DIAMOND ROLLING MILLS Vs. COLLECTOR OF C. EX.

JUDGEMENT

(1.) THESE are two appeals against common Order -in -Original No. 36/89, dated 5 -4 -1989 passed by the Additional Collector, Central Excise, Aurangabad.

(2.) THE appellants M/s. Diamond Rolling Mills manufactured M.S. Round bars which were removed by them availing exemption from whole of duty under Notification No. 208/83, dated 1 -8 -1983. A show cause notice dated 31 -8 -1988 was issued for demanding duty amounting to Rs. 35,867.45 on M.S. Round bars removed during the year 1987 alleging that the finished goods were manufactured out of ship breaking scrap which was clearly recognisable as non -duty paid and consequently the benefit of Notification No. 208/83 was not available to the appellants. The Additional Commissioner in the impugned order confirmed the demand of duty and imposed penalty of Rs. 10,000/ - on the appellant firm and Rs. 5,000/ - on Shri Mohan Singh Birdi and Rs. 5,000/ -on Shri Satyanarayan Sharma, both partners, holding that the finished goods manufactured from NIL duty paid or non duty paid ship breaking scrap would not qualify for exemption under Notification No. 208/83.

(3.) WHEN the cases were called, no one was present on behalf of both the appellants. Shri M.S. Jagesha, learned Advocate in his letter dated 14 -8 -1998, has requested to decide the appeals on the basis of written arguments. It has been submitted by the appellants in their appeal memorandum and written arguments that it has been held by various judicial and quasi judicial authorities that the goods cleared at NIL rate of duty in terms of an exemption notification are also goods cleared on payment of duty at the appropriate rate of duty since the appropriate rate of duty means duty that ought to have been paid or was contracted to be paid; that accordingly exempted goods could not be regarded as goods which had not discharged duty liability; that the second proviso to Notification No. 208/83, which provided that benefit of notification would be available only if credit of duty had not been availed of under Rule 56A or 57A of the Central Excise Rules, had not any where made it clear that the finished product, on which incidence of duty was nil, would not be entitled to the duty free clearance. Reliance was placed on the decision in the case of N.B. Sanjana v. The Elphinstone Spinning and Weaving Mills Co. Ltd. -1978 (2) E.L.T. (J399) (S.C.) in which it was held that expression "paid" in the context of a particular statute may mean "ought to have been paid" and nil assessment may mean assessed to duty. They also relied upon the following decisions : -