1984 (1) TMI 310 - AT - Central Excise

Summary

Issues: Classification of Mill-scale under Central Excise Tariff (C.E.T) T.I. 68, Justification of duty demand and penalty imposition.

In the present case, the primary issue before the Appellate Tribunal was the classification of "Mill-scale" under the Central Excise Tariff (C.E.T) T.I. 68, and the justification of the duty demand and penalty imposition. The appellants, engaged in the manufacture of Iron and Steel products falling under T.I. 26AA of the C.E.T, were asked to pay duty on the Mill-scales that arose during the hot rolling process in their factory. The Excise Officer contended that Mill-scale is Iron Oxide falling under T.I. 68, leading to the demand of duty and imposition of a penalty against the appellants.

The appellants argued that Mill-scales are merely scrap arising from the removal of surface scales during the manufacturing process of Iron & Steel Products. They contended that Central Excise duty had already been paid on the Mild Steel Billets/blooms from which the Mill-scales originated. The appellants further highlighted that the Mill-scales were exported to foreign countries through a government undertaking, implying that they are metal scraps and not goods falling under T.I. 68.

During the appeal, it was noted that the Chemical Examiner's report, crucial in determining the classification of Mill-scales as Iron Oxide, had not been supplied to the appellants. The respondent could not refute this claim. The Tribunal observed that without providing the appellants with the Chemical Examiner's report, the classification of Mill-scales as Iron Oxide could not be substantiated. Additionally, evidence showed that the Mill-scales were exported as scrap through a government undertaking, supporting the appellants' argument that they were not classified under T.I. 68.

Consequently, the Tribunal held that the lower authorities were unjustified in classifying Mill-scale as Iron Oxide under T.I. 68 of the C.E.T. The orders of the lower authorities were set aside, and a refund was directed to be given to the appellants. The appeal was allowed in favor of the appellants.