MYSORE ROLLING MILLS Vs. CCE, BANGALORE

JUDGEMENT

(1.) THIS appeal arises from order -in -original No. 40/87 dated 22.8.1987 passed by the Collector of Central Excise, Bangalore confirming the duty demand of Rs. 1,55,168.18 under Rule 9(2) of the CE Rules read with Section 11A of the Act, besides penalty of Rs. 15,000/ - under Rule 173Q of the CE Rules in terms of the show cause notice issued on 9.12.1986 for the period 11.4.1986 to 27.8.1986. The issue that arises for consideration is as to whether the appellants were entitled to the benefit of Notification 208/83 dated 28.2.1983 as amended by Notification 79/86 dated 10.2.1986 in respect of flats falling under sub -heading 7209.20 and 7209.90. The Notification lays down that the specified final products if manufactured out of the specified inputs enumerated in the table annexed to it would be only exempted from payment of duty leviable thereon. It is the appellant's contention that they were enjoying the benefit of Notification prior to 28.2.1986. It is their contention that they were using only re -rollable materials and not waste and scrap falling under heading 7203 and re -rollable materials are classifiable not under 72.03 but under 72.08, 72.09, 72.10. They referred to Trade Notice No. 128/83 dated 18.8.1983. They contend that except incorporating the tariff item, there is no other change in the Notification No. 208/83 compared to the description of the old tariff and the new tariff headings and sub -headings. Their contention is that the Collector's finding that they were using waste and scrap falling under 7203.20 and were not entitled to the benefit of Notification is not correct. Their further contention is that the classification and assessment had been accepted by the department. Therefore, the question of invocation of the larger period of limitation in the matter does not arise. It is their contention that there is no dispute with regard to the nature of inputs used by re -rolling mills and it is their further contention that the re -rolling mills cannot use melted waste and scrap and what was used was only re -rollable materials and such re -rollable materials are required to be granted the benefit of the Notification as amended. They relied upon the Board's circular 127/89 dated 21.9.1989. They also relied upon a large number of judgments rendered by the Tribunal on this very issue in respect of other industries who were functioning in the like manner and therefore, contended that the issue is no longer res integra as the matter is decided by these judgments. Reliance was placed on the judgment rendered in the case of Standard Rolling Mills v. CCE vide final order No. 232/98 dated 2.2.1998 wherein in respect of similar matter arising from the same Collectorate regarding denial of such benefit of the said Notification, the Tribunal held that larger period was not invocable in the facts and circumstances of the case. Demand for longer period was set aside by applying the ratio of the Supreme Court in the case of CCE v. HMM as reported in, 1995 (76) ELT 479 :, 1997 (71) ECR 331 (SC). Similarly the demand for longer period was set aside in the case of Agarwal Steel Rolling Mills as reported in : 1987 (27) ELT 334. Reliance was also placed on the ratio of the judgment rendered in the case of DCW v. CCE as reported in, 1986 (86) ELT 325 :, 1996 (66) ECR 79 (T) wherein it was held that waste and scrap arising in the course of manufacture of metal containers is classifiable under sub -heading 7237.03 of the tariff and not under sub -heading 7212.90 unless the department proves that such scrap was capable of being used otherwise than melting. Therefore, it was contended that in the present case, when scrap was used for re -rolling purpose it was for the department to prove that the same was used for such purpose and the converse of the ratio can hold good for this aspect of the matter also. Reliance was also placed in the case of Bajaj Auto Ltd. as reported in, 1975 (75) ELT 382 (T) :, 1995 (56) ECR 293 (T) wherein it was held that waste and scrap was being put into use as it was usable as sheet. But however, the Tribunal held that longer period was not invocable in the facts and circumstances of the case. Strong reliance has been placed on the merits on the judgment of the Tribunal in the case of CCE v. Sri Krishna Rolling Mills as reported in, 1996 (88) ELT 402 (T) :, 1997 (69) ECR 146 (T) which held that plate cuttings, angle cuttings, and MS rod cuttings are not scrap but inputs in terms of Notification 208/83 -CE as amended for manufacture of MS rods and hence would be eligible for exemption under the said Notification. Reliance has also been placed in the judgment of the Apex Court in the case of Tata Iron & Steel Co. v. CCE as reported in : 1995 (75) ELT 3 :, 1995 (56) ECR 643 (SC), wherein it was held that iron and steel scraps composed of and arising from steel mills such as cuttings of rails, billets, plates, axles and channels etc. which were found by the Tribunal to have been re -melted satisfying the test of re -melting scrap irrespective of its size or its classification in Iron & Steel Controller's price circulars or the fact that it closely resembled the effective blooms or slabs or bars or channels or the fact that it would theoretically be industrial scrap. Therefore, the Apex Court held that to be classifiable as melting scrap item 26 and not semi -finished steel under 26AA(i) of the erstwhile tariff. Reliance was also placed in the case of CCE v. Jagat Metals and Jaiswal Metals (P.) Ltd. as reported in, 1993 (44) ECR 212 wherein it was held that Pattas/Pattis would fall under 7208.00 even after 1.3.1986 as pieces of re -roughly shaped and not strips under 7211.00 as the tariff description and definition are identical before and after 1.3.1986. Further, reliance has been placed in the order No. 3444/97 dated 5.12.1997 in the case of M/s. Vijay Engineering wherein exemption under Notification 275/88 was held as grantable in the case of manufacture of iron and castings using scrap as raw material and clearing the goods availing the benefit of Notification.

(2.) THE learned DR Smt. Aruna N. Gupta relied upon the findings given by the Collector wherein it was noticed that appellants had received waste and scrap falling under 7203.20 with description waste and scrap of steel and also claim that they are re -rollable scrap falling under 72.10 as angles, Shapes and Sections of iron and steel which alone satisfy under this Notification. The learned DR points out that the appellants received all the goods in terms of the description in the gate pass of M/s. NGEF and Larsen & Toubro and the said description of the goods was required to be accepted on the same fact that the Collector held that the appellants having used the same re -rolling purposes under the criteria although the appellants had described in the classification lists No. 1/86 and 2/86 as product falling under 7209.20 i.e. flats exceeding 5 mm thickness of iron and steel falling under 7209.90 and other finished manufactured pieces of inputs falling under heading 7206.20, 7206.90, 7207.00, 7208.00 and 7210.10 of the said tariff classification. Classification list was approved by the Assistant Collector of Central Excise, Bangalore. However, on investigation it was found that they had received goods in terms of the description under the gate pass of M/s. NGEF and Larsen & Toubro as falling under 7203.20 and hence the said sub -heading as described in the gate pass would not be eligible for the benefit of the Notification and hence there is suppression and they are not entitled to the benefit of the Notification notwithstanding the fact that the re -rollable scrap fall under 72.10 as mentioned in the Notification. Hence she prayed for confirmation of the duty demand.