2006 (7) TMI 360 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 13/2000-C.E. regarding excise duty exemption for integrated steel plants based on raw material usage.

Analysis:
The case involved M/s. Sunflag Iron & Steel Limited, an integrated steel plant manufacturing goods falling under Chapter 72 of the Central Excise Tariff. The appellants manufactured sponge iron from iron ore and downstream rolled products like bars and rods. They used both self-produced sponge iron and purchased sponge iron and scrap for manufacturing final products, which were sold from the factory gate or transferred to depots/stock yards for sale.

Before September 1996, duty on stock transferred goods was based on the factory gate sale value. However, a change in legislation led to duty being calculated based on the sale price from the depot, including freight. Notification No. 13/2000-C.E. aimed to levy duty at the factory gate for goods sold from places other than the factory, treating such sales as if made at the factory gate. The appellants claimed this benefit as an integrated steel plant, but the department objected, citing non-exclusive use of self-produced sponge iron for final products.

The department's argument was that since the appellants used both self-produced and purchased sponge iron for final products, they were not entitled to the notification benefit. However, the notification did not require exclusive use of self-produced raw materials. It granted exemption based on the manufacturer's category, not the raw materials used. Referring to a precedent (CCE, Hyderabad v. Sunder Steels Limited), the Tribunal held that the benefit of the notification should be given as long as the manufacturer falls under the specified category, regardless of raw material sources. Consequently, the appeal was allowed, emphasizing that the exemption should not be denied based on raw material usage.

This judgment clarifies the application of Notification No. 13/2000-C.E. for excise duty exemption to integrated steel plants, emphasizing the manufacturer's category rather than the exclusive use of self-produced raw materials. The decision provides guidance on interpreting such notifications and ensuring consistent application of excise duty provisions for manufacturers in similar situations.