2002 (11) TMI 106 - SC - Central Excise

Summary

Issues:
Entitlement to benefit of Notification No. 53/64 for steel ingots under Item No. 26 of the Central Excise and Salt Act, 1944.

Analysis:
The appeals questioned the entitlement of the appellants to the benefit of Notification No. 53/64 dated March 1, 1964, which exempted steel ingots under Item No. 26 of the Central Excise and Salt Act, 1944, produced from fresh unused steel melting scrap. The notification specified conditions for exemption, including the requirement that the steel ingots are produced from fresh unused steel melting scrap that has suffered duty under the said Item and no set off of duty has been availed of. The quantum of exemption is limited to the duty proved to have been paid on such scrap. The appellants claimed exemption for steel ingots manufactured using steel melting scrap. The claim was initially rejected by departmental authorities and the Central Government, leading to a writ petition before the High Court.

The High Court initially denied the claim, stating that cut pieces of blooms used for manufacturing ingots would not merit exemption as they do not conform to the notification's description. However, the Supreme Court disagreed with this conclusion for two main reasons. Firstly, the Central Government had found that the material received back by the petitioners was a mutilated form of duty-paid bloom, rendering it into steel melting scrap. The High Court failed to consider this finding. Secondly, referring to a previous judgment in the appellant's case, it was established that melting scrap, even of bloom, satisfies the notification's requirements. The Court held that the cut pieces of bloom rendered into melting scrap had indeed contributed to making steel ingots falling under Item No. 26, fulfilling the notification's conditions.

In light of the previous judgment and the definition of 'melting scrap', the Court concluded that the appellants were entitled to the benefit of exemption under the notification for the excise duty paid on such melting scrap under Item 26. Consequently, the orders under challenge were set aside, and the civil appeals were allowed with no order as to costs.