1999 (7) TMI 309 - AT - Central Excise

Issues: Classification of goods as waste and scrap under Heading 7203.20/7204.40 or as CRCA strips under Heading 7211.51, Time-barred demand for duty, Mis-declaration of goods to evade duty, Application of extended period under proviso to Section 11A, Relevant definition of scrap under Chapter 72, Applicability of past inspections by Central Excise Officers.

Classification of Goods:
The central issue in this judgment revolves around the classification of goods as waste and scrap under Heading 7203.20/7204.40 or as CRCA strips under Heading 7211.51. The department argued that the goods were misclassified as scrap when they were usable for manufacturing without melting. The Tribunal referred to the definition of scrap under Chapter 72 and previous case law to determine that the goods removed were not waste and scrap but could be considered as cold rolled strips, justifying the classification under Heading 7211.51.

Time-barred Demand for Duty:
The appellant contended that the demand for duty for the period from August 1985 to May 1990 was time-barred as the extended period under proviso to Section 11A could not be invoked. They provided evidence of regular visits by Central Excise Officers who inspected and verified the stock of the goods, arguing that there was no intent to evade duty. The Tribunal agreed that the extended period was not applicable, limiting the duty demand to within the six months time limit under Section 11A.

Mis-declaration of Goods:
The department alleged that the goods were mis-declared to evade duty as they were not legally classified as scrap under the relevant tariff provisions. The Tribunal considered the definition of scrap in Chapter 72 and noted that the goods removed were not fit only for recovery of metal, as required for scrap. The Tribunal found that there was no wilful intent to evade duty, as the department was aware of the nature of the goods through past inspections and records, leading to the setting aside of the penalty amount imposed in the Order-in-Original.

Application of Extended Period:
The Tribunal analyzed the applicability of the extended period under proviso to Section 11A, concluding that in this case, the extended period could not be invoked due to the continuous inspections by Central Excise Officers, which showed that the nature of the goods was known to the department. As a result, the demand for duty was restricted to within the six months time limit provided under Section 11A.

Relevant Definition of Scrap and Case Precedents:
The Tribunal referred to the definition of waste and scrap under Chapter 72 and previous case law, including the decision in the case of Bajaj Auto Ltd., to establish the criteria for classifying goods as scrap. The case law highlighted that scrap should be limited to material used for re-melting purposes to obtain metal, which was not applicable to the goods in question. The Tribunal applied this interpretation to determine the correct classification of the goods as cold rolled strips under Heading 7211.51.

Past Inspections by Central Excise Officers:
The appellant emphasized the regular visits and inspections conducted by Central Excise Officers over the period in question to argue that there was no intent to evade duty. The Tribunal acknowledged the significance of these inspections, noting that the officers could have physically seen the nature of the goods during their visits, which were accounted for as scrap in the records. This observation supported the finding that there was no mis-declaration with the intent to evade duty, leading to the modification of the penalty amount in the Order-in-Original.

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