2005 (6) TMI 314 - AT - Central Excise

Summary

Issues: Classification of goods under Central Excise Tariff Act (CETA) - Whether goods are correctly classifiable under Heading 7204.90 or 7211.41, Penalty under Rule 173Q of Central Excise Rules.

In the case before the Appellate Tribunal CESTAT, Mumbai, the appellants were involved in the manufacture of cold rolled coils/sheets falling under Chapter 72 of the Schedule to CETA. The Department alleged that during a specific period, the appellants misclassified selected lengths and widths of CR Sheets under Heading No. 7204.90 meant for ferrous waste and scrap, whereas the Department contended that the goods should be classified under Heading 7211.41 as CRCA Sheets of selected length and width. The Department based its argument on the discrepancy between the description of goods in excise documents and private documents like delivery challans, which described the goods as various specific categories such as C.R. Bhungli, C.R. Lafa, Side Slits, Gauge Variations, Defective coils, and Cut Pieces of CR. Consequently, the Department sought to reclassify the goods under Heading 7211.41 and imposed a penalty under Rule 173Q of the Central Excise Rules.

Upon hearing both sides, the appellant's advocate argued that the goods in question were a result of the mechanical working of metals and should be classified as scrap. However, the Department's representative contended that the evidence, including delivery challans and the statement of the Company's General Manager, indicated that the goods were CR sheets/off cuts classifiable under 7211.41. The Department relied on a Supreme Court decision stating that off-cuts of steel sheets cannot be classified as waste/scrap, emphasizing that the nature of the products did not align with being considered waste/scrap.

The Tribunal analyzed the submissions and noted that the appellants themselves did not consider the goods as scrap, as they described them using specific terms like C.R. Lafa Cut Pieces of CR. The Tribunal highlighted that while the goods may have resulted from mechanical working of metals, not all such goods are necessarily scrap. The Tribunal upheld the classification under 7211.41 as decided by the Commissioner, dismissing the contention that all products resulting from mechanical working should be classified as scrap.

Considering that the duty was deposited during the adjudication proceedings, the Tribunal reduced the penalty to Rs. 50,000 under Rule 173Q. Ultimately, the appeal was partly allowed, affirming the correct classification of goods under 7211.41 and the consequent demand.