1996 (3) TMI 265 - AT - Central Excise

Summary

Issues: Classification of scraps arising in the manufacture of metal containers under Chapter Heading 7212.90 or 7203.20

In this case, the main issue for determination was the classification of scraps arising during the manufacture of metal containers under Chapter Heading 7212.90 or 7203.20. The appellants had declared steel sheets as their inputs and produced scraps during the manufacturing process, which were sold to customers. The appellants were paying duty on these scraps under Rule 57G(2) of Central Excise Rules, 1944. The appellants contended that the scraps should be classified under Chapter Heading 7203.20, while the Additional Collector classified them under 7212.90 based on the assumption that the scraps could be used otherwise than melting. The Department failed to provide evidence or dimensions to prove that the scraps were capable of being used otherwise. The Tribunal observed that there was no basis for assessing the scraps under 7212.90 and concluded that the scraps should be classified under 7203.20 as waste and scrap of steel sheets. The appeal was allowed with consequential relief.

The Tribunal noted that the scraps arose during the manufacture of metal containers from steel sheets declared as inputs by the appellants. The Department failed to provide any evidence or dimensions to prove that the scraps were capable of being used otherwise than melting. The burden was on the Department to establish that the scraps could be used in a manner other than melting, but no such proof was presented. The Tribunal emphasized that there was no basis to show that the scraps were usable otherwise than melting, and the presumption made by the Additional Collector was unfounded. As a result, the Tribunal held that the scraps should be classified under Chapter Heading 7203.20 as waste and scrap of steel sheets, given the lack of evidence supporting their classification under 7212.90.

The Tribunal considered the arguments presented by both parties regarding the classification of the scraps under Chapter Heading 7212.90 or 7203.20. The appellants acknowledged the liability to pay duty on the scraps but disputed their classification under 7212.90, asserting that the scraps were only capable of being melted and not used otherwise. The Additional Collector's reasoning for classifying the scraps under 7212.90 was based on the assumption that they could be used in a manner other than melting, without providing any supporting evidence. The Tribunal found that the scraps were generated during the manufacturing process of metal containers and that there was no proof of them being usable otherwise than melting. Consequently, the Tribunal concluded that the scraps should be classified under 7203.20 as waste and scrap of steel sheets, overturning the decision of the adjudicating authority and allowing the appeal with consequential relief.