Integrated steel plant exemption and pre-deposit relief where part of production used externally sourced sponge iron

The exemption for goods in Chapters 72 and 73 cleared from an integrated steel plant was considered in the context of sponge iron purchased from outside. The Tribunal noted that use of externally sourced sponge iron did not, by itself, mean the manufacturer had ceased to be an integrated steel plant, although a further question remained whether the exemption applied to goods manufactured otherwise than as part of integrated operations. On that prima facie basis, partial waiver of pre-deposit was granted and recovery of the balance duty was stayed.

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Issues: Whether the applicant was entitled to waiver of pre-deposit of duty in a case involving the benefit of exemption under Notification No. 13/2000 for goods manufactured by an integrated steel plant, where part of the production used sponge iron purchased from outside.

Analysis: The notification granted exemption from inclusion of freight and other charges in the assessable value for goods of Chapters 72 and 73 manufactured and cleared from an integrated steel plant. The dispute turned on whether purchase of sponge iron from outside deprived the applicant of that character. The applicant had not ceased to be an integrated steel manufacturer merely because part of its final products were made from sponge iron procured externally, but a further question remained whether the exemption applied to those goods manufactured otherwise than as an integrated steel plant. In view of this prima facie position, the Tribunal found it appropriate to direct partial deposit and grant stay for the balance.

Conclusion: Partial waiver of pre-deposit was granted. The applicant was directed to deposit Rs. 12 lakhs, and recovery of the remaining duty was stayed.

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