2003 (1) TMI 580 - AT - Central Excise

Dutiability - Intermediate products - Marketability - Demand - Limitation - Cenvat/Modvat - Valuation - Scrap - Exemption

Summary

Issues:
1. Demand of duty on flat rolled products of alloy steel and steel scrap.
2. Denial of benefit of Notification No. 89/95-C.E. in respect of scrap.
3. Time-barred demand.
4. Marketability of intermediate products.
5. Modvat credit entitlement.
6. Valuation of intermediate products.
7. Abatement of duty for assessable value calculation.
8. Exemption for clearance of scrap.
9. Imposition of penalty.

Demand of Duty on Flat Rolled Products and Steel Scrap:
The appellants appealed against the Commissioner of Central Excise's order confirming a demand of Rs. 6,18,77,325/- on flat rolled products of alloy steel and Rs. 64,36,765/- on steel scrap. The appellants argued that the flat rolled products were manufactured from duty-paid steel ingots and the scrap was generated during the manufacture of discs, which were exempt from duty. The revenue contended that the goods were marketable based on evidence of other manufacturers trading in similar goods.

Time-Barred Demand:
The appellants claimed that the demand was time-barred as they regularly filed declarations explaining the manufacturing process, which were received by the revenue. The Tribunal found that the process of manufacture was mentioned in the declarations, and no suppression could be alleged against the appellants, rendering the demand prior to six months from the notice date time-barred.

Marketability of Intermediate Products:
The Tribunal determined that the intermediate products were excisable and marketable based on evidence of other manufacturers trading in similar goods. Therefore, the appellants were held liable to pay duty on the flat rolled products. However, the Tribunal noted the need for re-consideration by the adjudicating authority regarding the valuation of the intermediate products.

Modvat Credit Entitlement and Valuation:
The Tribunal ruled that the appellants were entitled to Modvat credit for inputs used in manufacturing the intermediate product. It was highlighted that the value of the final product should not be considered for demanding duty on the intermediate product. Additionally, the assessable value needed to be recalculated with necessary abatement of excise duty as per Supreme Court precedent.

Exemption for Clearance of Scrap:
Regarding the scrap, the Tribunal found no evidence showing that the cleared scrap contained material from the manufacturing of intermediate products. As the scrap arose during the manufacture of duty-exempt final products, the appellants were entitled to exemption for its clearance. The matter was remanded for re-calculation of the duty demand in light of these findings.

Imposition of Penalty:
In consideration of the facts and circumstances, the Tribunal remanded the matter to the adjudicating authority for a fresh decision on the imposition of the penalty after re-calculating the duty demand. The appeal was disposed of accordingly.