2005 (3) TMI 377 - AT - Central Excise

Tribunal decision: Scrap not waste, reassessment ordered under Valuation Rules.

The tribunal concluded that the iron scrap recovered from the slag dump yard is excisable under sub-heading 7204.10 of the Central Excise Tariff Act, ... Valuation (Central Excise) - Iron scrap Issues Involved:1. Excisability of iron scrap recovered from slag dump yard.2. Correct classification of iron scrap with slag under the Central Excise Tariff Act.3. Determination of the appropriate price for assessment if classified under Chapter 72.4. Applicability of the longer period of limitation for demanding duty.Detailed Analysis:Excisability of Iron Scrap:The appellants argued that the iron scrap recovered from the slag dump yard is not excisable, citing that slag is considered waste and not liable for duty. They referenced several decisions, including *CCE, Patna v. Tata Iron & Steel Co. Ltd.* and *Union of India v. Indian Aluminium Co. Ltd.*, which held that waste products like slag and dross are not excisable. However, the tribunal found that the scrap in question is iron scrap, not slag, and thus is excisable under sub-heading 7204.10 of the Central Excise Tariff Act. The tribunal concluded that the iron scrap recovered from the slag dump yard is an excisable commodity.Classification of Iron Scrap:The appellants contended that the slag waste containing iron should be classified under sub-heading 26.19, which covers slag, dross, and other waste from the manufacture of iron or steel. They argued that the iron scrap with slag does not fit the definition of waste and scrap under sub-heading 7204.10. However, the tribunal determined that the iron scrap recovered from the slag dump yard is correctly classifiable under sub-heading 7204.10, as it is generated from the manufacture of iron in the factory.Price for Assessment:The appellants claimed that the price of the iron scrap from the slag dump yard should not be compared with the price of CI skull scrap, as they undergo different processes and have different values. They argued that the price charged was the only consideration for the sale and that invoking Rule 6(b)(1) of the Valuation Rules was incorrect. The tribunal found that the appellants provided various facilities to the contractor (M/s. AMR Associates) free of charge, which should be included in the assessable value. The tribunal concluded that the tender price did not represent the correct assessable value and that the value should be determined under Section 4(1)(b) of the Central Excise Act read with Valuation Rules, 1975.Applicability of Longer Period of Limitation:The appellants argued that the extended period of limitation for demanding duty was not applicable, as they had declared all relevant information to the department. However, the tribunal upheld the Commissioner's finding that the appellants had willfully suppressed facts and misdeclared the value of the iron scrap, justifying the invocation of the longer period of five years under the proviso to Section 11A of the Act.Re-determination of Assessable Value:The tribunal found that the Commissioner incorrectly applied Rule 6(b)(i) of the Valuation Rules, which is applicable when excisable goods are used or consumed by the assessee in the production or manufacture of other articles. Since the goods were sold to M/s. AMR Associates and not used by the appellants, Rule 6(b)(1) was not applicable. The tribunal set aside the Commissioner's order and remanded the matter for re-determination of the assessable value under Rule 7 of the Valuation Rules and re-adjudication of the duty and penalty.Conclusion:The appeal was disposed of by way of remand, directing the Commissioner to re-determine the assessable value of the disputed scrap under Rule 7 of the Valuation Rules and re-adjudicate the matter concerning the value, consequential duty, and penalty. The cross-objections filed by the Revenue were also disposed of accordingly.