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TMI Blog2017 (9) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... 42020 of Central Excise Tariff. The noticee is importing duty free Aluminum Sections/Tubes in terms of Notification No. 52/2003-Cus dt. 31.03.2003 and procuring duty free inputs i.e. M.S. Tubes indigenously in terms of Notification No. 22/2003-C.Ex dt. 31.03.2003-C.Ex dt. 31.03.2003 for manufacture of Wheel Chair and its components. During the course of audit of their records, it was observed that the Noticee was showing scrap generated at abnormally high levels. The generation of scrap as shown by the noticee was more than 8% in case of consumption of imported Aluminum Sections/Tubes and more than 15% in case of M.S. Tubes procured indigenously. Therefore, as per SION the inputs namely Aluminium Sections/Tubes and M.S. Tubes are to be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of scrap is more than that permitted in SION (nil in the instant case) then the appellant was required to discharge their duty liability on sale of such quantity of scrap equal to the amount of duty foregone on imported/indigenous procurement of such quantity of raw materials. Accordingly, a show cause notice was issued demanding differential duty of Rs. 1,14,42,920/- along with interest and proposing imposition of penalty under Section 114 A of the Custom Act, 1962 and Section 11AC of the Central Excise Act 1944. The matter was adjudicated resulting in confirmation of the demand of Rs. 1,34,64,782/- under Customs Act and Rs. 13,19,552/- under the Central Excise Act along with appropriate interest and imposition of equivalent amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties and examined the records. 6. We find that the dispute essentially emanates from the alleged higher percentage of scrap in the manufacturing process of the appellant and suspected undervaluation of that scrap by the appellant. 7. We also find that the Ld. Commissioner has given the following findings in para 18 of her order:- "18. I observe that in the instant case contention of Department is where no SION has been notified, the generation of waste, scrap and remnants up to 2% of input quantity shall be allowed on self-declared norms and in cases where generation of scrap is more than 2%, as per norms fixed by Development Commissioner shall be allowed. Since in the instant case generation of scrap was more than 2% such norms were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the norms as mentioned in the decision has to be read in terms of interpretation given by the Hon'ble Supreme Court in the case of National Institute of Technology Vs. Pannalal Choudhury & Anr (supra), wherein the Hon'ble Court has held as under:- "35. The expression "Ratification means" the making valid of an act already done. This principle is derived from the Latine maxim "ratihabitio mandato aequiparatur" meaning thereby a subsequent ratification of an act is equivalent to a prior authority to perform such act. It is for this reason; the ratification assumes an invalid act, which is retrospectively validated. 36. The expression "ratification" was succinctly defined by the English Court in one old case, Hartman Vs. Hornsby reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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