2001 (2) TMI 462 - AT - Central Excise

Summary

Issues:
Correct classification of "Skelp Cobbles" under Central Excise Tariff.

Analysis:
The dispute in the present appeal revolves around the correct classification of "Skelp Cobbles." The appellant, M/s Durgapur Steel Plant of Steel Authority of India, claimed the classification under sub-heading 7208.00 of the Central Excise Tariff, attracting a duty rate of Rs. 365/- per M.T. On the other hand, the Revenue contended that the correct classification should be under sub-heading 7211.40, attracting a duty rate of Rs. 500/- per M.T. The differential duty of Rs. 11,67,304.50 was confirmed against the appellants, leading to the appeal before the Tribunal challenging the Order-in-Appeal.

"Skelp" is a specialized steel article manufactured with rigid specifications, involving a complex manufacturing process. During the production of "Skelp," misrolls and defective materials, known as "cobbles" or "spoils," are generated. These cobbles are unsuitable for direct use in manufacturing pipes due to their irregularities. The Central Board of Excise and Customs clarified in 1966 that cobbles/spoils should be treated as re-rollable materials. The appellants classified the goods under dispute differently before and after the restructuring of the Tariff Item No. 25, leading to the initiation of adjudication proceedings resulting in the confirmation of the differential duty.

The appellant argued that the impugned goods do not meet the definition of skelp and should be classified under sub-heading 7208.00, as the description remained unchanged from the previous tariff. The learned Consultant emphasized that the production process and the goods' description remained consistent before and after the introduction of the Central Excise Tariff Act, 1985. The Rules for Interpretation of the Schedule under the Tariff Act also supported the classification under sub-heading 7208.00.

The Revenue, represented by the learned JDR, reiterated the reasoning contained in the impugned order, supporting the classification under sub-heading 7211.40. However, after careful consideration of both parties' submissions and a thorough examination of the relevant tariff entries, the Tribunal found merit in the appellant's arguments. The Tribunal concluded that the impugned goods align more closely with the description under sub-heading 7208.00, which corresponded to the previous classification. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellants.