2016 (10) TMI 509 - AT - Central Excise

Demand of custom duty along with interest and penalty - 100% EOU - import of Copper Cable Scrap - export of Recycled Mixed Copper Scrap - whether the process undertaken by the appellant can be termed as recycled scrap so as to avoid levy of duty, interest and penalty? - Held that - CBEC vide Circular No.314/30/97-CX, dated 06.05.1997 in the context of manufacture in Notification No.1/95-CE in respect of galvanisation of black MS pipes by 100% EOUs clarified that a broader view is called for in respect of the interpretation of the provisions of Notification No.1/95-CE and the exemption may not be restricted only to cases where manufacture under section 2(f) of the Central Excise Act is involved. It is clarified that the exemption under Notification No.1/95-CE will also be applicable to a 100% EOU engaged in galvanising of black MS pipes. The definition of manufacture in the policy which has a wide range - the process can be termed as recycled scrap - demand of duty, interest and penalty not justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Interpretation of the term "manufacture" in the context of duty foregone on imported copper cable scrap by a 100% E.O.U.
- Applicability of Circular No. 314/30/97-CX and Notification No. 1/95-CE to the case.
- Consideration of the definition of "recycle" and manufacturing processes in the Exim Policy.
- Assessment of the Commissioner (Appeals) decision based on dictionary meaning versus broader views on manufacturing.

Analysis:
The case involved the appellant, a 100% E.O.U., importing duty-free used copper cable scrap and exporting Recycled Mixed Copper Scrap, leading to a demand for customs duty of ?10,70,627/-, interest, and a penalty. The appellant claimed the process undertaken was manufacturing, involving shearing, peeling, and other processes. The Tribunal noted the definition of manufacture under the Exim Policy, which includes a wide range of processes beyond traditional manufacturing. Additionally, Circular No. 314/30/97-CX clarified that exemptions for 100% EOUs are not limited to cases falling under the Central Excise Act's definition of manufacture.

The Tribunal considered a Ministry of Commerce letter stating that the process mentioned in the Letter of Permission (LOP) falls within the definition of manufacturing as per the Exim Policy. The meaning of "recycle" was also highlighted as treating used items for reuse. The Commissioner (Appeals) decision, based mainly on dictionary meaning, was overturned by the Tribunal. The Tribunal emphasized the broader view of manufacturing clarified by the CBEC and the Ministry of Commerce's stance, ultimately allowing the appeal and setting aside the impugned order.

In conclusion, the Tribunal's decision focused on the expansive definition of manufacturing under the Exim Policy, considering the processes undertaken by the appellant as falling within this definition. The case highlights the importance of interpreting legal terms in line with policy directives and broader industry practices rather than solely relying on dictionary definitions.