2006 (7) TMI 210 - SC - Central Excise

Whether the mis-rolls arising during the process of manufacture CTD bars would fall under tariff entry 72.04 or 72.07 - Held that - Iron and Steel waste and scrap - Heading 72.04 would not cover an article which could be converted into another article by hot rolling without it being necessary to remit the metal first. The Board, therefore concluded that Heading No. 72.04 read with Note 6(a) to Section XV and HSN Explanatory Notes at pages 987-988 would cover only such waste and scrap as would generally be used for remelting and consequently would not cover re-rollable scrap. Such waste and scrap which is not for re-melting will have to be classified in the other appropriate headings of the tariff - As per this Circular the articles which could be converted into another articles by hot rolling without re-melting would not fall under heading 72.04. The waste and scrap which is not for remelting will have to be classified in the other appropriate headings of the tariff. This Circular is in consonance with the findings recorded by the Tribunal in the present case - Decided against assessee.

Summary

Issues: Classification of mis-rolls under tariff entry 72.04 or 72.07

In this case, the main issue is the classification of mis-rolls arising during the manufacturing process of CTD bars under tariff entry 72.04 or 72.07. The appellant initially classified the mis-rolls under tariff entry 72.07 but later switched to classifying them under 72.04 after an exemption notification was issued. The assessing authority issued a show cause notice demanding differential duty, penalty, and interest. The adjudicating authority confirmed the demand, including penalty and interest. The Commissioner (Appeals) dismissed the appeal, leading the appellant to appeal to the Tribunal. The Tribunal held that mis-rolls should be classified under 72.07, confirming the demand for differential duty while waiving off the penalty and interest.

The Tribunal based its decision on the argument that mis-rolls are semi-finished products emerging during the manufacture of rods and bars, cleared to other rolling mills. The adjudicating authority relied on Circular No. 27/89, stating that heading No. 7204 covers waste for re-melting, not re-rollable scrap. Since mis-rolls are solid sections used directly for re-rolling without re-melting, they should be classified under heading 7207.90 for semi-finished products. The Tribunal upheld this classification, supported by the Board's Circular emphasizing that heading 72.04 does not cover items convertible by hot rolling without re-melting, directing non-remeltable waste and scrap to be classified elsewhere.

The Supreme Court agreed with the Tribunal's finding, citing the Board's Circular to reinforce their decision. The Circular clarified that items convertible by hot rolling without re-melting do not fall under heading 72.04, directing non-remeltable waste and scrap to other appropriate tariff headings. This Circular aligns with the Tribunal's classification of mis-rolls under 72.07. Consequently, the Court found no merit in the appeal and dismissed it without costs.