1992 (3) TMI 177 - AT - Central Excise

Summary

Issues:
- Classification of M.S. angles and plates under Chapter Heading 7216.10
- Applicability of Rule 57F(1) of the Central Excise Rules
- Rate of duty on inputs removed under Rule 57F(1)
- Interpretation of the deeming provision under Rule 57F(1)(ii)
- Justification for the recovery of higher rate of duty

Classification of M.S. Angles and Plates:
The appellants classified M.S. angles of short length and defective plates under Chapter Heading 7216.10 in their classification list, but they were approved under Chapter Heading 7216.90. The dispute arose when the department claimed duty at higher rates for these items, leading to the appeal against the Order-in-Appeal.

Applicability of Rule 57F(1) of the Central Excise Rules:
The crux of the matter revolved around Rule 57F(1), which allows the removal of inputs for home consumption on payment of appropriate duty. The appellants argued that once excisable goods are cleared from the factory on payment of duty, they cannot be subjected to an enhanced rate of duty upon removal, especially when kept under the Modvat Scheme.

Rate of Duty on Inputs under Rule 57F(1):
The main issue was determining the rate of duty applicable when inputs are removed under Rule 57F(1). The dispute centered on whether the duty rate should be based on the date of removal or the rate at which credit was initially taken under Rule 57A of the Central Excise Rules.

Interpretation of Deeming Provision under Rule 57F(1)(ii):
The interpretation of the deeming provision under Rule 57F(1)(ii) was crucial in deciding the applicable duty rate. The rule states that duty on inputs removed for home consumption should not be more than the credit allowed under Rule 57A. The argument focused on whether this provision applied to goods cleared from the original manufacturer.

Justification for the Recovery of Higher Rate of Duty:
The authorities claimed a higher rate of duty on the inputs in question, leading to a differential duty amount. The appellants contended that since the inputs were already cleared from the original manufacturer at the appropriate rate, there was no justification for imposing a higher duty rate upon removal.

In the judgment, the Judge analyzed the arguments presented by both sides and examined the relevant provisions of the Central Excise Rules. It was concluded that since the appellants were not the manufacturers of the inputs but had purchased duty-paid inputs cleared from the original manufacturer, the rate of duty applicable upon removal should be the rate prevalent at the time of clearance from the original manufacturer. The Judge set aside the impugned order and allowed the appeal, providing consequential relief to the appellants.