1996 (12) TMI 202 - AT - Central Excise

Summary

Issues Involved:
1. Applicability of exemption under Notification No. 202/88 for steel bars and rods manufactured from 1-3-1992 to 9-3-1992.
2. Interpretation of the amendments introduced by Notification No. 33/92 and Notification No. 53/92.
3. Correctness of the decision in Saphire Steels (P) Ltd. v. Collector of Central Excise, Meerut.
4. Compliance with the first proviso to Notification No. 202/88 regarding duty payment on inputs.

Detailed Analysis:

Issue 1: Applicability of Exemption under Notification No. 202/88
The appellants argued that steel bars and rods manufactured and cleared during the period from 1-3-1992 to 9-3-1992 were exempt from excise duty under Notification No. 202/88 as amended. The Collector of Central Excise, Delhi, had overruled this contention and confirmed the demand for the disputed period. The Tribunal examined the amendments and concluded that the exemption was indeed applicable during this period.

Issue 2: Interpretation of Amendments by Notification No. 33/92 and Notification No. 53/92
Notification No. 202/88, dated 20-5-1988, was amended by Notification No. 33/92, dated 1-3-1992, which substituted Serial No. 2 with Serial Nos. 2 and 2A. The Tribunal analyzed the changes and noted that the amendments aimed to restrict the exemption to bars and rods manufactured from re-rollable materials of iron and steel other than stainless steel. The subsequent Notification No. 53/92, dated 10-3-1992, expanded the description of inputs to include "Ingots, bars, rods and other rollable or re-rollable materials of iron and steel other than stainless steel." The Tribunal interpreted that the intermediate product, "roughly shaped pieces," obtained by rolling steel ingots, qualified as "re-rollable material," thus entitling the appellants to the exemption.

Issue 3: Correctness of Saphire Steels (P) Ltd. Decision
The Tribunal reviewed the decision in Saphire Steels (P) Ltd. v. Collector of Central Excise, Meerut, where the Tribunal had rejected the claim for exemption due to the omission of ingots in the description of inputs in Serial No. 2A. The current Tribunal found that the previous decision did not consider the process of manufacturing bars and rods through intermediate products like "roughly shaped pieces." Consequently, the Tribunal held that the decision in Saphire Steels (P) Ltd. was not correctly decided.

Issue 4: Compliance with First Proviso to Notification No. 202/88
The first proviso to Notification No. 202/88 required that duty on inputs must have "already been paid." The Department argued that since the input, "roughly shaped pieces," was exempt from duty, the condition was not met. The Tribunal referred to the decision in I.E.L. Ltd. v. Collector of Central Excise, which held that goods cleared without payment of duty must be taken as duty-paid goods if the duty in terms of the exemption notification is nil. Thus, the condition in the first proviso was deemed satisfied.

Conclusion:
The Tribunal concluded that the appellants were entitled to the benefit of Notification No. 202/88 as amended by Notification No. 33/92 for the period from 1-3-1992 to 9-3-1992. The impugned order was set aside, and the appeals were allowed.