2010 (11) TMI 150 - AT - Central Excise

Manufacture - Cold rolling of hot-rolled SS strips - Decided against the Appellant by the decision of the Tribunal in case of Bharatbhai B.Gala v. CCE, Ahmedabad-I, wherein it was held that cold rolling of hot rolled SS strips is a process of manufacture as cold rolled SS strips are a distinct marketable goods different from hot rolled SS strips. Exemption Notification No. 67/95-C.E. - Captive consumption - the cold rolled SS pattas/patties are cleared captively for manufacture of SS circles for utensils chargeable to nil rate of duty, the CR pattas/patties are not eligible for duty exemption under Notification No. 67/95-C.E., as this exemption is not available if the finished products are fully exempt from duty or are chargeable to nil rate of duty, except for certain exceptions, as mentioned in the notification and this case is not covered by those exceptions - However if the scrap generated in course of manufacture of SS circles for utensils from cold rolled SS pattas/patties had been cleared on payment of duty, the quantity of Cold rolled SS pattas/patties which got used in manufacture of scrap would be eligible for duty exemption - Hence, the evidence regarding the quantity of such scrap cleared on payment of duty has to be produced by the Appellant. Demand of duty - As regards the adjustment of the amount of 8% of the sale price of SS utensils under Rule 57CC against the duty demand on cold rolled SS pattas/patties, since once the duty is collected at the stage of cold rolled SS pattas/patties, no amount would be payable under Rule 57CC in respect of clearances of the exempted goods -SS utensils - Disallowing this adjustment is not correct - Held that the matter is remanded to the original adjudicating authority for re-quantifying the net duty demand.

Issues:
1. Whether cold rolling of hot-rolled SS strips amounts to manufacture under Section 2(f) of the Central Excise Act, 1944.
2. Eligibility for duty exemption under Notification No. 67/95-C.E. in respect of cold rolled SS pattas/patties.
3. Adjustment of the amount equal to 8% of the sale price of SS utensils paid under Rule 57CC against the duty demands on cold rolled SS pattas/patties.

Issue 1: Cold Rolling as Manufacture
The main issue is whether cold rolling of hot-rolled SS strips constitutes manufacture under Section 2(f) of the Central Excise Act, 1944. The Tribunal, in previous cases, held that cold rolling results in distinct marketable goods, thus constituting manufacture. Consequently, cold rolled SS pattas/patties are deemed excisable goods chargeable to duty. However, if the cold rolled SS pattas/patties are cleared for the production of SS circles for utensils, which are duty-free, they are not eligible for duty exemption under Notification No. 67/95-C.E., unless the scrap generated from this process is cleared on payment of duty. The original adjudicating authority is tasked with determining the quantity of such scrap cleared on duty payment.

Issue 2: Duty Exemption Eligibility
Regarding eligibility for duty exemption under Notification No. 67/95-C.E., the Appellant's contention that the scrap generated from SS pattas/patties used in manufacturing SS circles for utensils, cleared on duty payment, should be exempt is considered valid. However, the evidence of the quantity of such scrap cleared on duty needs to be presented by the Appellant for assessment by the adjudicating authority.

Issue 3: Adjustment of 8% Sale Price
The adjustment of the amount equal to 8% of the sale price of SS utensils paid under Rule 57CC against the duty demands on cold rolled SS pattas/patties is disputed. The Appellant argues that once duty is collected on the pattas/patties, no further payment should be required for the exempted SS utensils. The CCE (Appeals) disallowed this adjustment, which is deemed incorrect. Therefore, the adjustment should be allowed against the duty demands on cold rolled SS pattas/patties.

In conclusion, the Appellant is not eligible for duty exemption under Notification No. 67/95-C.E. for the cold rolled SS pattas/patties used in manufacturing duty-free SS circles for utensils. However, the adjustment of the amount equal to 8% of the sale price of SS utensils paid under Rule 57CC against the duty demands on cold rolled SS pattas/patties should be permitted. The matter is remanded to the original adjudicating authority for re-quantifying the duty demand and assessing the exemption on scrap generated from the manufacturing process.

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