2004 (1) TMI 542 - AT - Central Excise

Summary

Issues Involved:
- Interpretation of Exemption Notification No. 202/88-C.E. dated 20-5-98 regarding the availability of benefits to products manufactured using old railway scrap.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved a crucial issue of whether the benefit of Exemption Notification No. 202/88-C.E. dated 20-5-98 was applicable to the products manufactured by M/s. Ravi Steel. The Appellants, represented by Shri A.P. Mathur, Advocate, contended that they manufactured M.S. round bars from old and discarded railway scrap purchased from Railway auctions. They argued that they were entitled to the exemption under Notification No. 202/88 if the products were made from rollable/re-rollable material recognized as duty paid. The Department, however, denied this benefit citing that old railway scrap was non-duty paid. The legal representative referred to the judgments of the Supreme Court and Allahabad High Court in cases involving similar issues, emphasizing that the benefit of the notification should apply to goods manufactured from old railway material. The Department's stance was reiterated by Shri Virag Gupta, JDR, during the proceedings.

Upon thorough consideration of the arguments presented by both parties, the Tribunal referred to the Supreme Court's decision in Vivek Rolling Mills and the Allahabad High Court's ruling in Lakshmi Rolling Mills. The Supreme Court had clarified that the Notification No. 202/88 applied to M.S. bars, rounds, and squares manufactured from old railway material. Similarly, the Allahabad High Court had determined that goods auctioned by Railways should be deemed as duty paid when used by the Railway or during the auction process. The Court emphasized that no duty was chargeable upon the sale of excisable goods post their use by the concerned party. Additionally, the Allahabad High Court highlighted that the "duty paid nature" of articles auctioned by Railways should be presumed as per the Notification's Explanation. Based on the precedents set by these judgments, the Tribunal concluded that the Appellants were eligible to avail the benefits under Notification No. 202/88-C.E. Consequently, the appeal filed by M/s. Ravi Steel was allowed in their favor.