2002 (7) TMI 122 - AT - Central Excise

Summary

Issues Involved:
1. Classification of re-rollable scrap under Central Excise Tariff.
2. Eligibility for exemption under Notification Nos. 208/83, 90/88, and 202/88.
3. Binding nature of Board's circulars on revenue authorities.
4. Adherence to judicial discipline and precedence by adjudicating authorities.

Detailed Analysis:

1. Classification of Re-rollable Scrap:
The primary issue was whether the respondents' products made from re-rollable scrap were exempt from duty under the cited Notifications. The contention revolved around whether re-rollable scrap should be classified under CET Heading 72.03 or 72.04. The Board's circular clarified that Heading 72.04 covers waste and scrap generally used for remelting, thus excluding re-rollable scrap. The Tribunal noted that re-rollable scrap does not merit classification as waste and scrap under Central Excise Tariff, as clarified by the Ministry's circulars, which stated that re-rollable materials are not considered waste and scrap but should be classified under relevant headings for angles, shapes, and sections.

2. Eligibility for Exemption:
The respondents sought exemption from Central Excise duty under Notification Nos. 208/83, 90/88, and 202/88. The Assistant Collector initially denied the exemption, but the Commissioner (Appeals) overturned this decision, citing the binding nature of appellate authority orders. The Tribunal confirmed that the inputs used by the respondents, such as angles and shapes, did not require remelting and were suitable for re-rolling, thus fitting the exemption criteria under the notifications. The Tribunal emphasized that the denial of exemption was contrary to the Board's classification and circulars, which should prevail to ensure consistency and uniformity in tax administration.

3. Binding Nature of Board's Circulars:
The Tribunal reiterated that Board's circulars are binding on revenue authorities. Circular No. 27/89 explicitly stated that re-rollable scrap, not intended for remelting, should not be classified under Heading 7204 but under appropriate headings for angles and sections. The Tribunal noted that the denial of exemption based on incorrect classification was unsustainable, as it contradicted the Board's circulars, which are essential for maintaining stability and uniformity in tax administration.

4. Adherence to Judicial Discipline and Precedence:
The Tribunal stressed the importance of judicial discipline, stating that orders of higher appellate authorities must be followed unreservedly by subordinate authorities. The Assistant Collector's adjudication order, which went against the appellate authority's decision, was deemed invalid. The Tribunal cited the Apex Court's decision in Kamlakshi Finance Corporation Ltd., emphasizing that non-acceptance of appellate orders by the department, without suspension by a competent court, leads to undue harassment of assessees and chaos in tax administration. The Tribunal upheld the principle that uniformity in tax administration is crucial, even more so than legal correctness.

Conclusion:
The Tribunal answered the reference in favor of the assessee, rejecting the appeal of the Commissioner. It concluded that the assessee's claim to exemption was valid, as it was covered by the Board's circulars. The Tribunal underscored the necessity of following circulars and appellate orders to ensure consistent and fair tax administration.