Bhupindra Steels (P) Ltd. vs Collector of Central Excise

Variava, J.—This appeal is against the Order dated 26th May, 1993 passed by the Customs Excise and Gold (Control) Appellate Tribunal.

Briefly stated the facts are as follows:

The Appellants are manufacturers of ingots. Ingots are manufactured out of among others, ends of M.S. Flats. The Appellants claimed exemption under Notification No. 208/83 dated 1st August, 1983. The relevant portion of the said Notification reads as follows:

"(4) In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods of the description specified in column (3) of the Table hereto annexed (such goods being hereinafter referred to as "final products") and falling under Item No. 2 of the First Schedule to the Central Excise and Salt Act, 1944 (of 1944) from the whole of the duty of excise leviable thereon u/s 3 of the said Act.

Provided that such final products are made from any goods of the description specified in the corresponding entry in column (2) of the said Table (such goods being hereinafter referred to as "inputs" and falling under the said item on which the duty of excise leviable under the Customs Tariff Act, 1975(5) of 1975), as the case may be, has already been paid.

Provided further that no credit of the duty paid on the inputs has been taken under Rule 56A of the said rules.

Explanation: For the purposes of this notification, all stocks of inputs in the country, except such stocks as are clearly recognisable as being non-duty paid, shall be deemed to be inputs on which duty has already been paid.

THE TABLE

S. No. Description of inputs Description of final products

Goods falling under sub-item (1)(I)(ii) 4(I), 6(I) and 16(I) of the said item. Goods falling under sub-item (I)(3)(I)(4)(I)(6)(I) and (16)(I) of the said item Iron sleepers and tubes and pipes and blanks therefore or iron

Goods falling under sub-items 6(ii) and (iii) (7)(ii), (8), (9)(ii) and (II) of the said item. Goods falling under sub-items (4)(ii), (6)(ii) and (iii), (7)(ii), (8), (9)(ii), (10), (11), (14) and (16)(ii) of the said item. Flats exceeding 5 mm in thickness, and hot-rolled strips, other than galvanized strips, exceeding 5 mm in thickness."

The Appellants claimed that the inputs used by them viz. "ends of M.S.Flats" fell under Sub-Item 8 and their final product fell under Sub-Item 6(II). On1st August, 1985, the Superintendent, Central Excise served a Show Cause Noticecalling upon the Appellants to show cause why the exemption availed of, from17.2.1985 to 31.3.1985, be not withdrawn. The Appellants filed their reply dated29th August, 1985. The Appellants claimed that the inputs namely pieces of steelroughly shaped by action of rolling or forging fell under Sub-Item 8. By an Orderdated 18th December, 1985, it was held that the Appellants were not entitled toexemption under the above mentioned Notification. The appeal filed by theAppellants before the Collector (Appeals) was allowed on 29th April, 1986.

The Collector then filed an appeal u/s 35-B before the CustomsExcise & Gold (Control) Appellate Tribunal. By the impugned order that Appealhas been allowed. It has been held that the inputs used by the Appellants cannotfall under Sub-Item 8 as that item only deals with products which are given a roughshape by the process of rolling and forging and which are then given their finalshape by further processing. It has been held that the "ends of Flats" remain "Flatseven after cutting and/or they would be "waste and scrap" falling under Sub-Item 3.It has been held that as the Notification does not cover either "waste and scrap" or"Flats", the Appellants would not be entitled to exemption under this Notification.

Mr. A.K. Jain has, in assailing the judgment, submitted that the Tribunal isentirely wrong in coming to the conclusion that the "ends of Flats" are "Flats". Hesubmits that explanation No. XXI describes a "Flat" as follows:

"(xxi) "flats" means finished products, generally of rectangularcross-section, having rolled edges only (square or slightly rounded),of controlled contour and of thickness 3 millimeters and over, width400 millimeters and below had supplied in straight lengths andincludes flat bars with bulb that has swelling on one or two faces ofthe same edge and a width of less than 400 millimeters."

He also points out that under explanation (ix), the term "waste and scrap"has been described as follows:

"(ix) 'waste and scrap' means waste and scrap of iron or steel fit onlyfor the recovery of metal or for use in the manufacture of chemicals,but does not include slag, ash and other residues."

He submits that "Flat" necessarily has to be a finished product. Hesubmits that ends of flat are never finished. He submits that ends of Flats cannotbe considered as Flats. He further submits that an item would be waste or scrapif it could be only used for recovery of metal or used in the manufacture ofchemicals. He admits that the ends of Flats are used by the Appellants forrecovery of metal. He however submits that ends of Flats are being used byothers for making various items like knives, forks etc. He submits that thus theends of Flats could not be "waste and scrap".

We are unable to accept the submission of Mr. Jain. To claim exemptionunder the Notification No. 208/83 the Appellants have to show under what Sub-Itemthe inputs used by them fall. The Appellants have claimed benefit of theNotification on the ground that input falls under Sub-Item 8. In our view theends of flats cannot be pieces which are roughly shaped by rolling or forging.Sub-Item 8 deals with pieces of iron and steel which are given a rough shape bythe process of rolling or forging. Sub-Item 8 would not cover pieces of bars,rods, flats etc. which are cut off from the main item.

Mr. Ganesh also points out that the manufacturer of Flats would sell offthe ends of Flats as waste and scrap. He points out that the Appellants havepurchased the ends of flats from scrap dealers. That the Appellants havepurchased from scrap dealers is not denied. In our view this also indicates thatends of Flats do not fall under Sub-Item 8. As the inputs do not fall under Sub-Item 8,the Appellant would not be entitled to exemption under the Notification.

Faced with the situation Mr. Jain submitted that even if cuts of flats do notfall under the Sub-Item 8, they would fall under Sub-Item 11. He admits thatthis Sub-Item is also included in the Notification as an input. Such a case isbeing made out for the first time in arguments before this Court. The Appellantshave not claimed exemption under the Notification on this basis. We, therefore,do not permit Mr. Jain to raise such a contention.

We see no infirmity in the impugned judgment. We see no reason tointerfere. The Appeal stands dismissed. There shall be no order as to costs.

We have today in Civil Appeal No. 2305 of 1994 held that the Appellantsare not entitled to exemption under Notification No. 208/83. In this case the onlydifference is that the inputs are different. On the reasoning given in that judgmentthese inputs would not fall under Sub-Item 8. Therefore this Appeal also standsdismissed. There shall be no order as to costs.