2007 (2) TMI 514 - AT - Central Excise

Summary

Issues:
1. Entitlement to benefit of Notification Nos. 90/88 and 202/88.
2. Compliance with principles of natural justice.
3. Classification of re-rollable scrap under Central Excise Tariff Act, 1985.

Entitlement to benefit of Notification Nos. 90/88 and 202/88:
The appeal revolved around whether the appellants were entitled to the benefit of Notification Nos. 90/88 and 202/88. The appellants, manufacturers of M.S. Rods, claimed exemption from excise duty under these notifications for rods manufactured from re-rollable material and scrap purchased from the open market. The Tribunal found the appellants' contentions in conformity with the Ministry's Circular dated 21-9-89, specifically referring to Notification No. 202/88. The Tribunal held that the impugned order was contrary to the Ministry's Circular and the wordings of the notifications. It noted that the adjudicating authority failed to address crucial aspects as directed by the Tribunal, rendering the order improper and non-tenable. The Tribunal emphasized that the demand was time-barred and that the adjudicating authority's failure to consider the plea of limitation was a legal flaw. Additionally, the Tribunal criticized the lack of a personal hearing, deeming it a violation of natural justice principles.

Compliance with principles of natural justice:
The Tribunal highlighted the importance of adhering to principles of natural justice in adjudicating matters. It noted that the adjudicating authority proceeded with a de novo order without granting a personal hearing to the party, as scheduled. This failure to provide an opportunity for a personal hearing was deemed a violation of natural justice principles, rendering the proceedings unsustainable under the law. The Tribunal further criticized the delay of eight years in initiating de novo adjudication, questioning the department's actions and emphasizing the need for timely and fair proceedings.

Classification of re-rollable scrap under Central Excise Tariff Act, 1985:
The issue of classifying re-rollable scrap under the Central Excise Tariff Act, 1985, was examined in light of Ministry Circulars and notifications. The Tribunal referenced a Circular from the Ministry, which clarified that re-rollable scrap should not be classified under heading 7204 of the Tariff Act. The Tribunal rejected the department's argument that M.S. Rods manufactured from scrap were not covered by the notifications, emphasizing that the department failed to prove that the scrap purchased was non-duty paid. The Tribunal held that the department did not discharge the onus of proving the nature of the scrap successfully, leading to the setting aside of the impugned order and allowing the appeal filed by the appellants. The Commissioner (Appeals) also supported the Ministry's Circular in this regard, reinforcing the decision to set aside the original order.