1985 (2) TMI 286 - AT - Central Excise

Summary

Issues:
Classification of steel scrap under Central Excise Tariff Items, Allegations of duty evasion, Admixture of re-rollable scrap in steel melting scrap, Correct classification of the product, Evidence of the quantity of re-rollable scrap present, Applicability of higher duty rate.

Analysis:
The case involved a dispute regarding the classification of steel scrap under the Central Excise Tariff. The appellants were accused of contravening Central Excise Rules by removing re-rollable steel scrap without paying the appropriate duty. The Department alleged that the scrap contained end-cuts, short-length pieces, and defectives falling under a higher duty category. The appellants argued that the scrap was primarily steel melting scrap, approved by the department for classification under a lower duty category.

The appellants contended that the small percentage of re-rollable scrap in the melting scrap did not alter its essential character or warrant classification under the higher duty category. They highlighted the process of scrap collection, emphasizing the difficulty in ensuring the exclusion of all re-rollable scrap. The Department argued that the mixture of steel melting scrap with cut ends of various products justified classification under the higher duty rate due to the potential use of the scrap by re-rolling mills.

The Tribunal examined the submissions and evidence presented by both parties. It noted the absence of substantial evidence from the Department to prove that the quantity of re-rollable scrap in the melting scrap was significant enough to alter its classification. The appellants provided an affidavit affirming the minimal presence of re-rollable scrap in the total quantity of melting scrap, supported by the Steel Authority of India Ltd. The Tribunal accepted these averments and concluded that there was no intent to evade duty or derive undue benefit.

Ultimately, the Tribunal set aside the impugned order, including the demand for duty and penalty, and allowed the appeal in favor of the appellants. The decision was based on the lack of substantial evidence to support the Department's claim of misclassification and the acceptance of the appellants' contentions regarding the negligible presence of re-rollable scrap in the melting scrap.