Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise And Ors. vs Modern Steel Ltd. And Ors. on 29 May, 1986
Equivalent citations: 1986(9)ECC82, 1986(8)ECR474(TRI.-DELHI), 1986(26)ELT165(TRI-DEL)
ORDER V.P. Gulati, Member (T)
1. These appeals are from the Collectors of Central Excise, Chandigarh and Jabalpur against the order of the Collector of Central Excise (Appeals), New Delhi.
2. Brief facts of the case are that the respondents are engaged in the manufacture of steel ingots out of iron and steel melting scrap with the aid of electric arc furnace and during the manufacture of the goods, runners and risers are also produced and these had been cleared by the respondents without payment of duty or at concession rate of duty in terms of notification No. 237/75 as amended and by notification No. 235/77, or by notification No. 156/79 and 53/80 as the case may be. The demand in respect of clearance of these runners and risers raised by the Department under the ground that benefit of the notification was available only in respect of ingots and not for clearance of runners and risers which have been described by the Department as steel melting scrap. These runners and risers are put to various uses after clearance. The Department alleged that the respondents had not declared in the classification list filed by them that they were also producing runners and risers. Show cause notices were issued demanding duty and contravention of provision of Rule 9(1), 173B, 173B, 173E and 173G read with Rule 226 was indicated and duty was demanded under proviso to rule 10A. The respondents resisted the demand and pleaded that runners and risers should be treated as ingots in as much as the term ingot had not been defined and runners and risers being the first solidification stage of molten metal, is fit for subsequent hot working. According to them, the runners and risers were nothing but inferior type of ingots. They pleaded that they had all along paid duty and cleared the runners and risers in terms of notification No. 237/75 and 112/77 at the rate applicable to ingots and in terms of notification 235/77 under which duty was withdrawn subject to fulfilment of conditions set out in the notification. Duty on runners and risers should also be construed to have been withdrawn. It has been pleaded that this was the interpretation placed by the Department on this notification and this is how it was understood by Industry throughout India and any demand of duty would be discriminatory in nature as in most of the Collectorates no duty on runners and risers had been charged. In this background, it was pleaded that the departmental officers were also aware of the position and after the notification 235/77, no duty was demanded. The plea of time bar was also taken. In appeal they also cited the order of the Government of India passed in Revision No. 78/82 dated 27.1.82 in the case of Century Iron and Steels Limited : 1982 ELT 761. Pointed attention was drawn to para 4 of the said order in which the Government of India referred to another order passed-in-revision, have observed as under:
"In earlier order No. 114-115/75, in another case the Government had already held that when the ingots were exempted under notification No. 237/75, it would not be reasonable to deny the exemption to the steel melting scrap including runners and risers generated along with the ingots in process of its manufacture from old iron or steel melting scrap specifically when item 26 of the Central Excise Tariff covers both ingots and steel melting scrap for the tariff entry reads as 'steel ingots including steel melting scrap'."
Adopting the ratio of the Government of India decision, the Appellate Collector allowed the appeals of the appellant. It is against the order of the Collector of Central Excise (Appeals) that the Collector has come up in appeal. In the ground of appeal following two grounds have been taken by Collector:
(1) The impugned order of Collector (Appeals) Central Excise, New Delhi is not legal, proper and correct as notification No. 237/75 dated 9.12.75 as amended by notifications No. 235/77 dated 15.7.77 exempts only steel ingots from payment of duty and benefit of this exemption cannot be extended to runners and risers (steel melting scrap) which is not mentioned in the said notification.
(2) The impugned order is contrary to the Hon'ble Tribunal's decision dated 24.1.83 in appeal No. ED/SB/T 231/80(B) filed by M/s. Ravindra Steels Limited, Nagpur : Reported as 1983 ELT 413.
3. The learned SDR for the Department, Smt. V. Zutshi, pleaded that notification extended the benefit only in respect of steel ingots and nothing more. Steel melting scrap and runners and risers could not be read into the exemption notification merely because the tariff entry that steel ingots including steel melting scrap is there. She pleaded that word including used in the tariff entry did not give any extended meaning to the word 'steel ingots' nor it defined the term 'steel ingot', but only specifies that for the purpose of levy under the tariff steel ingots and steel melting scrap would be charged at the same rate. But this did not mean that for the purposes of the exemption under the notification, the same position obtains. She pleaded even though the word ingot has not been defined in the Tariff, as per ISI specification, ingots has been defined as under :
"Ingot - Castings of suitable shape and size intended for subsequent hot working."
She pleaded that nowhere as has been averred before the Appellate Collector that the ingot is described as first solidification stage of iron and she pleaded that runners and risers are not ingots and are a different commodity. She cited the case of Ravindra Steels Limited : 1983 ELT 413 where the same issue had come up for consideration before the Tribunal and where the Tribunal had held that for the purpose of duty term ingots would not cover steel melting scrap and that steel melting scrap had to be charged at the higher rate as described otherwise under the. Tariff. She further pleaded it is not relevant as to what end use steel ingots are put to. She pleaded runners and risers were in the nature of steel melting scrap and the Collector (Appeals) should have followed the decision of the Tribunal in case of Ravindra Steels Limited. She drew our attention to para 3, 8 and 12 of the Order of the Tribunal in the case of Ravindra Steels Limited.
4. On behalf of the respondents, Shri Bedi stated that the decision of the Tribunal in the case of Ravindra Steels Limited v. CCE, Nagpur could not be made applicable to the facts of this case inasmuch as the issue dealt with in the Ravindra Steels was in respect of ingots vis-a-vis steel melting scrap and the issue involved was not whether runners and risers were ingots. He stated that anything which is the first stage of solidification for further hot treatment would qualify to be called ingot. Ingot, according to him, has not been defined. He stated that runners and risers should be treated as ingots and he drew our attention to the Trade Notice dated 4.3.77 according to which, he pleaded, the runners and risers cleared outside the factory were required to be accounted for as ingots. He further pleaded as of now under the recast item 25, steel scrap has been defined as one which is fit only for melting. The runners and risers were intended for re-rolling, according to him and, therefore, qualify to be called ingots. He drew our attention to the instructions of Government of India, issued under their letter No. 139/29/73-CX4 dated 29.11.79 reiterating the instructions issued earlier. These instructions were withdrawn only in 1983 and inasmuch as the period in respect of which the duty had been demended pertains in point of time earlier to 1983, the benefit of the instructions in force earlier, would be available to them. He cited the following case law: 1982 ELT 486 in the case of Government of India v. Century Iron & Steel Mills. He further pleaded that the Hon'ble Finance Minister in his 1977 Budget speech while shifting the burden of levy from product stage to ingot stage stated as under :
"Most steel re-rollers produce bars, rods, angles, etc. which attract an excise duty of Rs. 130 per tonne from the re-rollers to the ingot manufacturers, namely, the main steel plants or mini steal plants."
He, however, could not bring out the relevance of the decision cited to the facts of the case before us. The question of limitation was also raised as the demand has been raised for extended period. Shri D.N. Mehta, who appeared on behalf of one of the respondents, has stated that under Section 20 of the General Act, the meaning that should be assigned to steel ingots in the notification should be the same as in the main Tariff entry.
5. The first point that arises for consideration is whether the runners and risers can be called steel ingots. It has been stated by both the sides that steel ingot has not been defined in the Tariff. Reliance of the Department of definition of ingots is on the definition as given in ISI. This definition is given as under :
"Ingot - Castings of suitable shape and size intended for subsequent hot working."
6. The learned counsel for the respondent could not place any authority before us to show that anything which is first stage of solidification howsoever obtained can be called ingot. A mould for ingots showing the riser and runner was also shown in the Court. The runner and riser are channels in flow of the metal to the portion called ingot mould which is on atop the riser. Runners and riser were found to be narrow channels.
No evidence was produced that runners and risers are of any predetermined size and devised for producing solidified material for any particular end use as is the case when ingot is produced. It is the ingot mould which yielded the solidified metal of a predetermined size for a particular end-use. No evidence has been produced to show that the runners and risers are accepted in the trade as the ingots for the same end use. The runners and riser are left-over material after ingot has been removed from the ingot mould and is not having any definite shape and size to answer to any specific end use. Notwithstanding the fact that these, as has been pleaded, find use for re-rolling purposes, the fact remains by virtue of the size and nature these are essentially in the nature of melting scrap. In view of the above, we hold that the facts of case are not different from those dealt with in the case of Ravindra Steels (Supra) decided by the Tribunal. We observe that all points raised before us have been dealt with in the case of Ravindra Steels including the case law cited and we find no reason to differ from the decision taken in the case of Ravindra Steels (supra). We find that the Collector (Appeals) who had dealt with the matter had decided the issue on merits and had not touched upon the question of time bar raised by various appellants in the proceedings before him. We also observe that some other points were also raised in the proceedings before the lower authorities and Collector (Appeals) and these have not been dealt with in his orders. In view of the above, we hold that benefit of the notification as claimed by the respondents in the proceedings before the Collector (Appeals) and allowed by the Collector (Appeals) are not available in the case of runners and risers. We, therefore, set aside order of the Collector (Appeals) and remand the case for de novo consideration by the Collector (Appeals) in the light of above for orders in respect of other points raised by the respondents including that of time bar. The respondents have pleaded that till instructions regarding treating steel melting scrap for the purpose at par with steel ingots, issued by the Ministry, were withdrawn, the benefit of the same should have been made available to the respondents inasmuch as the case arises during the periods when these instructions were in vogue. The instructions which were issued stood withdrawn before the Appellate decision was taken. No Trade Notices were brought to our notice whereby promise had been held out for the benefit of notification as claimed by respondents. The question of promissory estoppel therefore does not arise. Notwithstanding the fact that the Government of India had in the order cited, supra, extended the benefit of notification in respect of steel melting scrap does not by itself constitute any ground for interpreting the notification otherwise than as interpreted as in the case of Ravindra Steels. The fact remains that we are concerned here with the correct interpretation in respect of the term ingot as set out in the relevant notification.