2000 (7) TMI 607 - AT - Central Excise

Summary

Issues:
1. Interpretation of notifications granting exemption to steel ingots.
2. Use of internally generated scrap known as "Circulating Scrap" in manufacturing process.
3. Denial of benefit of notifications due to use of Circulating Scrap.
4. Challenge of the order on merits and limitation.
5. Applicability of Central Board of Excise and Customs' clarification.
6. Allegations of discrimination and challenge on limitation.
7. Revenue's objection regarding use of Circulating Scrap.
8. Differentiation of case-law and applicability of Board's Circular.
9. Revenue's argument on limitation.
10. Decision on whether conditions of notifications were fulfilled.

Analysis:
The case involved the interpretation of notifications granting exemption to steel ingots manufactured from specified materials. The appellants used internally generated scrap termed as "Circulating Scrap" in the manufacturing process, which was put back into the furnace for production. The Revenue contended that the use of Circulating Scrap violated the conditions of the notifications, leading to show cause notices and demand of duties. The Assistant Commissioner initially dropped the notices, but a subsequent order by the Commissioner disentitled the appellants from the benefit of the notifications due to the use of Circulating Scrap.

The appellants challenged the order on merits and limitation. They argued that the Circulating Scrap originated from the specified inputs and was a technical necessity in the manufacturing process. They cited various decisions and the Central Board of Excise and Customs' clarification supporting their position. The appellants also alleged discrimination compared to other manufacturers who received the benefit of the notifications. On the issue of limitation, they maintained that the notices were not barred as they maintained proper records and filings.

The Revenue contended that the notifications required the final product to be manufactured solely from the specified materials, without the use of Circulating Scrap. They argued against the applicability of the Board's Circular and differentiated the case-law cited by the appellants. Regarding limitation, the Revenue claimed that the process involving Circulating Scrap was not disclosed, justifying the issuance of show cause notices.

The Tribunal analyzed the submissions and relevant legal precedents. They found that the use of Circulating Scrap did not violate the notifications as long as it originated from the specified inputs. Citing Supreme Court judgments, the Tribunal held that the benefit of the notifications could not be denied based on the use of Circulating Scrap in the manufacturing process. They also referenced the Revenue's Circular and trade notices supporting the appellants' position. Consequently, the Tribunal allowed the appeal, granting the appellants the benefit of the notifications and setting aside the impugned order. The issue of limitation was deemed of academic interest due to the appeal's allowance.