1997 (8) TMI 206 - AT - Central Excise

Summary

Issues:
Interpretation of the term "steel sheets" in government orders for deemed credit on inputs.

Analysis:
The case involved three appeals challenging the Order-in-Appeal by the Collector of Central Excise regarding the classification of "MS sheet cuttings" under the expression "steel sheets" in government orders. The main issue was whether the sheet cuttings could be considered as falling within the definition of "steel sheets" as per the relevant tariff headings. The appellants, engaged in manufacturing 'MS Ingots,' argued that they were entitled to deemed credit on the sheet cuttings used as inputs based on government orders dated 1-3-1989 and 1-6-1989.

The Asstt. Collector initially held that the sheet cuttings were not covered by the definition of "sheet" and were considered waste and scrap, leading to the denial of deemed credit facilities. The Collector (Appeals) upheld this decision, stating that the sheet cuttings did not fall under the category of "sheets" as per the Central Excise Tariff's definition of waste and scrap.

The appellants contended that the sheet cuttings should be considered as "steel sheets" based on various judgments and provisions of Central Excise Rules allowing Modvat credit on inputs. They argued that the government orders did not exclude sheet cuttings and that the cuttings were essentially pieces of steel sheets, eligible for deemed credit.

However, the Tribunal, after considering the submissions, ruled against the appellants. They agreed with the Department's argument that the sheet cuttings, once melted for manufacturing ingots, lost their character as sheets and were more appropriately classified as waste and scrap under Heading 72.04. The Tribunal held that the government orders on deemed credit did not extend to cover steel cuttings used for manufacturing steel ingots, affirming the decision of the lower authorities.

Therefore, the Tribunal rejected the appeals, upholding the impugned order that classified the sheet cuttings as waste and scrap rather than steel sheets eligible for deemed credit. The judgment emphasized that while sheet cuttings might initially fall under the category of sheets, they transformed into waste and scrap once processed for manufacturing ingots, making them ineligible for the deemed credit facility provided by the government orders.