1999 (4) TMI 192 - AT - Central Excise

Iron and Steel - Ingot moulds - not eligible for benefit of exemption under Notification No. 54/86-C.E.

Summary

Issues:
Interpretation of Notification No. 54/86 for exemption on ingot moulds; Application of conditions for duty exemption; Invocation of extended period of limitation for duty demand.

Analysis:
The appeal involved a dispute arising from an Order-in-Original passed by the Collector of Central Excise confirming a duty demand and imposing a penalty against the appellants. The Collector held that a certain quantity of ingot moulds cleared as scrap by the appellants was not eligible for duty exemption under Notification No. 54/86. The appellants argued that the ingot moulds had melted during their use in the factory, satisfying the conditions of the notification. They contended that the benefit of exemption should not be denied even if the moulds were subsequently cleared as scrap. The appellants also challenged the invocation of the extended period of limitation for demanding duty, claiming a bona fide belief in their entitlement to the exemption.

The main contention revolved around the interpretation of Notification No. 54/86, which provided full duty exemption to ingot moulds used in the manufacture of steel ingots and melted during or after such use in the factory. The Tribunal analyzed the wording of the notification and concluded that the deliberate melting of ingot moulds within the factory or after their use as moulds was necessary to qualify for the exemption. The incidental melting during the casting process of ingots was not considered sufficient to meet the conditions of the notification. The Tribunal also considered the negligible loss of metal in the ingot moulds during the casting process, supporting the argument that intentional melting was required for exemption eligibility.

Regarding the plea of limitation, the Tribunal rejected the appellants' claim of a bona fide belief in the moulds becoming scrap eligible for exemption. The Tribunal emphasized that a large entity like the appellants should have understood the clear requirements of the notification and could not have genuinely believed in the scrap exemption. Consequently, the Tribunal ruled against the appellants, denying them the benefit of the exemption on the quantity of ingot moulds cleared as scrap and upholding the duty demand confirmed by the Collector. The Tribunal also decided not to interfere with the quantum of penalty imposed, considering the lenient view already taken by the lower authority.