Customs, Excise and Gold Tribunal - Delhi
Commr. Of C. Ex. vs K.C. Alloys And Steel Castings on 26 September, 2000
Equivalent citations: 2001(73)ECC324, 2001(130)ELT169(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. In all these appeals, preferred by Revenue, the common issue involved is whether runners and risers, emerging during the process of manufacture of ingots are eligible for exemption from payment of duty of excise under notification No. 49/97-CE dated 1-8-1997 as waste and scrap.
2. Briefly stated that the facts are that all the respondents manufacture ingots from induction furnace and were paying duty on the basis of annual production capacity under Section 3A of the Central Excise Act. During the process of manufacture of ingots runners and risers are obtained which are consumed captively by them for manufacture of ingots. Show cause notices were issued to all the respondents for demanding central excise duty on runners and risers as the benefit of notification No. 67/95-CE dated 16-3-1995 was not available to the units working under Annual Production Capacity Scheme. The Assistant Commissioner, under various orders confirmed the demand of duty on the respondents, holding that runners and risers are not ingots and billets, as decided by the Appellate Tribunal in the case of Vishvakarma Steel Industries v. CC£, 1986 (26) E.L.T. 169 (T), and are classifiable under sub-heading 7206.90 of the Schedule to the Central Excise Tariff. The Assistant Commissioner did not accept the plea of the Respondents that runners and risers are basically waste and scrap as they themselves had declared the runners and risers under sub-heading 7206.90 of the Tariff and not as waste and scrap. The Assistant Commissioner, therefore, disallowed them the exemption under Notification No. 49/97-CE dated 1-8-1997. However, on appeal the Commissioner (Appeals) in the common Order Nos. 84 to 141/2000 dated 25-1-2000 set aside the Adjudication Orders, holding that as per Note 6(a) to Section XV of the Tariff, waste and scrap means metal waste and scrap from the manufacture or mechanical working of metal and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons; that runners and risers are scrap as these emerge after separating them from ingots by cutting and are eligible for benefit under notification No. 49/97.
2. Shri M.P. Singh, learned DR, submitted that runners and risers are not ingots and billets and cannot be 'treated as waste and scrap. In support of his contention, he relied upon the decision in the case of Vishwakarma Steel Industries (supra). He, further, submitted that the respondents themselves have classified runners and risers under sub-heading 7206.90 whereas waste and scrap of iron and steel is classifiable under Heading 72.04; that the respondents had never disputed the classification of runners and risers and accordingly the benefit of exemption under notification No. 49/97-C.E. cannot be extended to runners and risers as the exemption under this notification is only available to waste and scrap; that the capacity based payment of duty is applicable only to ingots and billets and not to the runners and risers. Finally, he submitted that no evidence has been brought on record by any of the respondents that runners and risers involved in all these matters were fit for melting and not fit for rolling.
3. On the other hand Shri Kulvinder Singh, learned Advocate, submitted that the ratio of the decision in Vishwakarma Steel's case is not applicable to the facts of the present matter as that decision was given in a totally different situation which has no relevance to the present matters; that even in the case of Vishwakarma Steel Industries a distinction has been drawn between rolling scrap and melting scrap, but the fact remains that runners and risers are treated as scrap in the said decision and once runners and risers are treated as scrap they are eligible for exemption under Notification No. 49/97; that further the Appellate Tribunal in the case of Hari Ganga Alloys and Steels Ltd. v. CCE, Nagpur, 1997 (94) E.L.T. 690 has held that runners and risers in a form which cannot be subjected to rolling and are fit only for the recovery of metal alone are classifiable as waste and scrap; that even Central Board of Excise & Customs had accepted this position as per Circular No. 27/89 dated 21-9-1989. He, further, mentioned that the use of runners and risers by respondents for melting and production of Steel Ingots has not been disputed by the Department; that in fact, show cause notices admit that runners and risers have been used for the production of steel ingots. Reliance was also placed on the decision in the case of Bengal Ferro Alloys & Steel Ltd. v. CCE, Bolpur, 1998 (104) E.L.T. 766 (T). Finally he submitted that as the duty is paid by the Induction Furnace Factories on the basis of annual capacity of production of the furnace, duty cannot be charged separately on runners and risers; that the annual capacity is determined keeping in view the crucible installed in the induction furnace unit and accordingly all excisable goods manufactured therein are to be treated as covered under the capacity based scheme.
4. In reply the learned DR submitted that if any product is classifiable under Heading 7206.90 it cannot be treated as waste and scrap which falls under 72.04 of the Tariff; that whether runners and riser are called reliable scrap or by any other name, it remains iron or steel in primary form; that by calling them as reliable scrap or using them for a particular purpose i.e. melting, will not change the classification of the product. He emphasised that the respondents have not disputed nor challanged the classification of the runners and risers. The Advocate appearing for the respondents countered by saying that notification No. 47/97 does not mention any Heading or subheading while providing exemption to waste and scrap and accordingly all types of waste and scrap irrespective of Heading or sub-heading it falls, is exempted from payment of duty. Shri K.K. Anand, learned Advocate, specifically submitted that if something is waste and scrap and is wrongly classified under sub-heading 7206.90 the benefit which is available to waste and scrap of iron and steel under notification No. 47/97 cannot be denied. Shri R.S. Saini, learned Advocate, in addition mentioned that the intention of the Government is to exempt all the goods which are captively consumed; that as the Revenue is levying excise duty under Section 3 of the Central Excise Act, benefit of Notification No. 67/95 will be available to the runners and risers.
5. We have considered the submissions of both the sides. Notification No. 49/97-C.E., dated 1-8-1997 exempts waste and scrap, falling under the Schedule to the Central Excise Tariff Act, arising in the course of manufacture of ingots and billets of non-alloy steel in an induction furnace unit, on which the duty of excise is paid under Section 3A of the Central Excise Act. It is admitted fact that runners and risers had arisen during the process of manufacturing the ingots as this fact is mentioned in the show cause notices issued to the Respondents. The Commissioner (Appeals), in the impugned order has given his specific finding that "runner and risers are scrap as these emerge after separating from the ingots by cutting." The contention of the Revenue is that Runners & Risers are not scrap but are rerollable material as held by the Tribunal in Vishwakarma Steel's case. What are Runners and Risers? It is mentioned in Hariganga Alloy's case that "Runners as iron or steel material are solidified molten metal in refractory channel leading to casting of ingot mould. They are formed in runner channel. The riser as iron or steel material is also solidified molten metal that remains in the riser block/box or cavity attached to the casting after the molten metal as required by the casting (because of shrinkage before and during solidification) had been provided." It is thus apparent that runners and riser arise in the course of manufacture of ingots and billets. The question to be decided is whether these are waste or scrap or rerollable material. We find that in Vishwakarma Steel case, the Appellate Tribunal did recognise the fact that runners and risers are generally used for melting purposes and are not in the class as ingots. Even after observing this, the Tribunal held the runners and risers as rerollable material as the Appellants therein used them for rerolling purposes. The Tribunal thus went by the use which runners and risers were put to. In the present matters also, it is not in dispute that all the respondents had used them for the manufacture of non-alloy steel ingots and satisfy the definition of waste and scrap as given in Note 6(a) to Section XV of the Central Excise Tariff. The Tribunal again decided the classification of the runners and risers by the use they were put to in the case of Hariganga Alloys & Steel. The Tribunal held as under :-
"...the runners and risers which are fit for rolling were correctly classifiable under Heading 72.06. Insofar as the runners and risers which were in such a form which could not be subjected to rolling and are fit only to the recovery of metal alone will be classifiable under Heading No. 72.03 (Now 72.04) as waste and scrap."
6. The Tribunal again observed in Bengal Ferro Alloy & Steel case that runners and risers are of two types, i.e. one fit for rolling and another fit for melting. The Tribunal in that case set aside the demand of duty in absence of allegation that the runners and risers removed by the Assessees were not fit for rolling. As rightly pointed out by the learned Advocate, even Government has clarified, vide circular No. 27/89 dated 21-9-1989 that Heading 72.04 would cover only such waste and scrap as would generally be used for remelting and consequently would not cover rerollable scrap and such waste and scrap which is not for re-melting will have to be classifiable in other appropriate headings of the Tariff.
7. Applying the ratio of all the decisions discussed earlier and the fact that the Notification exempts waste and scrap when such waste and scrap arises in the course of manufacture of ingots and billets of non-alloy in an induction furnace unit on which duty of excise is paid under Section 3A of the Act, the benefit of exemption cannot be denied to the runners and risers in question as they squarely fall within the ambit of notification No. 49/97-CE. It is not in dispute that :-
(i) Respondents are manufacturing ingots in induction furnace.
(ii) The runners and risers are arising in the course of manufacture or production of ingots.
(iii) The duty on ingot is paid under Section 3A of the Central Excise Act.
Further it is worth mentioning that the Notification does not mention Heading 72.04 after referring to waste and scrap. The scope of waste and scrap mentioned in the notification is wide enough to cover all waste and scrap, falling under the Schedule to the Central Excise Tariff Act. Even if runners and risers are treated as rerollable scrap, falling under Heading 72.06 of the Central Excise Tariff, though there is nothing on record to show that they were fit for re-rolling, the exemption provided under Notification cannot be denied as the exemption is not restricted to waste and scrap falling under Heading 72.04 only. The intention of the Central Government is also evident from Circular No. 327/43/97-CX., dated 1-8-1997 wherein it was mentioned as under :-
"It has been decided to exempt waste and scrap arising in the course of manufacture of ingots and billets (in the case of induction furnaces) as also the waste and scrap arising in the course of production or manufacture of hot re-rolled products (in the case of hot re-rolling mills), from whole of excise duty. Notification No. 49/97-CE, refers."
Accordingly, we find no reason to interfere with the impunged order and all the appeals filed by the Revenue are rejected. The cross-objections filed by the Respondents also stand disposed of as no other point has been raised therein.