Customs, Excise and Gold Tribunal - Delhi
Hercules Industries vs Collector Of Central Excise on 17 June, 1997
Equivalent citations: 1997(94)ELT400(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. The instant appeal has been filed by M/s. Hercules Industries Ltd., Thane, against the order of the Collector of Central Excise (Appeals), Bombay dated 15-2-1988 by which the Collector (Appeals) disallowed the benefit of Notification No. 43/75 to the appellants and confirmed the demand of Central Excise duty to the tune of Rs. 9,08,805.48 for the period February, 1980 to July, 1984.
2. The appellants who were manufacturers of aluminium casting falling under erstwhile T.I. 27 filed a classification list in April, 1979 classifying the goods under T.I. 27 and claimed exemption tinder Notification No. 43/75, dated 1-3-1975. The classification list was approved by the Assistant Collector on 5-10-1979. However, while approving the classification list the Assistant Collector deleted the classification of the goods under T.I. 27 and the claim for exemption under Notification No. 43/75. According to the appellants they were also asked by the Inspector of the Central Excise to surrender their Central Excise Licence on the ground that the goods were exempted wholly from the levy of excise duty and Rule 174 was not attracted. The licence was also accordingly surrendered by the appellants by their letter dated 11-4-1980. According to the appellants approximately 6 years later they were served with a Show Cause Notice dated 11-3-1985 wherein it was alleged that they were not entitled to exemption under Notification No. 43/75 as the goods were manufactured out of aluminium alloys and accordingly duty was demanded for the period January, 1980 to July, 1984.
3. In reply to the Show Cause Notice the appellants contended that there was no suppression of facts as the Department was aware that during the relevant period they were manufacturing aluminium casting out of aluminium ingots purchased from several other parties which made ingots out of old scrap or virgin metal or combination thereof. They further stated that the aluminium ingots were purchased from several parties who make the same out of waste and scrap obtained from virgin metal or virgin aluminium in crude form or a combination of both on which the appropriate amount of excise duty had already been paid. They, therefore, claimed that the condition of Notification No. 43/75 have not been violated and they were entitled to the exemption under the said Notification.
4. In the adjudication order dated 13-8-1985 the Assistant Collector accepted the present appellants contention that the demand was time barred since the Show Cause Notice contained no allegation of misstatement, etc. On the question of claim for exemption under Notification No. 43/75 he held that under the said Notification aluminium castings were exempted provided they were manufactured from old aluminium scrap which clearly showed that old aluminium scrap may not be from the virgin aluminium. Further, the Notification does not mention that the scrap should be of virgin aluminium. Hence aluminium ingot manufactured from the said scrap would also be entitled for exemption as the scrap cannot be directly used for the manufacture of castings and had to be converted into ingots. He also held that the Show Cause Notice had been issued more than 6 months after the date of clearance and was, therefore, time barred.
5. The Assistant Collector's order was, however, reversed by the impugned order. The Collector held that the exemption under Notification No. 43/75 was available to castings, if made from virgin aluminium in any crude form on which appropriate amount of duty had been paid and virgin aluminium would refer to freshly prepared aluminium from Bauxite or alumina through electrolytic reduction. Since the appellants had been using alloys of aluminium from manufactured ingots bought from other parties or from aluminium scrap with other additives to get the desired composition, such ingots could not be called virgin aluminium. According to the Collector (Appeals), a strict interpretation of the Notification did not permit aluminium alloys for the manufacture of aluminium castings. The expression "virgin aluminium in any crude form" used in clause (b) in column (5) against Sl. No. 2(a) of the Table to Notification No. 43/75 refer to purity and not the physical form of virgin aluminium like ingots, slabs, etc. He also rejected the contention of the present appellants that for purpose of clause (b) column (5) of the Table against Sl. No. 2(a) the definition of aluminium under T.I. 27 defining aluminium to include aluminium alloys wherein aluminium pre-dominated by weight would not be applicable. He also derived support from the ISI specification relating to virgin aluminium as the metal obtained by electrolytic reduction of alumina.
6. As regards the question of time bar the Collector (Appeals) found that though in the classification list filed by the present appellants they had declared that they were manufacturing aluminium castings from aluminium alloys ingots, there was nothing to show as to whether it was the approving authority who had struck of the said portion or the appellants themselves. Even if the appellants claim in this regard were correct, it only imply that the Assistant Collector did not approve the claim of the appellants for exemption under Notification No. 43/75 in respect of aluminium castings. The Collector (Appeals) also observed that the Assistant Collector had failed to appreciate the possibility of the present appellants striking of the said portion of the declaration.
7. Before us the ld. Counsel for the appellants strictly contended the assumption of the Collector (Appeals) to the effect that the appellants had themselves struck of the relevant portion from their classification list was not tenable since the appellants were holders of a Central Excise Licence at the time of the submission of the classification list and the declaration. If the classification list containing the scoring off the relevant portion had not been approved by the Assistant Collector, the appellants could not have surrendered their licence, since it was the Department which had cancelled the licence on its surrender by the appellants. As regards eligibility for exemption under Notification No. 43/75, that the appellants goods, namely, aluminium castings cannot be manufactured directly from aluminium scrap or waste or scrap obtained from virgin metal or virgin aluminium for manufacture of aluminium castings, the appellants had purchased from the open market and from suppliers of manufacture of aluminium alloys as well as suppliers of old aluminium scrap or waste or scrap obtained from virgin metal or virgin aluminium. They also contended that the Collector (Appeals) was not justified in holding that Notification No. 43/75 refer to aluminium castings which should be manufactured directly from aluminium scrap or waste or scrap obtained from virgin metal. There was also no question of misstatement on the part of the appellants since they had filed a classification list along with the declaration.
8. The ld. DR reiterated the findings of the Collector (Appeals) and sought for rejection of the appeal.
9. We have considered the submissions and gone through the records.
10. On the question of misstaternent and limitation, we find that the Collector (Appeals) has observed that the Assistant Collector failed to appreciate the possibility of the appellants themselves striking of the portion in the declaration filed by them stating that they were manufacturing aluminium castings from aluminium alloys ingots. It is seen from the photo copy of the classification list at pages 15 to 17 of the Memorandum of appeal that against Sl. No. VI relating to non-ferrous castings the relevant entries in Col. Nos. (2), (3) and (9) have been scored off and approval has been given to goods mentioned in Col. Nos. 1 to 5. If the intention of the Assistant Collector was to dis-allow the claim for exemption under Notification No. 43/75 which had been mentioned under Col. No. 9 of the Form-I (Part II), it was incumbent upon the Assistant Collector to indicate the reason for such scoring under the remark column, column (10) it has been specifically provided in Form-I. Since nothing has been indicated in the remarks column, the possibility of some manipulation of Form-I later on cannot be completely ruled out. However, such manipulation has to be proved by independent evidence and cannot be readily inferred. In this context we find force in the appellants contention that the Department had subsequently accepted the surrender of the excise licence. Even assuming that the appellants had themselves scored off the relevant portion in the column, the fact remains that the classification list filed by them containing the relevant entries relating to claim for exemption under Notification No. 43/75 and the description of the goods as non-ferrous castings including aluminium based alloys "manufactured out of ingots purchased from parties who make the same out of old scrap or virgin metal or combination thereof" was approved by the Assistant Collector on 5-10-1979. It cannot, therefore, be contended with any force that the appellants had mis-stated or suppressed any material information from the Department. We therefore uphold the appellants contention that the demand is barred by limitation.
11. On the question of applicability of exemption Notification No. 43/75, as amended, the relevant portion of the Notification is extracted below:
"Exemption to certain specified types of aluminium products. - In exercise of the powers conferred by Sub-rule (1) of rule 8 of the Central Excise Rules, 1944, and in supersession of the Notification No. 46/70-C.E., dated 1-3-1970, the Central Government hereby exempts aluminium of the description specified in column (3) of the Table hereto annexed and falling under sub-items specified in the corresponding entry in column (2) of the said Table of Item No. 27 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon as is in excess of the duty specified and subject to the conditions laid down in the corresponding entries in columns (4) and (5) respectively of the said Table.
TABLE
-------------------------------------------------------------------------------- S.l. Sub-
No. item Description Duty Conditions
No.
--------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
--------------------------------------------------------------------------------
1. xxxxxxx xxxx xxxx
2. (a) Aluminium in any crude form Nil If manufactured from any of the (including ingots, bars, following materials or a blocks, slabs, billets, combination thereof, namely :-
shots, pellets) and castings. (a) old aluminium scrap; or (b)
scrap obtained from virgin
metal, or virgin aluminium in
any crude form, or a
combination of both on which
appropriate duty of excise
or the additional duty leviable
under Section 2A of the Indian
Tariff Act, 1934 (32 of
1934), as the case may be, has
already been paid."
--------------------------------------------------------------------------------
12. From a close reading of clause (b) in Col. No. (5) against Sl. No. 2(a) of the Table it will be observed that three types of material or a combination thereof will be eligible for exemption if it is used for manufacturing aluminium and castings of aluminium referred to in Col. No. (3) against Sl. No. 2(a). Aluminium castings if they are made of scrap obtained from virgin metal as well as virgin aluminium in any crude form will be eligible for exemption. However, clause (b) under Column No. (5) also provides "or a combination of both" after the words "scrap obtained from virgin metal or virgin aluminium in any crude form". This would mean that what is covered by clause (b) is scrap of virgin aluminium or virgin aluminium in various crude forms. It does not contemplate aluminium at a state other than its virgin state, i.e., a stage when the virgin aluminium or virgin metal had been transformed into another stage by manufacture, namely, alloys, scrap of aluminium, etc. In fact, clause (a) under Column No. (5) against Sl. No. 2(a) clearly provides for the other situation where the aluminium used is of a non-virgin quality. We, therefore, agree with the findings of the Collector (Appeals) when he says that a strict interpretation of Notification No. 43/75 does not permit aluminium alloys for purposes of exemption of castings under the said Notification. However, since we have held that the Show Cause Notice is barred by limitation, the Show Cause Notice having been issued on 11-3-1985 for the period relating to January, 1980 to July, 1984, the appeal is to be allowed and the impugned order set aside on that ground alone.
13. Ordered accordingly.