2000 (7) TMI 130 - AT - Central Excise

Summary

Issues:
- Denial of benefit under Notification No. 208/83-C.E. to appellants
- Allegation of illegal clearance of goods without payment of duty
- Dispute over duty payment on ship breaking scrap used as raw material
- Validity of impugned order passed by the Collector
- Delegation of function to Assistant Collector for redetermining duty amount
- Challenge to extended period of limitation allowed by the Collector

Analysis:

1. Denial of Benefit under Notification No. 208/83-C.E.:
The appellants, manufacturers of iron and steel products, purchased ship breaking scrap as raw material for their final products but wrongly claimed exemption under Notification No. 208/83-C.E. The Collector observed that the ship breaking scrap purchased directly from ship breaking companies was not fully duty paid, making the appellants ineligible for the exemption. However, regarding scrap purchased from the open market, the Collector directed redetermination of duty amount based on whether the material was duty paid. The Tribunal upheld this decision, emphasizing the necessity for inputs to have discharged the full duty under Section 3 of the Act for exemption eligibility.

2. Allegation of Illegal Clearance of Goods Without Payment of Duty:
The appellants were accused of clearing products without paying duty or following Central Excise Rules from 1-3-1986 to 19-8-1986. Show cause notices were issued for duty payment, which the appellants contested by claiming compliance with Notification No. 208/83-C.E. The Collector found their arguments insufficient, leading to the dispute.

3. Dispute Over Duty Payment on Ship Breaking Scrap:
The core issue revolved around the duty payment status of ship breaking scrap used as inputs. The appellants failed to fully discharge the duty on the purchased scrap, with only 25% paid under court orders. This incomplete duty payment rendered them ineligible for the exemption under the notification, as per Section 3 of the Act.

4. Validity of Impugned Order:
The appellants challenged the Collector's order on two grounds. Firstly, they argued that the order exceeded the scope of the show cause notices. However, the Tribunal disagreed, stating that the notices clearly indicated the ineligibility of the appellants for the exemption. Secondly, the appellants contested the delegation of duty redetermination to the Assistant Collector, which was found impermissible. The Tribunal directed the Collector to perform this function personally.

5. Delegation of Function to Assistant Collector:
While the Collector's delegation of duty redetermination was deemed inappropriate, it did not render the entire order invalid. The Tribunal modified the order to ensure that the Collector personally handles the redetermination process, in line with legal precedents.

6. Challenge to Extended Period of Limitation:
The Collector allowed an extended period of limitation due to the appellants' failure to declare their belief in full exemption under the notification. This decision was upheld by the Tribunal, as the appellants were aware of the duty payment requirement for exemption eligibility.

In conclusion, the Tribunal dismissed the appeals of the appellants, with a modification regarding the redetermination of duty amount, while affirming the rest of the Collector's order.