the following persons: -

(2.) We have heard both sides.

(3.) We first take up the appeal of the Revenue. Credit was sought to be denied on the ground that credit of duty paid on scrap was availed on MS billets, which were not declared in the 57G declaration. The Commissioner has dropped the proceedings on the ground that during the period in dispute even the department has conceded that the products are only MS ingots. According to the Revenue, even after installation of continuous casting machinery in the factory in December, 1992, the assessees had declared their products as steel ingots and other primary forms under CET Sub Heading 7206.90, that billets and ingots are 2 distinguishable products and assessees have maintained this distinction in their office records and that filing of declaration of final products is a substantive requirement, for failure of which, credit is not admissible. We find that the plea of the assessees before the Commissioner was that they had only casting machinery installed in their factory for the manufacture of ingots and that they did not possess re -rolling or forging facilities for manufacture of billets, which are products of re -rolling or forging. This has not been rebutted by the Revenue in the appeal before the Tribunal. Further, even after physical verification of stock carried out by the Central Excise authorities, the products had been authenticated as steel ingots under CET Sub Heading 7206.90, while billets fall for classification under CET Sub Heading 7207.90. As the Revenue has not either raised the ground or established that billets are products of casting or that the assessee had installed re -rolling or forging machinery for manufacture of billets, the finding of the Commissioner on this aspect cannot be faulted and we accordingly uphold the same and reject Appeal No. E/1082/96.