1995 (12) TMI 186 - AT - Central Excise

Summary

Issues: Duty liability on ferro alloys, whether manufactured with or without the aid of power, application of exemption notifications, interpretation of manufacturing process, relevance of power usage in specific equipment.

In the case before the Appellate Tribunal CEGAT, New Delhi, two appeals were filed by M/s. Eastern Metal and Ferro Alloys Ltd., Cuttack challenging adjudication orders related to duty liability on ferro alloys. The appeals questioned whether the ferro alloys were manufactured with or without the aid of power. The appellant argued that they used the Alumino Thermic Process, which does not require power, and thus, they were eligible for exemption under the relevant notification. The Revenue contended that power was indeed used in certain processes, such as running a hoist and a blower, which they argued were not integral to the manufacturing of ferro alloys. The period under consideration was from 1-4-1984 to 15-8-1985, and the goods fell under Exemption Notification No. 209/83-C.E., dated 1-8-1983. The appellant emphasized that there was no suppression on their part and that the extended period of limitation should not apply. They also highlighted that their production was supplied to steel plants and was eligible for exemption, subject to procedural requirements.

The Appellate Tribunal examined the technical aspects of the manufacturing process and the exemption notifications governing ferro alloys. It was established that ferro alloys could be manufactured without the aid of power under the Alumino Thermic Process, as specified in the relevant exemption notification. The Tribunal noted that the use of power in ancillary equipment like blowers or hoists, not directly involved in the manufacturing process of ferro alloys, should not disqualify the goods from exemption. The Tribunal emphasized the importance of ferro alloys as an input in the steel industry and referenced the historical tariff classifications and exemption notifications supporting their use in steel manufacturing.

Ultimately, the Tribunal ruled in favor of the appellants, allowing both appeals. The Tribunal found that the ferro alloys were eligible for exemption under the relevant notification, disregarding the issue of limitation due to the exemption eligibility determination. The Tribunal concluded that the use of power for non-manufacturing activities should not impact the eligibility for exemption, especially considering the significance of ferro alloys in the iron and steel industry. The appeals were allowed with consequential relief, if applicable under the law.