1993 (4) TMI 145 - AT - Central Excise

Summary

Issues:
Interpretation of exemption notification for bars and rods made from copper scrap, provisional assessment, availability of exemption for billets, applicability of modvat scheme.

Analysis:
The case involved the interpretation of an exemption notification regarding the manufacturing of bars and rods from copper scrap, provisional assessment, availability of exemption for billets, and the applicability of the modvat scheme. The appellants argued that they were entitled to exemption under Notification No. 178/88 for manufacturing bars and rods of copper and brass from duty-paid scrap of copper purchased from the open market. They contended that the exemption applied not only to billets but also to bars and rods made from duty-paid scrap. The Collector (Appeals) initially accepted their appeal on the grounds of time bar but later directed the Asstt. Collector to adjudicate the case due to provisional assessment.

On the other hand, the Respondents argued that since the appellants had already availed of exemption for billets, the final product (bars and rods) should bear duty. They maintained that the exemption under Notification No. 178/88 did not apply to the final product if exemption had already been claimed for the billets used in manufacturing. They also argued that the Collector (Appeals) only directed to place the papers before the Collector, who had the authority to decide on the provisional assessment.

After considering both arguments, the Tribunal found that the copper scrap used as input, as specified in the exemption notification, allowed for exemption for bars and rods manufactured from it. The Tribunal noted that the modvat scheme covered the chapter relating to copper, allowing for duty paid on copper to be used as input and obtain modvat credit. Additionally, the exemption notification extended to billets manufactured from the copper scrap. The Tribunal observed that bars and rods could not be manufactured directly from copper scrap without first converting it into billets for re-rolling.

Based on the above analysis, the Tribunal held that both bars and rods and billets were exempted if manufactured from copper scrap obtained from the open market. The Tribunal reasoned that if both the intermediate product (billets) and the final product (bars and rods) were exempted and manufactured from the same basic input (duty-paid copper scrap), the exemption could not be denied. The Tribunal emphasized that denying exemption based on the argument that only billets were the inputs would frustrate the purpose of the notification. Therefore, the Tribunal directed the appellants to furnish a bond for the duty amount, with a stay and waiver of deposit pending final disposal of the appeal.