1992 (12) TMI 143 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for concessional rate of duty under Notification No. 209/83.
2. Interpretation of "electric furnace" in the context of the notification.
3. Applicability of the proviso to Notification No. 209/83 to wire rods produced with the aid of oil-fired furnace.
4. Limitation period for issuing the demand notice.

Issue-wise Analysis:

1. Eligibility for Concessional Rate of Duty under Notification No. 209/83:
The primary issue was whether the appellants were eligible for the concessional rate of duty of Rs. 130 per m.t. for wire rods produced using billets heated in an oil-fired furnace, given that the billets were initially produced with the aid of an electric furnace. The appellants argued that the electric furnace's primary function was to melt scrap metal to produce billets, and once billets were produced, the electric furnace had no role in further processes such as rolling into wire rods. They cited previous Tribunal decisions supporting their interpretation.

2. Interpretation of "Electric Furnace":
The Tribunal examined the interpretation of "electric furnace" in the context of the notification. The appellants relied on the Tribunal's decision in Pearlite Wire Products Ltd. v. Collector of Central Excise, which held that the electric furnace's function was limited to melting scrap to produce billets, and it did not need to be involved in subsequent manufacturing stages. The Tribunal agreed with this interpretation, noting that the notification's proviso applied to products made from steel ingots produced with the aid of an electric furnace, not requiring the electric furnace's use at every manufacturing stage.

3. Applicability of the Proviso to Notification No. 209/83 to Wire Rods Produced with the Aid of Oil-Fired Furnace:
The Tribunal found that the same question had been addressed in the Pearlite Wire Products case, where it was determined that the reduction in duty applied to products made from steel ingots produced with the aid of an electric furnace, regardless of whether an electric furnace was used in subsequent stages. The Tribunal also referred to a Central Board of Excise and Customs circular that supported this interpretation, clarifying that the reduction in duty applied as long as the steel used in the manufacture was produced with the aid of an electric furnace.

4. Limitation Period for Issuing the Demand Notice:
The appellants argued that the demand for duty was barred by limitation, as they had regularly filed classification lists during the relevant period, which were approved by the Department. The Tribunal agreed, noting that the Department's own circular and the Tribunal's previous judgment in Pearlite Wire Products supported the appellants' understanding. Therefore, there was no suppression of facts by the appellants, and the demand beyond the six-month period was not enforceable.

Conclusion:
The Tribunal concluded that the benefit of the concessional rate under Notification No. 209/83 could not be denied to the appellants merely because they used an oil-fired furnace for reheating billets. The billets, being the basic steel material, were produced with the aid of an electric furnace, fulfilling the notification's requirements. The Tribunal set aside the impugned order both on merits and on limitation, allowing the appeal with consequential relief to the appellants.