Judgment:
1. This is an appeal filed by M/s Jhunjhunwala Rolling Mills & Engg.
Works being aggreived with the order-in- appeal dated 15-9-1987 passed by the Collector of Central Excise (Appeals) Bombay.
2. The matter relates to the eligibility of exemption in respect of bars falling under item No. 25(9)(ii) of the old Central Excise Tariff under Notification No. 208/83-C.E., dated 1-8-1983. This exemption notification provided exemption, among other, bars if they were manufactured out of the goods falling under sub-item 6(ii) and (iii), 7(ii), 9(ii) and 11 of Item No. 25 aforesaid. In their classification list the appellants have described that these bars were manufactured from "all types of (i) "fresh unused rerollable scrap and (ii) old and used rerollable scrap" as it was considered that the said inputs, that is, "fresh unused rerollable scrap and old and used rerollable scrap" were not covered by the specified inputs classifiable under sub-item 6(ii), 7(ii), 8(ii) and 11 of Item 25 the exemption was denied to them.
The matter was heard on 9-10-1996 when Shri A.v. Padhnis, Advocate appeared for the appellants. He submitted that they broadly described their inputs as "scrap" while in fact they were covered by the description under sub-item (6) of Item No. 25 which covered ingots, block, lumps and similar forms of steel. It was his contention that their raw materials were also covered by other sub-items mentioned in Serial No. (2) of the table annexed to Notification No. 208/83-C.E.aforesaid. The learned advocate submitted that before the change over in the tariff with effect from 1-8-1983 they had described the goods as they were doing before when their goods were classified under Item No.26A of the Tariff. He also mentioned that even otherwise they were eligible for proforma credit procedure under Notification No.198/83-C.E. dated 1-8-1983. In reply Shri P.K. Jain, SDR submitted that case of the department is based on facts that the inputs were "waste and scrap". The appellants themselves had described them as waste and scrap and it was only after the show cause notice that they have taken the plea that their inputs were covered by the description as given in serial No. 2 of the table annexed to Notification No. 208/83-C.E. He further stated that there is nothing on record to show that the inputs were anything other than "waste and scrap" which [were] not covered by the scheme of exemption under Notification No. 208/83-C.E.3. We have carefully considered the matter. On introduction of the new tariff item No. 25 with effect from 1-8-1983 the appellants had filed a classification list in which among others, exemption was sought in respect of bars (excluding flats) and rods (including wire rods) of iron and steel under Notification No. 208/83-C.E. dated 1-8-1983. It was mentioned in the classification list that these bars and rods were made from "all types of (i) fresh unused rerollable scrap and (ii) old and used rerollable scrap". The appellants had admittedly purchased these inputs from the market and they did not have the duty paying document with them. The copies of the invoices/challans or any other documents to indicate that the inputs were not scrap but defective ingots blocks lumps and similar form of steel had not been produced.
4. Under Notification No. 208/83-C.E. dated 1-8-1983 only the inputs which were classifiable under sub-items 6(ii), (iii), 7(ii), 8(ii), 9(ii) and 11 of the item No. 25 were the eligible inputs. The description under sub-item 6, 7, 8, 9 and 11 is given below :(i) puddled bars and pillings of iron Seventy rupees per metric tonne.
(ii) ingots, blocks, limps and Three hundred and fifty rupees per similar forms of steel metric tonne.
(iii) not elsewhere specified Three hundred and fifty rupees per metric tonne.
(i) of iron Seventy rupees per metric tonne, (ii) of steel Three hundred and fifty rupees per metric tonne.(8) Pieces roughly shaped by rolling or Three hundred and fifty rupees perforging of iron or steel, not elsewhere metric tonne.specified (i) flats One thousand three hundred and fifty rupees per metric tonne.
(ii) others Three hundred and fifty rupees per metric tonne.
Rails, sleepers and sleeper bars Three hundred and fifty rupees per metric tonne.(11) Angles, shapes and sections of iron Three hundred and fifty rupees peror steel, not elsewhere specified, other metric tonne.than slotted angles and slotted channels, 5. It will be seen that the goods under these sub-items have been referred to by name and they are known in the market by their specific names. For the purposes of classification in the Central Excise Tariff for item No. 25 waste and scrap had been defined as under :- "waste and scrap" means waste and scrap of iron or steel fit only for the recovery of metal or for use in the manufacture of chemicals, but does not include slag, ash and other residues : plates and tin plate and tinned, lacquered or varnished sheets including tin taggers and cuttings of such plates, sheets or taggers.
6. It is the submission of the learned advocate that their inputs were among others defective inputs, block lumps, and similar forms of steel.
For the purposes of classification under sub-item (6) or, for that matter in any other sub-item the fact that particular item was a defective one would not take it to the category of waste and scrap. For most of the items the rate of duty prescribed was specific. As the goods were assessable to Central Excise duty on the basis of the weight irrespective of any defect the appropriate rate as leviable on those goods will be attracted.
7. The Learned advocate also submitted that in physical characteristics their inputs could be considered to be covered by the description as given in serial No. 2 of the table to the Notification No. 208/83-C.E.aforesaid. In this connection he referred to one decision by the Assistant Collector of Central Excise, Jalgaon wherein he had stated that the Central Excise Tariff does not describe rerollable old and used as well as fresh unused scrap but they are to be treated as falling in different sub-items of item No. 25 according to their physical characteristics. This decision of the Assistant Collector is not before us and it will not be proper for us to comment on the same.
We may however abserve that the physical characteristics as in the tariff item No. 25 refers to various commercial names of the products like puddled bars, pilings, ingots, blocks, angles, etc. The physical characteristics to the present proceedings have not been identified to any particular sub-item of Item No. 25 of the tariff. The appellants have generally mentioned that their inputs were classifiable under different sub-items as mentioned in the Notification No. 208/83-C.E.They have not been identified as to which physical characteristics their inputs relate.
8. In the Notification No. 208/83-C.E. it has been provided that for the purposes of that notification any stocks of inputs except such stocks as are clearly recognisable as being non-duty paid shall be deemed to be inputs on which duty has already been paid. "Waste and scrap are dutiable only when they are a manufactured product in a factory. All waste and scrap available in the market could not be considered as manufactured goods and all the scrap available with kabaris could not be considered as manufactured products and could not be taken to have paid any Central Excise duty. In the case of Machine Builders v. CCE - 1996 (12) R.L.T. 817 the larger bench of the Tribunal had held that the intention was not to deem that inputs which actually did not suffer duty were inputs which suffered, duty and the purpose was to ensure the benefit of those who used inputs in the manufacture of which duty has actually been paid, but it might not be possible to produce duty paying document which will' unerringly connect the document or duty payment with the particular inputs (refer Para 15 of the above decision). The Tribunal in Para 25 had held that the scrap inputs was clearly and wholly exempt from duty and the assessees were not entitled to deemed credit.
9. In view of the above discussion we find no infirmity in the order-in- appeal and as a result this appeal is rejected.