Judgment:
1. This is an appeal filed by M/s. Utkal Steel Ltd., Sundargarh, Orissa, being aggrieved with the order-in-original dated 31-12-1986 passed by the Collector of Central Excise, Bhubaneshwar.
2. The matter related to the classification of the products which the Revenue had held as flats, classifiable under Item No. 25(9)(1) of the erstwhile Central Excise Tariff and the appellants have contended that the goods were bars classifiable under Item No. 25(9)(2) of the said Tariff. The Collector of Central Excise, Bhubaneshwar, had held in his order that the goods in question were flats. He had confirmed the demand of Central Excise duty of Rs. 89,912.50. He also imposed a penalty of Rs. 1,50,000/- on M/s. Utkal Steel Ltd. 3. Shri P.S. Bedi, Consultant, appearing for the appellants stated that the goods manufactured by them were bars and that they have no arrangement for rolling the edges of controlled contour. They were producing bars from re-rollable material during the period 4-6-1985 to 26-10-1985 and although they have referred their product as flat, they did not fit in with the definition of the flat as given in the central excise tariff. It was his submission that the burden was on the Department to establish that the goods were flats. As their goods were exempted from duty, they were not required to take out the central excise licence and they were not required to file any declaration. The learned Consultant submitted that they had no facility for edge rolling which was a requirement for classification of any product under flats and referred to the Supreme Court decision in the case of Collector of Central Excise v. Calcutta Steel Industries -1989 (39) E.L.T. 175 (SC), to plead that once there is a definition in the Tariff, the goods have to be classified as per that definition only. He prayed for the remand of the matter.
4. In reply, Shri P.K. Jain, SDR, submitted that they had facility for mill edging and had dies for controlling edges. Everywhere the product has been referred to as flats. He referred to the statement recorded at the time of the seizure and the Panchnama drawn where it had been admitted by the appellants that their products were mild steel flats.
The goods were commercially marketed as mild steel flats and the case is made on the basis of their own records. Nowhere the goods have been described or referred to as bars. As discussed by the adjudicating authority, the goods are covered by the definition of flats as contained in the tariff and that the plea that the goods were bars and not flats is being taken for the first time before the Tribunal and a new case is being made out by the learned Consultant.
5. We have carefully considered the matter. During the relevant time sub-item No. (9) of Item No. 25 of the Central Excise Tariff read as under : "(9) Bars (including flats) and rods (including wire rods) of iron or steel, rolled, forged, extruded, formed, finished whether in straight lengths or in coils, hollow mining drill steel Under Explanation No. (xx) bars (including flats) and rods (including wire rods) had been defined as products of solid Section which do not conform to the entirety of any of the definitions at (vii), (viii), (xii), (xiii), (xiv), (xv), (xvi), (xvii), (xviii) and (xix) of the explanation, and which have cross-sections in the shape of circles, segments of circles, ovals, isosceles triangles, rectangles, hexagons, octagons or quadrilaterals with only two sides parallel and the other sides equals. It will be seen from this definition that it covers the full gamut of sub-item (9). The flats'which are specifically classifiable under sub-item (9)(i) of Item No. 25 have been defined as under : "flats, means finished products, generally of rectangular cross-section, having rolled edges only (square or slightly rounded), of controlled contour and of thickness 3 millimetres and over, width 400 millimetres and below and supplied in straight lengths and includes flat bars with bulb that has swelling on one or two faces of the same edge and a width of less than 400 millimetres." It will be seen that this definition specifically covers flats. Any product which is not covered by the above definition of flats will be covered by sub-item (9)(2) of Item No. 25 as it covers the 'others'.
6. The appellants had not taken Central Excise licence. They have also not filed any declaration. They have also not sought any approval of classification.
7. The appellants on their own without approval, without filing any information, had availed of exemption under Notification No.208/83-C.E., dated 1-8-1983. The exemption under Notification No.208/83-C.E., dated 1-8-1983 is conditional and is subject to the condition that the final products specified in the table annexed to that notification are made from the duty paid inputs. Although, it was explained that all stocks of inputs in the market except such stocks as are clearly recognisable as being non-duty paid shall be deemed to be inputs on which the duty has already been paid, no exemption was available if the inputs were exempted or were clearly recognisable as being non-duty paid. The learned Consultant had submitted that during the relevant period, there was no requirement of taking any approval from the Department for availing exemption under Notification No.208/83-C.E., aforesaid. As we find that the exemption was conditional, relevant information had to be filed with the Department to ensure that both the inputs and the final products were covered by the scheme of the exemption. We find that in this case, no such information had been given and no approval as such had been obtained.
8. The case was detected as a result of surprise visit to the factory premises by the Central Excise Officers on 21-11-1985. It was found that the factory was engaged in the production of M.S. rounds and M.S.flats. Certain goods lying in the premises were seized and the statement of the Assistant Manager of the factory was recorded. It was found that in all the correspondence with their customers, the goods have been referred to as flats.
9. The goods produced were known in the trade and commerce as flats. As is seen from the definition of flats in the tariff, the flats are those having rolled edges only (square or slightly rounded) of controlled contours and of thickness 3mm and above. There is no dispute that the thickness of the goods in question was over 3mm. The learned Consultant had argued that their goods had no rolled edges of controlled contours.
The learned SDR has, however, stated that the appellants had dies rolls for controlling the edges. We find that everywhere the goods have been described by the appellants themselves as flats and the case has not been argued on the basis that the goods were bars. We find that in their profit & loss account also at page 24 of the paper book, the opening stock and the closing stock of M.S. rounds and M.S. flats had been given. There is no reference to the bars.
10. The appellants have contended that the burden "is on the Department to prove that the goods in question were flats and not bars. We find that before the surprise visit of the Central Excise Officers on 21-11-1985 to the factory premises of the appellants, no declaration had been filed or no information had been furnished that the goods produced by them were bars. Everywhere they have mentioned it as flats.
We consider that in these circumstances, the burden of proof is on the appellants to show that although the goods were described by them as flats, actually they were not flats as per definition in the tariff. We find that the appellants have not been able to discharge this burden in these proceedings.
11. The appellants have also contended that the exact size and thickness had not been given by the Department. In this connection, the adjudicating authority had referred to Annexure 'A' to the show cause notice, where the details of size and thickness of the flats have been given. Annexure 'A' to the show cause notice was prepared from the register maintained by the appellants and in that register the sizes of the M.S. flats had been stated . The adjudicating authority had also referred to the various communications from the customers and other persons in the trade and came to a decision that the goods described by the appellants as flats were the flats as per the definition in the central excise tariff.
12. The learned Consultant has relied upon the Supreme Court decision in the case of Collector of Central Excise v. Calcutta Steel Industries, 1989 (39) E.L.T. 175 (S.C.), wherein it had been held that rectangular products flat products of thickness less than 3mm and width of less than 75mm were classifiable as bars. As in the present proceedings there is no dispute that the thickness was more than 3mm, we consider that this decision has no relevancy to the facts before us.
They have also observed that if Department wants to tax particular goods known as such, then the onus is on the Department. In the case before us at no stage the appellants before the visit by the Central Excise Officers had declared that their goods were bars. Without any licence, without any declaration and approval, they availed of the exemption under Notification No. 208/83-C.E., which we find gives only exemption subject to certain conditions. It was not for the assessees themselves to determine, whether they were covered by those conditions.
Thus, when the assessees themselves were treating their goods as flats, when their customers were purchasing them as flats, we consider that the burden of proof was on the assessee to establish that the goods were not flats. In the facts and circumstances of this case, we find that they have failed to discharge this burden.
13. The learned Consultant had also made a request that the matter may be remanded to the Commissioner of Central Excise to re-determine whether the goods were having rolled edges of controlled contours. We find that the show cause notice in this case was issued on 12-5-1986, as a result of surprise visit on 21-11-1985. It is an old matter and not only the tariff has undergone a change but the manufacturing facilities may not also be the same as they were in the year 1985-86.
On the question of fact, the adjudicating authority, the Collector of Central Excise, Bhuvaneshwar, had come to a clear finding and had based his findings on the contemporary records of the appellants themselves.
In the circumstances, we consider that no purpose will be served in remanding the matter.
14. Taking all the relevant considerations into account, we find no infirmity in the view taken by the Collector of Central Excise, Bhubaneshwar, that the goods seized as well as the goods on which duty had been demanded in the show cause notice were mild steel flats and were correctly classifiable under sub-item (9)(i) of Item No. 25.
15. The duty demanded in this case is Rs. 89,912.50. A penalty of Rs. 1,50,000/" has been imposed. Keeping in view the facts and circumstances of the case, we reduce the penalty from Rs. 1,50,000/- to Rs. 75,000/- (Rupees seventy five thousand only).
16. Subject to above, the appeal is otherwise rejected. Ordered accordingly.