1983 (1) TMI 262 - AT - Central Excise

Issues Involved:
1. Applicability of Central Excise Notification No. 237/75 to steel melting scrap.
2. Applicability of Central Excise Notification No. 54/64 to steel melting scrap.
3. Time-bar for raising demands for duties short-levied under Rule 10 of the Central Excise Rules, 1944.

Detailed Analysis:

1. Applicability of Central Excise Notification No. 237/75 to Steel Melting Scrap:

The appellants argued that the term "steel ingots" in Item No. 26 of the Central Excise Tariff Schedule should be interpreted to include "steel melting scrap" as per the tariff entry which reads "Steel ingots including steel melting scrap." They contended that the concessional rates of duty under Notification No. 237/75 should apply to steel melting scrap as well, as excluding it would be inconsistent with the tariff entry and the legislative intent. They also referenced the Government of India's Order-in-Revision in the case of Century Iron & Steel Limited, which supported their interpretation.

The respondents countered that exemption notifications must be interpreted strictly and that Notification No. 237/75 explicitly mentioned only "steel ingots" and not "steel melting scrap." They argued that the plain meaning of the words should be adhered to, and there was no basis to read "steel melting scrap" into the notification.

The Tribunal agreed with the respondents, stating that the notification clearly specified only "steel ingots" and that there was no justification to extend its scope to include "steel melting scrap." The Tribunal noted that where the government intended to exempt steel melting scrap, it did so explicitly in other notifications, such as Notification No. 54/64. Therefore, Notification No. 237/75 did not cover steel melting scrap.

2. Applicability of Central Excise Notification No. 54/64 to Steel Melting Scrap:

The appellants alternatively argued that if Notification No. 237/75 was not applicable, then Notification No. 54/64 should exempt the steel melting scrap in question. This notification exempted scrap iron and steel melting scrap obtained in the manufacture of iron and steel products from excise duty, provided the raw materials had already paid the appropriate duty.

The Tribunal rejected this argument, clarifying that Notification No. 54/64 applied only to steel melting scrap obtained in the manufacture of iron and steel products from specified duty-paid raw materials. In the present case, the steel melting scrap arose during the manufacture of steel ingots, not iron and steel products. Consequently, Notification No. 54/64 did not apply to the steel melting scrap in question.

3. Time-bar for Raising Demands for Duties Short-levied:

The appellants contended that the Show Cause Notice issued on 21-6-1977 was beyond the three-month period prescribed by Rule 10 of the Central Excise Rules for goods cleared between May 1976 and February 1977. The Tribunal noted that at the material time, the time limit for raising demands for short-levied duties was 12 months under Rule 10 read with Rule 173-J for manufacturers operating under the "Self Removal Procedure."

The Tribunal found that the demand issued on 21-6-1977 covered only the period within 12 months preceding the date of the demand. Therefore, the demand for clearances made in May 1976 and part of June 1976 was time-barred. The Tribunal directed the Assistant Collector to re-adjudicate the case within 60 days and determine the exact amount of short-levy due, excluding the time-barred period.

Conclusion:

The appeal was disposed of with directions for re-adjudication regarding the time-bar issue. The Tribunal highlighted that the strict legal interpretation of Notification No. 237/75 resulted in a higher duty on scrap than on steel ingots, suggesting that the government might consider remedial action if this was not the legislative intent.

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