1991 (6) TMI 127 - AT - Central Excise

Summary

Issues:
1. Whether recasting defective steel ingots into ingots amounts to manufacture.
2. Whether defective steel ingots can be considered as "steel melting scrap" for concessional duty.

Analysis:

Issue 1:
The case involved the appellants, engaged in manufacturing steel ingots, who received defective steel ingots and remelted them to produce ingots. The dispute arose when the Assistant Collector sought to recover differential duty, contending that the benefit of concessional duty was not applicable as defective ingots were not specified raw materials. The appellants argued that remelting defective ingots did not constitute manufacture, citing the Supreme Court's decision in Union of India v. Delhi Cloth and General Mills. The department contended that the process of recasting constituted manufacture as the defective ingots lost their identity. The Tribunal examined relevant case law and concluded that the defective ingots were transformed into a new product, qualifying as manufacture. The appellants' claim was upheld, and the order demanding duty was set aside.

Issue 2:
The appellants also argued that the defective steel ingots could be deemed as "steel melting scrap," entitling them to concessional duty under Notification No. 53/80. The Tribunal analyzed the definition of "steel melting scrap" and concluded that it consisted of steel items unfit for any use other than melting. Considering the nature and extent of defects in the ingots, the Tribunal found that they were rendered unusable for any purpose other than melting. Therefore, the ingots produced from defective ones could be deemed as produced from "steel melting scrap," making the appellants eligible for the concessional duty. The alternative plea regarding the remaking of defective ingots not amounting to manufacture was dismissed, as the Tribunal found the cited cases irrelevant to the present situation. The order appealed against was set aside, and the appeal was allowed in favor of the appellants.