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TMI Blog2002 (9) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and rods of iron and non-alloy steel, round bars, C.T.D. bars, etc. The goods being manufactured by them the Central Excise Tariff Act, 1985, and previously in the erstwhile Tariff were classifiable under TI 25 of the First Schedule to the Old Tariff Act. The final product of the appellants are dutiable and it is their contention that they have been declaring the same by filing the classification list and paying the duty under the relevant Tariff item of the Act. The appellants have narrated the history pertaining to the manufacture of rerolled items and have contended that they were procuring the inputs in the nature of rerollable material either from the market or directly from the ship breakers, who were obtaining the same by breaking, disused and condemned ships. It is their contention that this activity is within the knowledge of the department as there were licenced. It is stated by them that such items were earlier exempted from the ambit of the levy of the excise duty by virtue of Notification No. 37/76 subject to the conditions stated therein. They were exempted from obtaining a Central Excise Licence as the goods were chargeable to nil rate of duty. It is their content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the show cause notice is not sustainable. It is their further contention that the inputs procured from the ship breakers cannot be classified under TI 25(3)(i)(ii) which is clearly not covered by the Notification but they have to be treated as re-rollable material and they are required to be classified under TI 25 (9) and 25(11) of the erstwhile Tariff which are covered under Notification and hence no duty is leviable. It is their submission that earlier judgment of the Tribunal rendered in the case of Collector of Central Excise v. Choday Apparaw Steel Re-Rolling Mills as reported in 1989 (44) E.L.T. 70 and that of M/s. Tigrania Metal Steel Ltd. Others v. Collector of Central Excise, as reported in 1994 (73) E.L.T. 76 (T) = 1994 (50) ECR 437 is erroneous and should not be applied to the present case. It is their contention that the Collector's finding that the inputs cannot be considered as nil duty paid and the reliance by the Collector on the judgment of Rapsi Engineering Industries (P) Ltd. v. Collector of Central Excise as reported in 1989 (43) E.L.T. 577 is incorrect and the Collector ought to have applied the ratio of the judgment rendered in the case of Ajit Metals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, does not arise in terms of the Notification. It is his contention that the inputs although described as waste and scrap, according to the Revenue is required to be classified under TI 25(3) (i), (ii). However, they are not in the nature of 'waste and scrap', for the purpose of recovery of metal or for melting, but they are re-rollable material and, therefore, are required to be classified under TI 25(9) and 25(11) of the erstwhile Tariff. It is his contention that the inputs falling under TI 25(9) and 25(11) were exempted from payment of duty, has not having suffered duty because the duty was 'nil' rate and therefore, question of paying duty again on the inputs does not arise. It is his contention that the department has not carried out any detailed investigation with regard to the nature of inputs purchased from the traders by the appellants but have presumed the inputs to be from ship breakers and as 'waste and scrap' arising from ship breaking. He pointed that even in the case of Tigrania Metal and Steel, the Tribunal had come to the conclusion in para 2.14 that the inputs purchased from ship breaking yard of the specified inputs falling under various sub-items of item 25 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out that the officers had taken statement on various dates on 14-12-86, 2-6-86, 11-8-87 and 24-9-97. Hence the department were aware of the utilisation of waste and scrap from the ship breakers. They were required to have issued the notice expeditiously, however, having issued the show cause notice on 31-10-88, therefore, it is clearly barred by time. He also submitted that the officers of the Range were visiting these factories and the department had full knowledge of the activity of the appellants and hence allegation of suppression is not sustainable. He also submitted that the appellants were holding bona fide belief that the inputs purchased from ship breakers were exempted under the Notification, therefore, the invokation of larger period is not justified. 7.The learned JCDR pointed out that the issue with regard to the non-availability of the benefit of the Notification, with regard to the inputs namely, waste and scrap arising from the ship breakers or the same having purchased from the traders, has been fully settled as in the case of Choday Apparaw Steel Re-Rolling Mill (Supra) and the same has been again reconsidered and followed after a detailed discussion as in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation list or declaration and also had not maintained any accounts and hence the confirmation of the duty is required to be upheld. 8. We have carefully considered the submissions made by both the sides and have perused the material on record. As regards the contention of the learned Advocate, the inputs ought to be considered as exempted items and having suffered duty at nil rate is required to be rejected for the reasons that during the material period there was no Notification exempting the levy of duty on these inputs. The inputs which have been purchased from the market and which were re-rollable material were considered as having been exempted materials as nil rate of duty goods and they were granted the benefit of the Notification. While in the present case the inputs are not on the same footing as those of the inputs purchased from the open market. The Tribunal has gone into in great detail on this aspect of the matter and has held that the material which were exempted were those falling under TI 29 (9) and (11) of the erstwhile Tariff and under sub-headings 7209.90, 7210.10, 7203.20 of the Central Excise Tariff Act, 1985 and the Tribunal as in the cited judgments namely, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see any reason to hold that the department was justified in invoking larger period in this case. Admittedly, in all the appeals show cause notices has been issued after a period of 6 months and therefore, we have to hold that these demands are barred by time. The appellants succeed on time bar only and as a consequence the impugned orders are required to be set aside and the appeals are required to be accepted. 10.Ordered accordingly. Sd/- (S.L. Peeran) Member (J) [Order per : S.K. Bhatnagar, Vice President]. - With due respects to Hon'ble Member (J) my views and orders are as follows :- 11.I consider that in so far as period from 1950 to 1982 is concerned the narration of the ld. Counsel regarding the re-rolling industry in Saurashtra may be of historical importance and useful for such purposes as the desirability or otherwise of issuing of Notification under Section 11C by the Government and therefore of interest to the CBEC for such and other purposes but in so far as this Tribunal is concerned all the cases before us fall within the period 1983-88 and it is the developments only during this period which are relevant for our purposes at this stage. 12.A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aiver of recovery of the duty due was considered desirable. I am mentioning this to show that such general averments act as a double edged sword and do not take us very far in deciding the issue; And in a Tribunal we have to concentrate on specific facts as may emerge and are applicable to each of these cases during the relevant period. 18.We have to follow the well established principle that law as it stood during the relevant period and applicable to the facts of a given case is required to be kept in view while examining the matter. Hence, I propose to deal with the relevant period namely 1983-1988. 19.In this respect I agree with the ld. Advocate as well as the ld. JCDR that it will be more appropriate to consider these cases with reference to three different periods proposed by them in view of changes in the Tariff. 20. I also agree that insofar as the merits are concerned there are two main issues - 1. relating to the eligibility of the inputs in terms of Notification No. 208/83 (as amended from time to time. 2. the question relating to duty paid character of the inputs. PERIOD : Prior to 28-2-86 21.Hence, ld. JCDR is correct in pointing out that tariff item 25(3) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 23.It is therefore really not necessary to answer the second question as to whether they were or could be deemed to be duty paid. However, since it is one of the major points which has been argued before us, even if for arguments sake, it is considered that the inputs were covered by the description given in col. 2 the provisos and the explanation incorporated in the notification will come into picture. Here the point that these materials had been obtained as a result of ship breaking becomes important. Although the ld. Counsel is correct in stating that at that time the tariff heading did not distinguish between articles obtained from ship breaking or otherwise and the notification also does not mention the words 'articles obtained from ship breaking' but the fact remains that proviso 1 refer to the 'additional duty leviable under the Customs Tariff Act' and the question of leviability of such a duty or otherwise can arise only in case the source of the material is an imported item. Therefore if the appellants could show that the items were obtained from breaking of an imported ship the presumption could only be that such additional duty (i.e. CVD) would have been charged b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges - 1. at for the stage of customs clearance when the ship intended for breaking has to pay customs duty and CVD; (Therefore the material to be obtained from such a ship actually bears the incidence of CVD before the ship is actually broken). 2. As a result of breaking of ship the excisable goods of various types are deemed to have been produced and they are required to be cleared on payment of excise duty if any due at this stage. Hence, if a nil duty gate pass has been issued in the light of Boards letter 139/49/86-CX. IV, dated 6-4-89 mentioned by ld. JCDR (by which it was decided to waive the excise duty on ship scrap leviable under TI 25 or chapter 72 or 73 for the period prior to 386/86, dated 28-8-86) and therefore the ship breakers were not paying the central excise duty on the material obtained from ship breaking and classifiable under erstwhile TI 25 or chapter 72 or 73 of the subsequent tariff, the materials obtained directly from breaking of imported ships have to be treated as having borne CVD but not excise duty. Even in the amended notification No. 208/83 as it stood during this period proviso 1 covers specified items made from the specified inputs falling under ei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y paid in character. But being a product of ship breaking on which CVD could only be deemed to have been paid unless proved otherwise they will have to be treated as CVD paid and in view of the proviso 1 therefore would be eligible input subject to fulfilment of the condition prescribed in proviso 2. 30.Again the goods obtained from the market will not have this benefit in view of the explanation. 31.Insofar as proviso 2 is concerned, which is applicable to all the three periods it is evident that in the normal course unless the goods were received with documents showing proof of payment of duty no credit could be taken under Rule 56A or 57A except where in view of the deeming provision the benefit could be availed of in terms of trade notice No. 127/83 during the period it was in force. This trade notice is applicable to the stock of re-rollable scrap lying with the re-rollers on or after 1-8-83 and announces that such stock would be deemed to have paid duty @ Rs. 330/- per metric tonne but prescribes a rider that no such credit shall be allowed where reduction of duty in terms of proviso 1 to Notification No. 209/83 is claimed in respect of the finished goods. The ld. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aration as for example the one dated 5-3-85 filed by Saraswati Steel Industries also shows that the appellants were conscious about the Central Excise requirements and had undertaken to apply for a Central Excise license in terms of Notification No. 1/78 in the proper form in terms of the said notification and had undertaken to maintain records and follow the prescribed procedure but had not filed any declaration in terms of the requirements of 208/83 itself shows that the information required for the purposes of the aforesaid notification was witheld or suppressed. Hence, the demand was not time barred. 37.Insofar as the question of Notification 201/79 and Rule 56A is concerned the payment of Customs Duty or additional duty does not entitle them to the said benefit in terms of 201/79. 38.In view of the above discussion, while I hold that the duty was demandable in all these cases the amount will have to be reworked out in each case in the light of above observations and findings. 39.Ld. JCDR is also technically correct that penalty also becomes leviable, but that it becomes leviable does not necessarily mean that it must always be imposed. It is true that once the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26-3-2002 as Shri M. Chandrasekharan, Senior Advocate engaged for appearance by the appellants was busy elsewhere. On 24-7-2002, when the matter was called before the Bench, Shri Abhishek Jain, Advocate appearing for the appellants informed that Shri M. Chandrasekharan, ld. Senior Advocate was not available even on that day and the case of the appellants will be argued by Shri Vivek Kohli, Advocate. But, even Shri Vivek Kohli, Advocate had not come to the Court. Consequently, the matter was given a pass over. When the whole list of the cases for that day was over, the matter was called again. No one appeared to argue the case for the appellants and Shri Abhishek Jain, Advocate submitted that he does not know whether or not or when an appearance will be made for the appellants by Shri Vivek Kohli, Advocate. Accordingly, I have heard Shri M.P. Singh, JDR for the Revenue. 44.The facts of the case are already given in the respective orders of the ld. Members constituting the Bench and the same need not be repeated. The ld. Member (J) has held the case on merits against the appellants. At the material time, Notfn. No. 208/83-C.E., dated 1-8-1983 exempted the manufactured products if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication. The ld. Vice President in his order has also held that the waste and scrap could be classified under Tariff item No. 25(3)(i) and No. 25(3)(ii) which satisfied the definition in clause (ix) of the explanation to Tariff Item 25; that with effect from 1-8-1983 only such waste and scrap of iron and steel which was fit only for the recovery of the metal or for use in the manufacture of chemicals but not slag, ash and other residues. It is observed that this shows that prior to 1-3-84, such waste and scrap was not eligible for the benefit of Notfn. No. 208/83 but after 1-3-84 even this type of scrap became eligible for the benefit subject to fulfilment of other conditions; that admittedly bars/rods, angles, shapes and sections of iron or steel were covered at that time under Tariff Items 25(9) and 25(11) respectively and these headings were not covered by the description of inputs in Col. 2 of the Notfn. No. 208/83; that during this period, inputs in question were not covered by Notfn. No. 208/83 and hence, they were not eligible for exemption. In the face of such findings, I see no purpose of verifying whether ships for breaking were subject to CVD or not because even if such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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