2000 (1) TMI 431 - AT - Central Excise

Summary

Issues involved:
Whether waste and scrap of Iron and Steel generated during the manufacture of metal containers out of CRCA sheets is exempted from payment of duty under Notification No. 171/88.

Detailed Analysis:

1. Interpretation of Notification No. 171/88:
The primary issue in this appeal is whether the waste and scrap of Iron and Steel, arising during the production of metal containers from CRCA sheets, is eligible for duty exemption under Notification No. 171/88. The Appellant argues that the waste and scrap should be considered as part of the final products, i.e., metal containers, and hence exempt from duty. On the other hand, the Respondent contends that the waste and scrap originate from the cutting of CRCA sheets, not the metal containers, making them ineligible for exemption under the notification.

2. Conditions for Exemption under Notification:
The Notification specifies conditions for the exemption of Ferrous waste and scrap falling under Heading 72.04 from duty payment. It requires that such waste and scrap must have arisen from specific goods covered by Chapter 72, on which the appropriate duty has been paid, and the credit of such duty has not been taken under the Central Excise Rules. The Tribunal's interpretation emphasizes that the term "goods" refers to the raw material, not the final products. This aligns with a previous decision in the case of Amar Steel Container Corporation v. C.C.E., Bombay-II, which denied the benefit of the notification to waste and scrap. Consequently, the waste and scrap generated during the production of metal containers does not qualify for the duty exemption under the notification.

3. Period of Liability and Imposition of Penalty:
Regarding the liability for duty payment, it is acknowledged that the demand for duty from July to November 1990 is not sustainable due to the approved classification list during that period. However, duty payment for the subsequent period from December 1990 to February 1992 is deemed payable by the Appellants. Considering the complexity of interpreting the notification and the absence of malafide intent, the imposition of a penalty is deemed unwarranted in this case. Therefore, the Tribunal rules in favor of the Appellant for the period before November 1990 but upholds duty payment obligations for the subsequent period, while setting aside the penalty imposition.

In conclusion, the judgment clarifies the interpretation of the notification regarding duty exemption for waste and scrap of Iron and Steel, emphasizing the distinction between raw materials and final products. The decision balances the duty payment liabilities for different periods and highlights the absence of penalty imposition due to the complexity of the matter.