Customs, Excise and Gold Tribunal - Delhi
Singh Alloys And Steel Ltd. vs Collector Of Central Excise on 26 April, 1991
Equivalent citations: 1991(56)ELT782(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. Brief facts of the case are as follows :-
The appellant has a scrap based factory and manufactured steel ingots under the erstwhile Tariff Item 26 CET with the aid of electric furnace out of duty paid unused steel melting scrap in admixture with other materials as laid down in Notification No. 144/75-C.E., dated 7-6-1975. The other materials included, inter alia, bazar scrap, i.e. old and used iron and steel scrap. Apart from availing the benefit of this aforesaid Notification, he also availed of the concessional rate of duty under Notification No. 237/75-C.E., dated 9-12-1975. The appellant was accorded approval to manufacture steel ingots from steel melting scrap or steel scrap brought under Rule 56A subject to the observance of the procedure detailed in Rule 56A of Central Excise Rules, 1944.
1.1 Later on after scrutiny of the records of the firm by the Central Excise Officers, it was alleged inter alia by the Department, which is in dispute now before the Tribunal, as follows :-
(i) The appellant has evaded duty on 1047.973 M.T. of steel ingot by irregularly adjusting the duty payable in their set-off register which was alleged to be inadmissible.
(ii) The appellant has not paid appropriate amount of duty on 297.440 M.T. of steel ingot by determining the duty in terms of Notification No 237/75-C.E., dated 9-12-1975.
1.2 On adjudication, the Collector of Central Excise, West Bengal has confirmed the auxiliary duty amount of Rs. 57,297.88 which has been held to have been short-paid by the appellant during the period from 1-4-1975 to 1-1-1976. He has also confirmed payment of duty of Rs. 22,308/- towards auxiliary duty being the difference of duty paid at the rate of Rs. 25/- per metric tonne and the rate of Rs. 100/- per metric tonne payable by the appellant during the period from 15-5-1976 to 11-6-1976 on 297.440 metric tonne of steel ingot. Penalty of Rs. 1,000/- has also been imposed on the appellant under Rule 173A of the Central Excise Rules, 1944.
2. The Adjudicating Authority has held in the impugned order that as per the words of Notification No. 144/75-C.E., dated 7-6-1975, set-off of duty on steel ingot is admissible to the extent the fresh unused steel melting scrap on which duty has been paid is used in the manufacture of such steel ingot in view of the proviso to the said Notification. In other words, it has been held that if the Notification had allowed the set-off of duty paid on the 'other materials' referred to in the Notification, the proviso would have clearly spelt out the position rather than limiting the set-off to the duty paid on 'such scrap', i.e. the two types of scrap mentioned earlier in the Notification.
2.1. As regards the controversy on Notification 237/75, the Collector has held that in giving the benefit of exemption Notification 237/75, Rule 56A procedure has not been adopted or permitted and, therefore, if any assessee elects to avail of the benefit of concessional rate of duty under the said Notification, such an assessee automatically gets excluded from the purview of the benefit of Rule 56A in respect of such steel ingot. In short he has held that the benefit under Rule 56A and the scheme of exemption under Notification 237/75 are independent of each other.
3. The learned Advocate, Shri S. K. Roy Choudhary appearing for the appellant has urged that the purpose of the proviso to Notification is totally different. It only states that where the duty paid on any such scrap i.e. on any fresh unused steel melting scrap or unused steel scrap is more than the duty leviable on steel ingot manufactured out of the above scraps, the amount eligible for adjustment towards the exemption shall be restricted to the amount of duty leviable on such quantity of steel ingot. In other words, the duty paid on the aforesaid scraps should not be allowed to be paid back to the assessee by way of refund, and adjustment of duty shall be limited to the amount of duty leviable on quantity of steel ingot manufactured out of such scraps.
4. They have also contended that the Adjudicating Authority has gone wrong in holding that the benefit of set-off of duty admissible under Notification 144/75 is available only to the duty paid melting scrap and that the benefit of set-off of duty is not available to the bazar scrap inasmuch as the bazar scrap is to be treated as duty paid as per CBEC's Circular F. No. 12/25/62 CX. VI-I, dated 22-9-1962 with effect from 1st October, 1962. The appellant, therefore, submits that set-off of duty deemed to have been paid on bazar scrap should also be allowed to the extent permitted by the CBEC's circular.
4.1. In order to appreciate the above argument of the appellant, it is also desirable to reproduce the aforesaid circular, a copy of which has been given by the appellant as Annexure-A to the appeal :-
"Representations have been received from secondary re-rollers of iron and steel products to the effect that they are not able to take full advantage of the set-off or exemption contemplated in Notification Nos. 89/62 and 132/62 respectively as it is difficult for them to obtain and produce necessary proof of payment of duty on the articles or scrap purchased and used by them for further re-rolling. It is reported to be particularly difficult for those re-rollers who get their supply of iron and steel material from the market or the stockists and not from the primary producers.
2. The representations have been carefully considered by the Board. In the beginning when the pre-excise stock of iron and steel products also existed in the market along with duty paid products, it was necessary to insist on a certified copy of A.R.I or other convincing proof of payment of duty before set-off or exemption could be allowed. But once the pre-excise stock is exhausted, there will be no particular necessity in demanding such proof. Having regard to the stock position as it existed on 24-4-1962 and the possibility of such stocks having been already used up the Board has now decided that all stocks of iron and steel products (including fresh industrial scrap and re-rollable scrap) existing in the market onor after the 1st October, 1962 should be treated as duty paid and proof of payment of duty need be demanded in respect of purchases by the secondary re-rollers either from the primary manufacturers or from stockists or from the market. In other words set-off or exemption as admissible should be allowed assuming that the products used for further re-rolling have paid the appropriate amount of duty under Item No. 26AA."
5. The learned DR has reiterated the findings of the Adjudicating Authority as already set out above. We have carefully considered the pleas advanced on both the sides. We notice that Notification No. 144/75 grants exemption from payment of duty on steel ingot if it is manufactured from two types of scrap either singly or in combination with one another, and in admixture with 'other materials'. The specified types of scrap are (i) duty paid fresh unused steel melting scrap and (ii) duty paid unused steel scrap of any type. The extent of exemption is equivalent to the duty of excise, proved to the satisfaction of the proper officer, to have been paid on such scrap. The words emphasized above have a special significance, it has to be proved categorically fey an assessee availing of the aforesaid exemption that the aforesaid types of scrap mentioned in the Notification have paid duty and then only, set-off of such duty paid on such scrap can be allowed from the duty payable on steel ingot manufactured out of such unused melting scrap or unused steel scrap. It is not the contention of the appellant that the bazar scrap used by them in the manufacture of the steel ingot is unused steel scrap or unused steel melting scrap. The CBEC's circular relied upon by the appellant is not applicable to the facts of the case. Even a cursory glance at the circular would make it clear that it is applicable to the secondary re-rollers only and it is applicable to the iron and steel products falling under Item No. 26AA of GET. This is apparent from the last sentence of the aforesaid circular which reads as follows :-
"In other words set-off or exemption as admissible should be allowed assuming that the products used for further re-rolling have paid the appropriate amount or duty under Item No. 26AA" (emphasis supplied).
It follows, therefore, that adjustment of duty has to be equivalent to the duty paid on the two types of scrap mentioned in the Notification 144/75 and not of the duty deemed to have been paid on the bazar scrap. Adjudicating Authority's detailed calculation in para 7(i) of the impugned order is correct in fact and in Jaw except to the extent that full effective rate of duty on steel ingot is not to be charged, if there is any Exemption Notification available in respect of steel ingot, both for basic Central Excise duty or for auxiliary excise duty. If there is any Exemption Notification, the benefit of that Notification should also be extended to the steel ingot so manufactured subject to satisfaction of conditions, if any, of the Notification. The Department is, therefore, directed to revise the demand of duty, if any, in the light of the above observations, so far as applicability of Notification 144/75 is concerned.
6. As regards the second controversy of Notification No. 237/75, the learned Advocate, Shri S. K. Roy Choudhary for the appellant has urged that there is no restriction in the Notification No. 237/75 that if a manufacturer avails of the benefit of set-off under Notification 144/75 or the proforma credit procedure under Rule 56A, he would not be entitled to the benefit of Notification No. 237/75. There is neither any provision nor is there any such restriction in Notification No. 144/75. With regard to availing of the benefit of Notification No. 237/75, he submits that the Notification 237/75 being independent of Notification No. 144/75 and since the terms of the former Notification No. 237/75 are fulfilled by the appellant, there is no reason not to grant the benefit of the said Notification and the rate of duty leviable on the steel ingot as manufactured by the appellant would carry a rate of Rs. 25/- per M.T., so far as the Basic Central Excise duty is concerned. He cites in his support two decisions as follows :-
(i) 1985 (19) ELT 141 (Tribunal) - CCE, Chandigarh v. Hindustan Wire Products.
(ii) 1989 (41) ELT 217 (Bom.) - Indoswe Engineers Private Limited v. Union of India.
He also relied upon Tribunal's Order No. 238/88-B1, dated 19th April, 1988 in the case of K. R. Steel Union (P) Limited v. CCE, Calcutta.
6.1. In this controversy, the learned DR reiterates the findings of the Adjudicating Authority set out above.
7. We have carefully considered the pleas advanced on both the sides. We are in agreement with the contention of the learned Advocate for the appellant that there is nothing in either the Notification No. 144/75 or Notification No. 237/75 that one is denied if the other is availed of. The two Notifications being different, if the conditions of both the Notifications are satisfied by the appellant, which are not in dispute from the side of the Department; we see no reason as to why the appellant cannot avail the benefit of both the Notifications. Notification 237/75 lays down that the steel ingot should be manufactured with the aid of electric arc furnace and it should be manufactured from any of the following materials :-
(a) old iron or steel melting scrap;
(b) a combination of the material referred to at (a) above with fresh unused steel melting scrap on which the appropriate duty of excise has been paid; and
(c) iron in any crude form falling under Item No. 25 of the said First Schedule on which the appropriate duty of excise has been paid in combination with the materials referred to at (a) and (b) above.
7.1. Bazar scrap is nothing but old iron and steel melting scrap referred to (a) above. Therefore, all the conditions of Notification No. 237/75, dated 9-12-1975 are apparently fulfilled by the appellant. Reliance placed by the appellant on the citations mentioned supra is also correct. Duty paid character of the scrap is not altered simply because set-off procedure has been followed. It is only an accounting facility instead of permitting set-off on consignment to consignment basis. The rate of basic Central Excise duty on the ingot manufactured by the appellant during the relevant period would be Rs. 25/-per M.T. as given in terms of the effect of the Notification No. 237/75.
8. The appeal and cross-objection are disposed of in the above terms.