Customs, Excise and Gold Tribunal - Delhi
Devi Dayal Stainless Steel Indust. (P) ... vs Collr. Of C. Ex. on 17 September, 1996
Equivalent citations: 1997(90)ELT388(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. In this appeal filed by M/s. Devi Dayal Stainless Steel Indust. (P) Ltd. the issue for our consideration is whether the waste and scrap on which the appellant had claimed exemption under Notification 204/83-C.E., dated 1-8-1983 had arisen out of the goods falling under any item other than Item No. 25 of the Central Excise Tariff. The appellants were bringing duty-paid stainless steel sheets classifiable under Item No. 25 of the Tariff and were processing them to manufacture laminations and stampings classifiable under Item No. 28A of the Tariff. Stainless sheets brought from outside were subjected to the process of blanking and during the process of blanking certain scraps arise. The appellants had availed of pro-forma credit in respect of the sheets and the credit taken was to be utilized towards the payment of excise duty on the stampings classifiable under Item No. 28A. The Collector of Central Excise (Appeals) had held that the waste and scrap in question had arisen before the sheets reached the stage of stamping. He had classified the waste and scrap in question under Item No. 25 and had denied them the exemption under Notification No. 204/83-C.E. as they have already taken the credit of the duty paid on the sheets.
2. The matter was heard on 17-9-1996. Shri K.K. Anand, Advocate appeared for the appellants. Shri P.K. Jain, SDR, represented the respondents/ Revenue.
3. We have carefully considered the submissions made on both sides and have gone through the facts on record. It is seen that the waste and scrap had been classified by the appellants under Item No. 25(3)(II). There is no dispute that the material out of which the waste and scrap had arisen were duty paid and the credit of the same had already been taken on their receipt in the factory. When the sheets are processed to make strips and then blanks are taken out of the strips we do not consider that it will go outside the purview of Item No. 25 which cover both sheets and strips. The appellants have in their classification list not shown any other classification other than Item No. 25. It is only after the blanks are further processed and assembled then the goods will fall under Item No. 28A of the Tariff. At the stage when the waste was generated it could not be said that the classification under Item No. 25 had undergone any change. The Collector of Central Excise (Appeals) in Para 4 of his order has reported as under :-
"I have carefully considered the submissions made by the appellants in their appeal petition and those made in their written submission presented at the time of personal hearing. I have also gone through the order of the Assistant Collector appealed against. In the instant case, I find that according to the Assistant Collector the scraps/wastes is from steel sheets falling under T.I. 25. The appellants, however, submitted that once these sheets are used for the next operation i.e. blanking then the goods get classified under T.I. 28A even though such goods have not been fully converted into stampings and therefore any scrap/waste arising from this stage will fall under T.I. 28A and not under T.I. 25.I do not agree with the contention of the appellants. In my view the scrap/waste arising in the process of manufacture of stampings i.e. before the goods reach the stage of stamping. The Assistant Collector is therefore, right in classifying the scraps / waste under T.I. 25.I therefore do not find any considerable force in the appellants arguments deserving any consideration".
5. The learned Advocate submitted that in their case the waste had arisen after the sheets classifiable under T.I. 25 had undergone certain processes including that of blanking. The learned Advocate had not been able to show that at that stage the goods were classifiable under any other heading other than Item No. 25 as the Collector had observed that the waste had arisen before the goods had reached the stage of stamping.
6. The learned Advocate had also referred to the Tribunal decision in the case of Johnson Fabrics Co. v. CCE - 1989 (43) E.L.T. 274 (Tribunal). In that case the matter related to the process of manufacture of rolled cold grain oriented electrical grade silicon steel sheets which after cutting in particular forms straightaway went into transformers as stampings or laminations. The issue before the Tribunal was whether the strips to form electrical laminations amounted to the process of manufacture. The Tribunal in Para 13 of the order had observed that the product in question were electrical stampings and they were classifiable under Item No. 28A. In the case before us at the stage of the blanking it could not be said that the manufacture of electrical stampings was complete.
7. The point had also been made that another Collector (Appeals) had taken a different view in the matter. The learned Adv. had referred to the decision of another Collector (Appeals) where he had held that as the scrap had arisen during the manufacture of electrical stampings it had to be held that it had arisen out of the goods falling under Item No . 28A. He had observed as under :
"I have considered the submissions made by Shri D. Pillay, Supdt. C. Excise and Shri Marfatia, Company Secretary of the Respondents. The respondents had claimed the benefit of Notification No. 204/83, dated 1-8-1983 in respect of the scrap which arise during the manufacture of electrical stampings falling under T.I. 28A. They also availed of the benefit of Notification No. 95/83 dated 1-3-1983 in respect of steel sheets used for the manufacture of electrical stampings. The Asstt. Collr. allowed the benefit of Notification No. 204/83 depending on Sub-clause (ii) to the Notification. He held that the scrap was generated from tariff items other than T.I. 25. The applicant Asstt. Collr. has taken the stand that the source of T.I. 28A scrap is steel and not electrical stampings and therefore, the benefit of clause (ii) of Notification. No. 204/83 cannot be given. I do not agree with this view. The source for scrap has to be steel whether it is item 25 or any other items. In this case scrap has arisen during the manufacture of electrical stampings, a product covered by T.I. 28A. This being so clause (ii) of Notification No. 204/83 would apply. Scrap arising from the item (28A) is exempt. The second plea of the applicant Asstt. Collr. that since credit of duty on steel sheets has been taken, the scrap arising during the manufacture cannot be cleared without payment of duty also has no basis. There is nothing in the Notification No. 95/83 to warrant such an assumption. Scrap is to be cleared on payment of duty. By an exemption, no duty is leviable. Therefore the question of paying duty as contended by the Asstt. Collr. is correct. The order dated 27-11-1984 is incorrect. The application in form E.A. 2 is rejected."
8. This order is not before us and we do not want to make any observation on the merits of that order. In the present case however we find that the scrap had arisen at the stage of blanking and at that stage the waste and scrap had not arisen from the goods classifiable under Item 28A of the Tariff. At the stage of blanking the sheets were not classifiable under Item No. 28A. They remain classifiable under Item No. 25 of the Tariff. The expression used in the Notification is "such waste and scrap have arisen from goods falling under any item other than the said item No. 25." In the order relied upon by the learned Advocate there is no discussion that the waste had arisen in the process of blanking or after the process of blanking.
9. In view of the above we consider that the view taken by the Collector, Central Excise (Appeals) does not suffer from any infirmity. In the result the appeal is rejected.