2004 (7) TMI 436 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 208/83-C.E.
2. Classification of inputs used by the appellants.
3. Applicability of extended period of limitation for duty demand.

Detailed Analysis:

1. Eligibility for Exemption under Notification No. 208/83-C.E.:
The primary issue in this appeal is whether M.S. Round bars manufactured by the appellants are eligible for exemption under Notification No. 208/83-C.E. The appellants claimed that they manufacture M.S. Round Bars from used and old re-rollable cut pieces of bars, plates, angles, etc., which are deemed duty-paid and thus qualify for exemption. The Commissioner, however, confirmed the demand for duty under two show cause notices but did not impose any penalty, citing no mala fide intent.

2. Classification of Inputs Used by the Appellants:
The appellants argued that the inputs used by them are not scrap but re-rollable materials, and thus, they should be classified under Heading 72.10 of the Tariff, which is specified in Notification No. 208/83-C.E. They cited various Trade Notices and Circulars, including Pune Collectorate Trade Notice No. 147/1983 and Board's Circular No. 26/88, which clarified that re-rollable scrap should not be classified as waste and scrap but under relevant sub-items of the Tariff Item 25. The appellants also referred to several judgments, including Vivek Re-Rolling Mills v. CCE and LML Ltd. v. CCE, to support their claim that the materials used by them should not be regarded as waste and scrap.

3. Applicability of Extended Period of Limitation for Duty Demand:
The appellants contended that the extended period of limitation is not applicable as there was no mala fide intent, as confirmed by the Commissioner. According to the Supreme Court judgment in Pushpam Pharmaceuticals v. CCE, the term "suppression of facts" must be construed strictly, implying deliberate omission to evade duty. Since the Commissioner found no mala fide, the extended period of limitation could not be invoked. Consequently, the show cause notice issued on 18-12-87 for the period 9-7-85 to 10-3-87 was deemed time-barred.

Conclusion:
The Tribunal concluded that the inputs used by the appellants are re-rollable materials and not waste and scrap, thus falling under the description of inputs given in Notification No. 208/83-C.E. Consequently, the appellants are eligible for the exemption. Additionally, the extended period of limitation is not applicable due to the absence of mala fide intent. Therefore, the impugned order was set aside, and the appeal was allowed.