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TMI Blog2005 (3) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... tapped and removed in the ladles to slag dump yard. This slag also contains some molten iron. The appellants by periodical tenders are selling iron scrap from blast furnace slag dump yard in "as is where is condition". The department has issued 12 show cause notices covering the period from March, 1994 to August, 2000, to the appellants on the ground that iron scrap cleared from slag dump yard has been under-valued. These show cause notices were adjudicated by the Commissioner under the impugned order. He determined the assessable value of iron scrap by allowing 15% abatement from the assessable value of C.I. skull scrap and confirmed the duty of Rs. 12,32,37,721/- under Section 11A. He also imposed penalty of Rs. 6,52,51,251/- under Section 11AC of the Central Excise Act and penalty of Rs. 50,00,000/- on the appellants under Rule 173Q of the Central Excise Rules. 2.Shri V. Laxmikumaran, learned Advocate contested the order of the Commissioner raising the grounds that (i) whether the iron scrap recovered from slag dump yard is excisable, (ii) what will be the correct classification of the iron scrap with slag, whether it will fall under Chapter 26 or Chapter 72 of the Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find mention in one of the entries of the First Schedule does not mean that they become liable for payment of excise duty. Goods have to satisfy the test of being produced or manufactured in India. Unless goods are manufactured in India, they cannot be subjected to payment of excise duty. He, therefore, pleads that in view of the above decisions, slag containing iron, dumped in slag dumping yard, is not excisable and therefore, no duty should be charged. 4.On classification, he pleaded that slag waste containing iron is properly classifiable under sub-heading 26.19 of the Central Excise Tariff Act as entry is for slag, dross (other than granulated slag), scalings and other waste from the manufacture of iron or steel. He pleads that goods cannot be classified as waste and scrap of cast iron under sub-heading 7204.10 of the CETA, on the ground that Section Note 8 of Section XV defines waste and scrap as under: - "Metal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons." He pleaded that slag with iron is neither obtained by mechanical working of metals or it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, do not dispute the facts in respect of working on the 'Slag' in the 'Slag Dump Yard' and to separate cast iron from the slag and recover and retrieve such cast iron, embedded in the Slag Lump/Solid by breaking it and by similar methods deployed, ……….. The goods cleared by M/s. Bhilai Steel Plant, Bhilai to M/s. AMR Associates and M/s. AMR Associates to other ultimate industrial consumers, are being used for manufacture of C.I. Castings or for further manufacture of steel through industrial furnaces. There is no dispute that the product cleared from the "Slag Dump Yard" is 'cast iron scrap' and not 'slag'. It is also a fact that the 'cast iron scrap' irrespective of its origin in an integrated Steel Plant, like Bhilai Steel Plant is classifiable under Heading 7204.10 of Central Excise Tariff and is required to pay appropriate rate of duty." In view of this, he pleaded that there is no dispute regarding excisability or classification of the goods in dispute. 8.Regarding valuation he pleaded that M/s. Bhilai Steel Plant, Bhilai were required to file price declaration for obtaining acceptance of an assessable values from the Divisional Officer in terms of Rule 173C of the Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le breaking yard. He also pleads that in his statement dated 4-3-99 under Section 14 of Central Excise Act. Shri Nagendra Prasad, Assistant General Manager, M CS of the appellants stated in reply to question No. 10 that the iron scrap found from Blast Furnace Slag Dump contains more slag embedded to the iron scrap in comparison with the other iron scrap available in the other areas such as CI Ladle skull. As far as chemical properties are concerned, iron scrap of blast furnace slag dump of M/s. BSP, Bhilai and scrap of other areas, as mentioned in question are identical. He also referred to the tender issued by the appellants which invites tender for recovery, removal and lifting of iron scrap on payment from the blast furnace slag dump of Bhilai Steel Plant, Bhilai and the contract entered with the customers who lifted such scrap. He referred to the contract entered with M/s. AMR Associates and states that various charges incurred by the customer were not disclosed to the department to determine the correct value. 9.Shri Lakshmikumaran pleaded that even if the value under Section 4(1)(a) is not accepted then the value of the impugned goods is required to be determined under Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered the submissions made by both the sides. We find that in this case, the appellants were manufacturing iron from iron ore in the blast furnace. From bottom tap of the blast furnace, molten iron was removed in ladle for further manufacture of various iron and steel products. From top tap of blast furnace, slag was removed in the ladle along with slag, some molten iron also gets removed which is taken in ladle to slag dump yard. This molten iron gets solidified and it remains in the slag dump yard. The appellants float tenders for recovery, removal and lifting of iron scrap. Thus, from the tenders, it is clear that what is being recovered and cleared from the factory of the appellants is iron scrap and not slag. Therefore, the various decisions relied upon by appellants about the excisability and classification of the iron scrap removed from the slag dump yard are not relevant. It is also not disputed that this scrap is generated in the manufacture of iron in the factory of the appellants from the iron ore. Therefore, it is very well covered by the definition of scrap as provided under Note 8 of Section XV of the Central Excise Tariff Act. Therefore, iron scrap which is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achinery and labour force inside their factory for sorting out iron lumps, breaking of the lumps, removing slag from the lumps and then clearing the iron scrap from the factory. They have also given them facility for installation of weigh-bridge. They have allowed them to maintain the approach roads and converts from operation at their own cost. No ground rent was charged by the appellants from M/s. AMR for making use of the company land, for their canteen and labour etc. Therefore, all these facilities which were provided free of charge form value of the iron scrap which is being cleared from the factory of the appellants. All the charges incurred inside the factory for bringing scrap up to the factory gate are required to be included for assessment purpose in the assessable value of the goods whether incurred by the appellants or by M/s. AMR Associates on behalf of the appellants. Therefore, the tender price at which the goods were assessed by the appellants does not represent the correct assessable value. Since the goods were cleared from the factory of the appellants and were further processed by M/s. AMR Associates before these were finally sold to the customers, the normal pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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