2000 (1) TMI 547 - AT - Central Excise

Summary

Issues: Classification of waste and scrap arising during the manufacture of cold rolled strips in coils out of hot rolled strips under the Central Excise Tariff Act.

In the judgment by the Appellate Tribunal CEGAT, New Delhi, the common issue involved in two appeals filed by M/s. Him Ispat Ltd. was whether the waste and scraps of iron and steel arising during the manufacturing process are classified as waste and scrap of iron and steel under Heading 72.04.90 of the Schedule to the Central Excise Tariff Act. The Appellant argued that the waste and scrap arose due to various reasons such as width limitations, end cutting of hot rolled strips, and damage during cold rolling. They contended that such waste and scrap should be classified under sub-heading 7204.90 and filed refund claims for the excess duty paid. The Department had classified the waste under different sub-headings during a specific period, leading to the rejection of refund claims by the Assistant Collector and subsequent confirmation by the Collector (Appeals) in one appeal, while remanding the matter in the other.

The Appellant's advocate argued that the waste and scrap generated in their unit was not suitable for rolling, challenging the presumption made by the Assistant Collector regarding its reusability for remelting without evidence. They relied on legal provisions and previous decisions to support their claim, emphasizing that waste and scrap classification does not require usability only for remelting. The advocate referred to a Supreme Court decision and a previous Tribunal order in their case to strengthen their argument against the classification of their products as waste and scrap.

The Department's representative countered the arguments by stating that the process did not produce waste and scrap but sheets, and as Modvat Credit was availed, the duty liability must be discharged as sheets under the Central Excise Rules. Referring to precedents, the Department emphasized that if the off cuts were usable sheets, they could not be considered waste and scrap, citing relevant tribunal decisions to support their stance.

After considering both sides' submissions, the Tribunal referred to the Supreme Court's decision in L.M.L. Ltd. case and its own previous order in the Appellant's case, concluding that the product should be classified under Heading 72.10 of the Central Excise Tariff Act as off cuts, not waste and scrap. The Tribunal directed the duty to be discharged accordingly and mentioned the possibility of refunding any excess duty paid, subject to the doctrine of unjust enrichment as per a Supreme Court decision. Consequently, both appeals were disposed of based on the above findings.