1998 (4) TMI 336 - AT - Central Excise

Summary

Issues:

1. Availability of concessional rate of duty under Notification Nos. 53/80-C.E. and 144/77-C.E.
2. Eligibility of inputs received by the assessee under the notification.
3. Limitation period for demand of duty.

Analysis:

Issue 1: Availability of concessional rate of duty under Notification Nos. 53/80-C.E. and 144/77-C.E.

The assessees were manufacturing steel ingots with the aid of Electric Arc Furnace and availing the concessional rate of duty under Notification No. 53/80. The notification provided partial exemption to steel ingots produced by electric furnace subject to specific provisos. The dispute arose regarding the eligibility of the assessees for the concessional rate of duty under the said notification.

Issue 2: Eligibility of inputs received by the assessee under the notification

The inputs received by the assessee included runners, risers, cuts of billets, and defective ingots. A show cause notice alleged that the assessees had received iron and steel products not specified in the permissible inputs under the notification. Consequently, duty for the period 1981-82 and 1982-83 was demanded. The question was whether the inputs received by the assessee complied with the conditions stipulated in the notification for availing the concessional rate of duty.

Issue 3: Limitation period for demand of duty

The demand for duty beyond December 1982 was challenged on the grounds of limitation. The show cause notice did not allege fraud, suppression, or wilful misstatement by the assessee leading to short-levy. Citing relevant judgments, it was argued that demands made beyond six months without specific allegations in the notice were not sustainable. The issue was whether the demand for duty for the period before December 1982 was time-barred.

The Tribunal held that the demand for duty before December 1982 was hit by limitation due to lack of specific allegations in the show cause notice. On the merits of the case, it was found that the inputs used by the assessee were within the scope of the notification. The Tribunal considered the expansive interpretation of the term "steel melting scrap" in executive instructions and clarified that the eligible inputs were not restricted to steel melting scrap but also included iron melting scrap. Consequently, the demand for duty was not sustainable, and the order was set aside, allowing the appeal and granting consequential relief as necessary.