2002 (9) TMI 161 - AT - Central Excise

Issues Involved:
1. Eligibility for benefit under Notification No. 208/83-C.E., dated 1-8-83.
2. Classification of inputs obtained from ship breaking.
3. Retrospective application of Notification No. 101/87-C.E., dated 27-3-87.
4. Time-bar of demands.

Detailed Analysis:

1. Eligibility for Benefit under Notification No. 208/83-C.E., dated 1-8-83:
The appellants argued that they were entitled to the benefit of Notification No. 208/83-C.E. for inputs obtained from ship breaking or purchased from traders for manufacturing CTD bars/rods of iron, round bars, and angles. They contended that these inputs were exempt from excise duty, as they were considered 'nil' duty paid items. The Tribunal, however, referenced previous judgments (Collector of Central Excise v. Choday Apparaw Steel Re-Rolling Mills and M/s. Tigrania Metal & Steel Ltd. & Others v. Collector of Central Excise) and concluded that waste and scrap arising from ship breaking were not entitled to the benefit of the Notification. The Tribunal held that the inputs were not on the same footing as those purchased from the open market and were not covered under the specific sub-headings of the Notification.

2. Classification of Inputs Obtained from Ship Breaking:
The appellants argued that the inputs should be classified under TI 25(9) and 25(11) as re-rollable material, which were exempt from duty. The Tribunal disagreed, stating that the inputs were classified as waste and scrap under TI 25(3)(i)(ii) and were not covered by the Notification. The Tribunal emphasized that the classification of inputs could not be challenged at the appellant's end and upheld the previous judgments that inputs from ship breaking were not eligible for exemption under Notification No. 208/83.

3. Retrospective Application of Notification No. 101/87-C.E., dated 27-3-87:
The appellants claimed that Notification No. 101/87, which incorporated goods obtained from ship breaking under specific sub-headings, was clarificatory and should be applied retrospectively. The Tribunal rejected this argument, stating that Notification No. 101/87 was a new Notification with only prospective effect. The Tribunal noted that the earlier Notification No. 208/83 did not include waste and scrap from ship breaking and that the amendment in 1987 did not have retrospective application.

4. Time-bar of Demands:
The appellants argued that the demands were barred by time, as the department had full knowledge of their activities and the utilization of inputs from ship breaking. They pointed to correspondence with the Assistant Collector and statements recorded by the department. The Tribunal, however, found that the appellants had not filed the required classification lists or declarations and had withheld information. The Tribunal referenced the Supreme Court judgment in Madras Petro-Chem. Ltd. v. C.C.E. Madras and concluded that the demands were not time-barred. The Tribunal held that the appellants were aware of their duty liability and had failed to discharge it, justifying the invocation of the larger period for demands.

Majority Order:
The majority order, delivered by S/Shri S.S. Kang, Member (J) & V.K. Agrawal, Member (T), rejected the appeals on both merits and time-bar. The Tribunal upheld the findings that the inputs from ship breaking were not eligible for exemption under Notification No. 208/83 and that the demands were not time-barred due to the appellants' failure to comply with excise requirements and their awareness of duty liability.

Conclusion:
The appeals were rejected based on the majority order, affirming that the inputs obtained from ship breaking were not eligible for exemption under Notification No. 208/83 and that the demands were not time-barred. The Tribunal emphasized the need for compliance with excise regulations and the non-retrospective application of Notification No. 101/87.

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