1998 (6) TMI 323 - AT - Central Excise

Steel scrap emerged in manufacture of steel ingots, cleared availing exemption under Notification No. 150/77-C.E.

Summary

Issues:
Levy of duty on scrap for earlier period - Application of "latter the better" principle - Interpretation of Supreme Court decision on levy of duty on scrap.

Analysis:
The appeal involved a dispute regarding the levy of duty on scrap for an earlier period by the assessee, an integrated steel plant manufacturing iron and steel products. The appellant had been following the principle of "latter the better," not paying duty on intermediate products. A Show Cause Notice was issued proposing duty on pig iron cleared for manufacturing steel ingots, alleging non-payment of duty on scrap cleared under an exemption. The Assistant Collector and the Collector of Central Excise (Appeals) upheld the demand. The main contention raised by the appellant was the applicability of the Supreme Court decision in the case of Steel Authority of India Ltd. v. C.C.E., Bholpur, where it was held that no duty was payable on such scrap.

During the hearing, the appellant's counsel argued that the issue had been addressed by the Tribunal previously, but the Supreme Court's decision clarified that no duty was payable on the scrap. The Department reiterated the findings of the lower authorities. Upon careful consideration, the Tribunal noted the Supreme Court's observation that the appellant should not be disadvantaged by paying duty on pig iron not used in manufacturing steel ingots but emerged incidentally as scrap. The Court emphasized that the "latter the better" principle should not place the assessee in a more disadvantageous position. It was clarified that pig iron was used for producing steel ingots, not the incidental scrap.

Based on the Supreme Court's decision and the observations made, the Tribunal accepted the appellant's contention. Consequently, the appeal was allowed, granting any consequential relief due to the appellant.