1. Since the above captioned appeals involve identical issues, they are disposed of by this common order. The appellants in these cases were engaged in the manufactures of M.S. Rounds/Squares falling under Heading No. 72.14 of the Schedule to the Central Excise Tariff Act, 1985 out of rejected railway material, viz. old and used rails/wheels/axles/metal tyres. Enquiries made by the Department revealed that in these cases the finished goods were being manufactured by the concerned manufacturers without obtaining Central Excise Licence in Form L-4 and without payment of duty under the impression that M.S.Rounds/Squares falling under Heading 74.14 out of used railway material viz. old and used rails/wheels/axles/metal tyres etc. were exempted from the payment of Central Excise duty in terms of Notification No.202/88-C.E., dated 20-5-1988. Since the Department was of the view that old and used railway material i.e., rails/wheels/axles/metal tyres did not fall in the category of any of the inputs specified in Column 2 of Notification No. 202/88-C.E., dated 20-5-1988, the appellants were served with a show cause notice alleging the contravention of various provisions of the Central Excises & Salt Act, 1944 and Rules and they were required to show cause as to why Central Excise duty on the finished goods cleared during the period indicated in the show cause notice should not be recovered. The show cause notices which were issued on different dates in 1993 and sought the recovery of duty on clearance during different periods between 1988 and 1991 by invoking the extended period of limitation in terms of the proviso to Section 11A on the grounds that the appellants had suppressed material facts from the Department.
2. In their written replies to the show cause notices and also during the personal hearing before the Collector, each of the appellants denied the allegations. They contended that according to the prevailing practice and the clarifications issued by the Department from time to time, used and rejected railway materials such as rails, wheels, axles, metal tyres etc. had to be deemed as shapes and sections which were specified under Column 2 against Serial No. 2 of the Table annexed to Notification No. 202/88-C.E., dated 20-5-1988. It was also contended that such materials could alternately be deemed as reliable or re-rollable materials which were added in Column No. 2 against Serial No. 2 of the Table annexed to Notification No. 202/88-C.E., dated 20-5-1988 with effect from 1-3-1992. In each case, the appellants also contended that the demand was time barred. However, by the impugned orders, the Collector rejected the appellants' contentions and confirmed the demands.
3. Appearing on behalf of M/s. Vivek Re-rolling Mills, M/s. Bajrang Steel Rolling Mills, M/s. Bhartiya Steel Rolling Mills and M/s. Vishal Steel Rolling Mills, Shri R. Santhanam, Learned Advocate stated that the show cause notice as well as the adjudication order clearly ignored the prevailing practice in respect of similar finished product as specifically approved by the Central Board of Excise and Customs who had issued circulars from time to time to the effect that the inputs consisting of rejected railway material etc. could be treated as angles, shapes and sections specified in Column 2 against Serial No. 2 of the Table annexed to the Notification 202/88-C.E., dated 20-5-1988.
He submitted that such inputs had always been regarded as duty paid and therefore the product manufactured therefrom had to be deemed as exempt from the payment of duty. He referred to the letter F. No.139/40/87-CX4 dated 27-8-1987 issued by the Board in reply to the letter dated 29/30-4-1987 of the Central Excise Collectorate, Indore, wherein it was clarified that unserviceable railway material must be treated as angles, shapes and sections falling under Heading No.7210.10 of the Central Excise Tariff. He submitted that whether old used and unserviceable rails purchased by re-rollers for cutting and rolling into various other products could be considered as material for railway track came up for consideration earlier when the Central Board of Excise and Customs had clarified by a letter F. No. B/28/8/83-TRU dated 8-9-1983 that all these materials would be treatable as railway material under Item 25(11) of the erstwhile Tariff and not under Tariff Item 25(10) since they were to be regarded as shapes and sections and it was further clarified that in all such cases the benefit of the exemption Notification 208/83, dated 1-8-1983 would be admissible. He also referred to the Trade Notice No. 31/CE/83 (3-TI 25) dated 14-9-1983 issued by the Chandigarh Collectorate wherein it was accepted that used railway materials are eligible for exemption under Notification No. 208/83. He contended that clarifications and circulars issued by the Board from time to time not having been withdrawn or modified during the period of demand, there was no justification for the Department to take a contrary view. He submitted that rejected railway materials were nothing but rollable or re-rollable materials which had been specifically included as inputs in Column 2 at Serial No. 2 of the Table annexed to the Notification No. 33/92 dated 1-3-1992 and the amending notification being clarificatory in nature it must be regarded as having retrospective effect as held by the Bombay High Court in the case of Glindia Ltd. v. Union of India, reported in 1988 (36) E.L.T. 479 and by CEGAT in a number of cases. He further submitted that the Collector had passed the order disregarding the fact that if the appellants are held to be liable to duty, they would also be entitled to Modvat credit in respect of duty paid in terms of the decision of the CEGAT in the case of Jagraon Machine Tools v. Collector of C. Excise,Chamundi Steel Re-rolling Mills v. Collector of C. Excise (Final Order No.E/161/94-B1). The Learned Counsel stated that the Collector had ignored the appellants plea of time bar even though the Department was fully aware of the activity of the assessees. He stated that the correspondence exchanged between the appellants and the Department clearly establishes that the Department had complete knowledge about the inputs used by the appellants in the manufacture of their final product. He contended that under these circumstances the show cause notice issued on 11-5-1993 for demanding duty for the period 20-5-1988 to 28-2-1991 has to be deemed as barred by limitation. In this regard he also submitted that the extended period of limitation could not be invoked by the Collector since the Department through its communications, circulars and trade notices had been treating the goods in question as eligible for exemption under Notification No. 208/83. He therefore pleaded that the appeals may be allowed.
4. Appearing on behalf of M/s. Venkateshwara Steels (P) Ltd., the Learned Advocate Shri Rajesh Chhibber submitted that he would adopt the arguments advanced by Shri R. Santhanam, Advocate. He pointed out that the appellant had purchased untested rail from Steel Authority of India Ltd. and contended that the Collector had failed to appreciate that under Column 2 of Serial No. 2 of the Notification one of the specified inputs was "pieces roughly shaped by rolling of Iron & Steel" and "the untested rails" used by the appellant as input could be deemed as pieces roughly shaped by rolling. He added that the Collector erred in demanding duty at Rs. 600/- PMT since on such goods the maximum duty that could be recovered under the relevant notification could not be in excess of Rs. 500/- PMT. He referred to the correspondence exchanged between the appellant and the Department and contended that the extended period invoked by the Collector for confirming the demand was illegal since the Department was fully aware of the appellant's activity and there was no suppression of fact. In this regard he submitted that the proceedings initiated against the appellants in an earlier case were dropped by the Department. In support of his contention he cited the decision in the case of Neyveli Lignite Corpn.
Ltd. v. Collector of Central Excise, reported in 1992 (58) E.L.T. 76 and Metal Fabric, reported in 1992 (57) E.L.T. 70.
5. On behalf of the appellants M/s. Sawan Mal Shibu Mal Rolling Mills, M/s. Kalsi Steels and M/s. Gopal Industries (Serial Nos. 5,6 and 7 of the Cause List) Shri Bhangoo, Learned Advocate appeared before us and Shri K.K. Anand, Ld. Advocate appeared on behalf of M/s. New India Steel Inds., M/s. Agarwal Steel Rolling Mills and M/s. Rehal Indl.
Corporation (Serial Nos. 12, 13 and 14 of the Cause List). They reiterated the points made by Shri Santhanam. Shri Bhangoo submitted that the only other point which he wished to make was that the Collector had erred in holding that re-rollable materials used as inputs by the appellants were not eligible for exemption under Notification No. 202/88-C.E., dated 20-5-1988 prior to the insertion of the term "re-rollable material" with effect from 1-3-1992 in Notification 202/88. He contended that the amending notification dated 1-3-1992 was clarificatory in nature since right from 1963 when Notification 206/63 was in force such used railway material had been treated as re-rollable materials. He claimed that Notification No.33/92, dated 1-3-1992 being clarificatory in nature would have retrospective effect. Shri Bhangoo stated that the Collector had also erred in invoking the extended period of limitation since the Department was fully aware of the activities of the appellants and the fact that they were availing of the exemption under the said notification on the basis of the prevailing practice which was based on the clarifications issued by the Board from time to time. He contended that under these circumstances the appellants will have to be deemed as acted with bona fide belief that they were entitled to exemption under Notification 202/88 and, therefore, on the ratio of the Supreme Court judgment in the case of Collector of C. Excise v. Chemphar Drugs & Liniments, reported in 1989 (40) E.L.T. 276, the Collector's order invoking the extended period was not sustainable. He further contended that the Collector had erred in not considering the alternative plea of the appellants that if the exemption under Notification No. 202/88 was not extended, then the duty demanded would be admissible as Modvat credit.
6. On behalf of the appellants M/s. Supreme Steel Inds., M/s. V.K.Industries and Modern Steel & Agro Inds. (Serial Nos. 10, 11 and 15 of the Cause List), Shri V. Sridharan, Learned Advocate appeared before us. He submitted that the appellants used re-rollable materials like sleepers/channels as inputs for the manufacture of M.S. Bar. He contended that these inputs being covered by the definition of angles/shapes and sections given in Chapter Note l(n) of Chapter 72 have to be deemed as specified in Column 2 under Serial No. 2 of Notification 202/88. He argued that under these circumstances the appellants were eligible for the exemption under Notification 202/88 in respect of the bars manufactured out of such inputs. He argued that old and used railway materials such as rail/wheels/axles/metal tyres/sleepers/bars/channels used by the appellants could not be treated as covered by Heading 73.02 as "railway track and construction material of iron and steel" since being unserviceable material it was no longer capable of being used as railway track construction material.
He submitted that from 1963 onwards the Board has issued several clarifications in regard to the question whether the re-rollable materials purchased from railway could be deemed as covered by the description of the input as given in the notifications issued from time to time.
He added that the controversy was again raised after the introduction of the Central Excise Tariff Act, 1985 and the Board once again clarified that re-rollable materials purchased from railways could be deemed as angles, shapes, sections of iron and non-alloy steel appearing in Column 2 of the Table against Serial No. 2 of the Notification 202/88. He argued that under these circumstances the order passed by the Collector denying the benefit under the said notification was wholly incorrect. He submitted that after duly considering the definition of angles/shapes and sections given in Chapter 72, the Board had clarified that the earlier clarifications were equally applicable to the Central Excise Tariff Act, 1985. He argued that under these circumstances the Collector had erred in ignoring the clarifications issued by the Board on the ground that the same were in connection with the period prior to 28-2-1986 when statutory definition of "angles, shapes and sections" was not available. He further submitted that after 1-3-1988 Notification 90/88 specified "angles, shapes and sections of iron or non alloy steel" and retained all the conditions of Notification 208/83 dated 1-8-1983. He stated that the definition of angles, shapes and sections appearing in Note l(n) to Chapter 72 also did not undergo any significant change consequent to the Finance Act, 1988. He argued that the definition of "angles, shapes and sections" having remained almost the same after 1-3-1988, the position as clarified by the Board vide Notification No. 208/83-C.E. was equally applicable to Notification 202/88. He stated that the letted dated 21-8-1987 issued by the Board accepted the view expressed by the Additional Collector that re-rollable material like railway sleepers, sleeper bars etc. were covered by the definition "angles, shapes and sections" even in Notification No. 202/88. He argued that under these circumstances the Collector's finding that the inputs used by the appellants were not covered by the description "angles shapes and sections" as defined under Note l(n) of Chapter 72 was incorrect. He submitted that, in any event, the appellants having purchased the inputs, namely, unserviceable railway material which was also re-rollable material, they were eligible for deemed credit in terms of Order No. 332/30/87/ TRU dated 20-10-1987 and F.No. 342/1/88/TRU dated 1-6-1988 at Rs. 365 PMT and Rs. 500 PMT respectively for the periods in question. He stated that if the deemed credit on the inputs used in the manufacture of the final product in question is allowed no duty liability would exist against the appellants. He also submitted that the duty demanded was wholly barred by limitation since the invocation of the extended period under proviso to Section HA was not permissible.
He stated that the appellants having acted on the basis of the bona fide belief that their product was not excisable in view of the prevailing practice on the basis of the clarifications issued by the Board from time to time, it could be alleged that they had suppressed facts with the intent to evade payment of duty. In support of his contention he placed reliance on the following case law :-Nagpur Engg. Co. Ltd. v. Collector of Central Excise, 1993 (63) E.L.T. 699.H.C.L. Ltd. v. Collector of Central Excise, Meerut, 7. Learned Advocate Shri A.K. Mahajan appeared on behalf of M/s. Golden Steel Industries (Serial No. 16 of the Cause List). He reiterated the submissions made by Learned Advocate Shri R. Santhanam.
8. On behalf of the respondents, Learned JDR Shri S.K. Sharma stated that the inputs used by the appellants were old and used railway material such as rail, wheels, axles, sleeper bars which at the time of clearance after manufacture were treated as railway materials. He contended that under these circumstances when they are sold after use by the railway authorities, they would continue to be railway materials falling under Chapter 73 of Tariff Schedule. He contended that there was no force in the appellants argument that the goods in question which were not cleared from the factory as "angles, shapes and sections" would be treatable as "angles, shapes and sections". He submitted that in Notification 208/83 only the Tariff Headings of the inputs in question were specified, whereas in Notification No. 202/88 the inputs had been specified by giving their description. He contended that under these circumstances the clarification issued by the Board in respect of Notification No. 208/83 would not be applicable to the inputs specified in Notification No. 202/88. He reiterated his stand that used railway materials such as rails, wheels, axles, sleeper bars having been cleared from the factory as railway material could not be deemed as "angles, shapes and sections." He contended that such material even in terms of the definition given in Note l(n) to Chapter 72 would not be treatable as "angles, shapes and sections" since they do not have uniform cross section. He stated that "re-rollable materials" having been included in the list of specified inputs in Notification No. 208/83 from 1-3-1992 onwards vide Notification No.33/92 dated 1-3-1992, it follows that during the relevant period such used railway materials could not be extended the benefit of Notification 202/88 by treating them as "re-rollable materials". He contended that the appellants plea that the Collector's order invoking the extended period of limitation is not sustainable has to be rejected since during the period for which demands were raised none of the assessees had furnished the details of the materials used by them as "inputs" for the manufacture of final product and it was only after enquiries were made by the Department that the details regarding description of the inputs and the quantity were furnished. He stated that the appellants had also not furnished the required declaration in terms of Rule 174(a) indicating the details of the product manufactured by them during the relevant period. He stated that the appellants had thus suppressed fact with the intention of evading duty. He contended that under these circumstances the Collector's order invoking the extended period of limitation under proviso to Section 11A is sustainable. As regards the appellants contention that they would be entitled to Modvat credit in case the final product is held to be dutiable, he submitted that in each case the claim for deemed credit will have to be examined with reference to the description of the particular inputs and the relevant duty paying documents.
9. We have examined the relevant records and considered the submissions made on behalf of both sides. It is seen that the following are the main questions that arise for consideration in these cases :- (i) Whether used and rejected railway materials used as inputs by the appellants for the manufacture of their finished products could be deemed as angles, shapes and sections which figure as permissible inputs in Col. 2 against Serial No. 2 of Notification No. 202/88-C.E., dated 20-5-1988.
(ii) Whether the order confirming the demand by invoking the extended period of limitation under proviso to Section 11A is sustainable.
10. In these cases similarly worded show cause notices were issued in which it was alleged that M.S. Rounds/Squares falling under Heading No.72.14 were not eligible for exemption in terms of Notification No.202/88-C.E., dated 20-5-1988 since rejected railway material/old and used rails/wheels/ axles/Metal Tyres etc. used as inputs were not specified in Column 2 against Serial No. 2 of the said Notification. It is seen that while the main show cause notice in each of these cases gave the same general description of the inputs i.e. "rejected Railway Material/old and used Rails/Wheels/Axles/Metal Tyres etc.", the description of the actual inputs used as given in the annexure to the show cause notices varied from case to case. As seen from the annexures to the various show cause notices and also the declarations filed by the appellants during the course of the hearing by the Tribunal, the main items used as inputs for the manufacture of M.S. Rounds and Bars were old and used or rejected or untested Rails/Rail cuttings and used railway wheels/axles/metal tyres/ sleepers/sleeper bars. The appellants case is that being used and unserviceable these inputs cannot be treated as railway track construction material of iron and steel falling under Heading 73.02. It has been claimed that these inputs have to be deemed as angles, shapes and sections which are specified as inputs in Column 2 against Serial No. 2 of Notification 202/88 since they are covered by the definition of angles, shapes and sections in Note l(n) of Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985. The appellants have also contended that the Department has all along treated such old and used railway materials as 'angles, shapes and sections'. In this regard reliance has been placed on Board's letter R No. 8/28/83-TRU, dated 8-9-1983 wherein in regard to the exemption under Notification No. 208/83-C.E., it was clarified that old used and unserviceable rails purchased by re-rollers for cutting and rolling into various other products could not be considered as materials for railway track construction and as such they were treatable as products falling under sub-item (11) of Tariff Item 25 which covered unspecified angles, shapes and sections. The appellants have pointed out that in April 1987 when Collector Indore expressed the view that rail cuttings, sleepers, sleeper bars etc. could not be treated as railway track construction material under Heading 7302.10 and they were eligible for exemption under Notification 208/83 on account of being classifiable under sub-headings of Chapter 72 as angles, shapes and sections, the Board in its letter No. 139/40/87-CX.4, dated 21-8-1987 concurred with the views of the Collector. The appellants have also contended that in the alternative, used and unserviceable railway materials used by them as inputs could be treated as "re-rollable material" which was added to the list of items specified as inputs in Notification No. 202/88 by the amending Notification 90/88 dated 1-3-1988 and which being clarificatory in nature has to be deemed as having retrospective effect. It is seen from the impugned orders that the Collector while rejecting the appellants contention that the inputs used by them were angles, shapes and sections simply observed that the "inputs used by the noticees for the manufacture of finished goods did not fit in the description of the inputs specified in the said notification and, therefore, the finished goods manufactured out of the same are not eligible for the exemption thereunder". However, while making his submissions on behalf of the respondents, the Learned Departmental Representative has argued that the materials in question having been originally cleared after being manufactured as "railway or railway track construction material falling under Heading 73.02" and not as "angles, shapes and sections" of Chapter 72, they would continue to be "railway or railway track and construction material" of Chapter 73 of the Tariff Schedule even when they are sold as old and unserviceable materials.
11. For the proper appreciation of the rival contentions we refer to Note l(n) to Chapter 72 and Heading No. 73.02 of the Central Excise Tariff Schedule, which are reproduced below :- Products having a uniform solid cross-section along their whole length which do not conform to any of the definitions at (ij), (k), (1) or (m) above or to the definition of wire.
"73.02 Railway or tramway track construction material of iron or steel, the following: Rails, check-rails and rack rails, switch blades, crossing frogs, point rods and other crossing pieces, sleepers (cross-ties), fish plates, chairs, chair wedges, sole plates (base plates), rail clips, bedplates, ties and other material specialized for jointing or fixing rails." 12. We find that the appellants contention that the question whether the used and unserviceable Railway materials used as inputs could be deemed as angles, shapes and sections has to be determined with reference to Note l(n) of Chapter 72 of the Tariff Schedule has no force at all. It has been held by the Tribunal in the case of Collector of Customs v. O.E.N. India Ltd., reported in 1989 (42) E.L.T. 235 that Interpretative Rules, Section Notes etc. governing the tariff are not relevant for the purpose of interpreting notifications. As held by the Hon'ble Madras High Court in the case of Collector of C. Excise v. Alco Industries, reported in 1991 (55) E.L.T. 184 in interpreting a taxing statute the words used therein have to be construed in their own context and in the sense as ordinarily understood by people usually conversant and dealing in such goods and scientific, technical or dictionary meaning should not be mechanically adopted. It is seen that while examining the question whether old and unserviceable rails could be deemed as "old and used re-rollable scrap" for purposes of Notification No. 206/63-C.E., dated 3-11-1963, the Hon'ble Gujarat High Court has held in the case of Malhotra Iron & Steel Industries, Ahmedabad v. MM. Gupta and Anr., reported in 1988 (33) E.L.T. 344 that the materials in the shape of second class rails which are rejected by the Railway and which are used in the manufacture of other end products were unserviceable rails and such unserviceable rails were, therefore, "old and unserviceable re-rollable scrap". Since the railway authorities who are the main users of railway track material and other rolling stock had no use for the various materials used as inputs by the appellants, on the ratio of the Gujarat High Court judgment quoted above, such unserviceable railway materials would neither be treatable as railway track construction material falling under sub-heading 73.02 nor as "angles, shapes and sections" but only as "old and used re-rollable scrap". We are therefore of the view that during the relevant period old and unserviceable railway material used by the appellants was not covered by any of the inputs specified in Column 2 against Serial No. 2 of Notification No. 202/88-C.E., dated 20-5-1988 and accordingly the final products manufactured by the appellants by using such inputs were not eligible for exemption under the said notification. The appellants have contended that even if the inputs in question are held as "old and used re-rollable scrap", they have to be deemed as inputs specified in Notification 202/88-C.E., dated 20-5-1988 since the amending Notification No. 33/92-C.E., dated 1-3-1992 by which the item "rollable and re-rollable material" was added to the list of inputs specified in Notification No. 202/88-C.E. being clarificatory in nature has to be deemed as having retrospective effect. We are not impressed by the appellants argument since it is well settled that exemption notifications have to be construed strictly according to the words used therein and during the relevant period "old and used re-roll-able scrap" was not one of the specified inputs in Notification No. 202/88-C.E., dated 20-5-1988.
13. The next point to be examined is whether the demands confirmed by the Collector by invoking the extended period of limitation under the proviso to Section 11A are sustainable. It is seen that the only ground on which the Collector justified the invocation of the extended period of limitation is that the appellants had not placed any material before him to show that the use of old railway materials in question as inputs was within the knowledge of the Department and they had failed to inform the Department about their manufacturing activity by filing the prescribed declaration under Rule 174A. In this regard the appellants case is that the impugned order invoking the extended period of limitation is illegal in the absence of any finding of suppression or mis-statement. The appellants have also contended they had throughout acted on the bona fide belief that the final products manufactured by them were eligible for exemption from the payment of Central Excise duty in terms of Notification No. 202/88-C.E., dated 20-5-1988 since based on the clarifications issued from time to time it was a long standing practice of the Department to treat old and rejected railway materials such as rails, wheels, axles, metal tyres etc. as "angles, shapes and sections" which figured in the inputs specified in Column 2 against Serial No. 2 of Notification No. 202/88-C.E., dated 20-5-1988.
In support of their claim that the Department had been treating old and rejected railway materials as angles, shapes and sections, the appellants have referred to the Board's letter F. No. B-28/8/83-TRU, dated 8-9-1983 wherein it was clarified that old and unserviceable rails purchased by re-rollers for cutting and rolling into various other products could not be considered as materials for railway construction and as such they were treatable as products falling under sub-item (11) of Tariff Item 25 which covered unspecified angles, shapes and sections. In this regard the appellants have also pointed out that once again in 1987 the Board in its letter No. 139/40/87-CX.4, dated 21-8-1987 conveyed its approval in regard to the view expressed by the Collector Central Excise, Indore in his letter F. No.XV(73)30-7/86/CX, dated 29/30th April, 1987 that old and used rail cuttings, sleepers, sleeper bars etc. were treatable as angles, shapes and sections falling under Chapter 72. On perusal of correspondence between the field formations and the Board on this subject, we are inclined to agree with the appellants that during the relevant period it was a practice of the Department to treat old and rejected railway materials such as rails, rail cuttings, wheels, axles, metal tyres etc.
as angles, shapes and sections falling under sub-heading 7210.10 of the Tariff Schedule. We are therefore inclined to accept the appellants claim that in view of the past practice of the Department during the relevant period, they had entertained a bona fide belief that the final products manufactured by them out of old and rejected railway materials were exempted from the payment of Central Excise duty in terms of Notification No. 202/88-C.E., dated 20-5-1988. In the case of Padmini Products v. Collector of Central Excise, 1989 (43) E.L.T. 195 (SC), the Supreme Court has held that mere failure or negligence on the part of the manufacturer to take out a licence or not to pay duty in case where there was scope for doubt as to whether goods were dutiable or not would not attract the extended limitation. Again in the case of Collector of C. Excise v. Chemphar Drugs and Liniments, reported in 1989 (40) E.L.T. 276, the Supreme Court has held that "in order to make the demand of duty sustainable beyond a period of six months and upto a period of 5 years in view of the proviso to Section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid or erroneously refunded by reasons of either fraud or collusion or wilful mis-statement or suppression of facts or contravention of the provisions of the Act or Rules made thereunder, with the intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before he is saddled with any liability, before the period of six months".
14. In view of the above discussion it follows that during the relevant period on account of the departmental practice to treat such used and rejected railway materials as angles, shapes and sections, the appellants had justifiably entertained the bona fide belief that their final products made out of old and used rejected railway materials were exempt from the payment of Central Excise duty in terms of Notification No. 202/88. Hence, on the ratio of the Supreme Court judgment quoted above, we hold that in these cases the short levy, if any, was recoverable for a period of only six months from the date of the show cause notice and the Collector's order invoking the extended period of limitation in terms of the proviso to Section 11A is not sustainable.
15. In view of our finding that old and unserviceable railway materials used as inputs by the appellants were treatable only as "old and unserviceable scrap" which, during the relevant period, was not one of the specified inputs in Notification No. 202/88, duty would be recoverable on the clearances of the final products in question that may have been cleared by the appellants within a period of six months of the date of the show cause notice. The appellants have argued that even if it is held that during the relevant period the final products were dutiable on account of the inputs used in the manufacture thereof not being specified in the Notification 202/88, on the ratio of the Tribunal's Final Order E/161/94-B1, dated 9-3-1994 in the case of Chamundi Steels Re-rolling Mills v. Collector of Central Excise, Bangalore and theJagraon Machine Tools v.Collector of Central Excise, reported in 1993 (65) E.L.T. 300 (Trib.), they would be entitled to Modvat credit that might have been admissible in respect of "re-rollable scrap" in terms of the relevant order of the Ministry. In this regard it is seen that in Final Order E/161/94-B1, dated 9-3-1994, the Tribunal having regard to the appellants contention that if benefit of Notification No. 202/88 is disallowed they would be entitled to Modvat credit in terms of Notification No. 177/86 read with Rules 57A to 57J of the Central Excise Rules, had remanded the matter to the Collector for consideration of the following issues :- "Whether the demand of duty raised may be reduced by allowing the modvat credit after verifying the duty paying documents prescribed under Rule 57G(ii). In ascertaining that the inputs used by the appellants are "duty paid", the fact that the appellants have not filed any declaration under Rule 57G is not material for the purpose of disposing of this case. The benefit of modvat credit should not be denied merely on account of non-filing of declaration under Rule 57G or maintenance of RG- 23A. The question of time bar is also open for arguments by both sides and both sides are at liberty to adduce evidence in support of their allegations/submissions.
Question of penalty will also be at large before the adjudicating authority having regard to the amount of duty payable by the appellants after allowing them the modvat credit and finding on time bar, if any." 16. Having regard to the Tribunal's order quoted above, we hold that if in case duty is found to be recoverable in terms of this order in respect of clearances within a period of 6 months from the date of the show cause notice, the benefit of Modvat credit would not be deniable on the grounds of non-filing of declaration under Rule 57G or non-maintenance of R.G. 23A.