1999 (7) TMI 148 - AT - Central Excise

Summary

Issues:
Classification of mill scale under Central Excise Tariff - Applicability of sub-heading 7204.90 - Interpretation of Section Note 6(a) of Section XV - Claim for classification under Heading 26.19 - Appeal against Order-in-Appeal by Collector of Central Excise - Dispute over whether mill scale is 'waste and scrap' or a by-product of steel manufacturing process.

Analysis:
The appeal was filed challenging the Order-in-Appeal by the Collector of Central Excise, which classified mill scale under sub-heading 7204.90 of the Central Excise Tariff as 'waste and scrap' of steel. The appellant contended that the mill scale, generated during the production of seamless steel tubes, should be classified under Heading 26.19 of the Tariff, not as waste and scrap. The appellant argued that the mill scale is an oxide layer formed on steel surfaces due to high temperatures, citing the Metal Hand Book by the American Society for Metals.

The Revenue, represented by the JDR, countered the appellant's claim by asserting that the Chapter Heading 26.19 pertains to waste and by-products from the manufacture of iron or steel, which includes the mill scale arising from the production of seamless steel tubes. The Revenue argued that the mill scale should be classified under sub-heading 7204.90 as waste and scrap of steel, given the nature of the appellant's manufacturing process.

The issue at hand revolved around the classification of mill scale, with Section Note 6(a) of Section XV defining 'waste and scrap' as metal waste from metalworking processes. The American Society for Metals described mill scale as an oxidized surface of steel formed during heating and hot working processes. The Tribunal noted that the mill scale in question was a thick oxide layer resulting from high temperatures during the manufacturing of seamless steel tubes.

Based on the evidence presented and the definitions provided, the Tribunal concluded that the mill scale should not be categorized as 'waste and scrap' under sub-heading 7204.90. Instead, it aligned with the materials covered under Chapter Heading 26.19, which includes slag, dross, and scaling from iron or steel manufacturing. As the issue of marketability or excisability was not contested, the Tribunal allowed the appeal, setting aside the impugned order by the Collector of Central Excise (Appeals).