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TMI Blog1992 (12) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... ts produced from molten metal produced with the aid of electric furnace were cleared at concessional rate of Rs. 130 m.t. in terms of the proviso to the abovementioned Notification. Steel wire rods rolled from billets produced from integrated steel plants on which duty at the full rate of Rs. 363 has been paid by the integrated plants was cleared as exempted from duty under Notification No. 208/83 dated 1-8-1983 as the appellants had not taken credit of duty paid on such billets under Rule 56A. The appellants filed classification lists showing effective basic rate of duty at Rs. 200 per m.t. on steel billets classified under Tariff Item No. 25(7)(ii) and steel rods under Tariff Item No. 25(9)(ii) (both of which are entitled to be cleared at concessional rate of Rs. 130 per m.t. if produced with the aid of electric furnace in terms of S. Nos. 9 12 of Notification No. 209/83) which were approved by the Department. Subsequently, a show-cause notice dated 28-5-1985 was issued to the appellants proposing levy of duty of Rs. 1,45,19,071.60 on the ground that as wire rods were rolled from billets with the aid of oil furnace, they were not entitled to the benefit of concessional rate whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 330 per M.T. basic + 10% special excise duty. (c) All products enumerated above are exempted from the whole of duty of excise under S. No. 2 of Notification No. 208/83-C.E. dated 1-8-1983 if produced out of duty-paid billets. (d) Steel billets covered under Tariff Item 25(6)(ii) fall within description of inputs. (e) Steel rods covered under Tariff Item 25(9)(ii) and roll spoils [T.I. 25(8)] fall within description of final products. (f) The appellants have not taken credit of duty paid on inputs under Rule 56A C.E. Rules and have admittedly filed intimation of receipt of duty-paid inputs in prescribed form and there is no allegation to the contrary in the show cause notice. (g) Since these billets were cleared by integrated steel plant on payment of full duty, the question of eligibility of concessional rate of duty on wire rods/roll spoils is immaterial and, as long as goods are proved to have been produced from duty-paid inputs, exemption is lawfully availed. Therefore, the appellants submit that duty demand to the extent of Rs. 62,93,374.90 is not sustainable. 5. He further contends that Trade Notice No. 34/83 dated 19th Oct., 1983 specifically provides that dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es high frequency current which heats the material by means of eddy-currents. Resistance furnaces may be divided into two types, those in which the current is conducted by the materials to be heated with or without electrolysis, and those in which the current is conducted by a special resistor. The charge or the resistor is connected directly to the source of the current supply. The heat developed in both induction and resistance furnaces is generated by the passage of a current through the resistance offered by the charge in the furnace or by the special resistor. Resistance furnaces are mainly used as heating furnaces, but are also employed for melting metals and alloys having a comparatively low melting point (Pages 417 and 418 of Engineering Encyclopaedia by Franklin D. Jones and Paul B. Schubert). Furnaces are used in connection with many different operations and processes, such as the hardening of steel, annealing, melting of metals drying and baking, or for heating parts preparatory to a rolling, forging, or drawing operation. The furnaces used for these different classes of work vary greatly both in regard to size and design. The fuel may be oil, gas, coal or coke or el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... skin) and plain carbon or alloy steel either cast or wrought. 7. Ld. DR also refers to the book titled Engineering Materials Technology by W. Bolton with particular reference to the cold working processes set out at page 179 dealing with forming processes with metals to submit that heating is not always necessary before rolling into wire rods. He, therefore, submits with the finding of the Tribunal in the Pearlite s case that in further process of rolling ingots into wire rods and then drawing wires out of such rods, the electric furnace has no role to play" is not correct in view of the technical literature filed by him. In the context of his submission that the benefit of the proviso would be available only if the product is entirely made with the aid of electric furnace at each and every stage of its manufacture, the learned DR referred to Sl. Nos. 6 and 9 of the notification which basically cover items like ingots, blooms, billets, etc. which are generally manufactured with the aid of electric furnace by melting of steel. The learned DR stated that he is citing instances of products which would be specifically covered by proviso to the notification even if his interpretatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty conferred under Notification Nos. 67/73 and 152/77 would not be applicable to that case as the notification granted this reduction only if the products were manufactured with the aid of electric furnace . This contention of the department was rejected by the Tribunal in the following terms : It is clear from the wording of the proviso that the further reduction given thereunder is applicable to the specified products provides they are made with the aid of electric furnace and not of specified categories of scraps etc. The function of an electric furnace is only to melt the scrap and iron so that steel ingots can be cast from the liquid metal. In the further process of rolling the ingots into wire rods and then drawing wires out of such rods, the electric furnace has no role to play. The only reasonable interpretation of the proviso therefore, is that the further concession contemplated therein is applicable to all the specified products made out of steel ingots which were manufactured with the aid of electric furnace and out of specified categories of scraps, etc. There is no dispute that both steel wire rods and steel wires are among the products specified in the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arance of the rolled products. In the case of a re-rolling unit, rolled products may be cleared at the reduced rate of duty provided documentary evidence is produced to the effect that the ingots/billets used in the manufacture of such rolled products have been brought from electric furnace units on payment of reduced duty. Therefore, there would/ however, be no bar to avail the full exemption under Notification No. 209/83 C.E., dated 1-8-1983 in the case of rolled products specified under this notification." 12.1 It would be seen that the circular was specifically issued in the context of Notification No. 209/83-C.E. The above circular issued by the Central Government itself offered valuable guide as contemporaneous expositio for construing the proviso to Notification No. 209/83-C.E. The Hon ble Supreme Court in the case of Indian Metal Ferro Alloys Ltd. v. CCE reported in 1991 (51) E.L.T. 165 (S.C.) has applied the doctrine of contemporaneous expositio. Relevant extracts of Para 15 of the judgment is reproduced below : 15. The practice of the department in assessing the poles to duty (except in cases where they were exempt as the conditions in the exemption notifications w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d so that that word or phrase is interpreted according to the meaning that has been previously assigned to it. Section 4 of the Amending Act was enacted for saving the validity of notices issued under Section 34(1) of the Act. When that section used a word interpreted by courts in the context of such notices, it would be reasonable to assume that the expression was designedly used in the same sense.".... 12.4 Similarly in the case of Dewan Brothers v. Central Bank of India, Bombay and others [AIR 1976 Supreme Court 1503], the Hon ble Supreme Court held as under : 20. Apart from the above considerations, it is a well settled principle of interpretation of statutes that where the Legislature uses an expression bearing a well-known legal connotation it must be presumed to have used the said expression in the sense in which it has been so understood. Craies on Statute Law observes as follows : There is a well-known principle of construction that where the legislature uses in an Act a legal term which has received judicial interpretation, it must be assumed that the term is used in the sense in which it has been judicially interpreted unless a contrary intention appear. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence to S. No. 23 in the proviso is a forcible reason which would compel us to reject the argument of the Department. The appellant s contention that the benefit of the proviso would apply so long as the ingots or billets, being the basic steel materials, are manufactured with the aid of electric arc furnace, on the other hand does not render any part of the notification redundant. In addition such an interpretation is in line with the earlier judgments of the Tribunal and contemporaneous circular of 1983 of the respondents themselves. 16. The learned Departmental Representative has referred to Engineering Encyclopaedia by Franklin D. Jones and Paul B. Schubert particularly to pages 417 and 418 of this book wherein it has been clearly stated that electric furnace has been divided into three general classes according to the method by which heat is generated : 1. Arc Furnace, 2. Induction Furnaces, 3. Resistance Furnaces. The book also states and refers to the purpose of furnace and states that they may be divided into two large groups:- melting and heating furnaces. He has also referred to page 527 of the same book dealing with furnace wherein it has been stated that furnaces are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned DR. 17. It is also seen from the records that the Department has by show cause notice dated 28-5-1985 demanded duty on the entire quantity of wire rods cleared by the appellants during the period August 83 to December 84. In their reply to the show cause notice, in paras 2.1 to 2.3, it was pointed out that they were purchasing the billets from factories like Tata Iron and Steel Co., Steel Authority of India Ltd., Mukand Iron and Steel Works and other mini-steel plants and in respect of wire rods manufactured from these billets, they are effecting clearance after availing exemption under Notification No. 208/83-C.E. In respect of these wire rods they are not even seeking exemption under Notification No. 209/83-C.E. They have also pointed out in reply that out of the total quantity of 1,01,531.970 MT, wire rods were 44009.615 MT have been cleared by them under Notification No. 208/83-C.E. In our opinion there is no occasion whatsoever for demanding duty on this quantity in the present proceedings and the demand on this quantity is in any event not sustainable. 18. The appellant have also contended that the show cause notice dated 28-5-1985 demanding duty for the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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