1993 (11) TMI 121 - AT - Central Excise

Definition of Virgin Aluminium: Scrap Ingots Not Considered Virgin; Clarity on IS Specification

COLLECTOR OF CENTRAL EXCISE, THANE Versus ELECTROMETAL INDUSTRIES

The Tribunal held that aluminium alloy ingots made from scrap cannot be considered as virgin aluminium for the purpose of a specific notification. It was ... Aluminium ingots Issues:1. Whether aluminium alloy ingots made out of scrap can be considered as virgin aluminium for the purpose of Notification No. 43/75-C.E., dated 1-3-1975.Analysis:1. The appeal revolved around the interpretation of whether aluminium alloy ingots made from scrap qualify as virgin aluminium for the purpose of a specific notification. The appellants argued that as per the definition of 'aluminium' under Tariff Heading 27, 'alloy aluminium' was included, and 'virgin aluminium' meant aluminium in crude form that has not been worked. They cited Tribunal decisions to support their stance. However, the department contended that as per the IS specification, virgin aluminium is metal obtained by electrolysis, while alloy was considered secondary aluminium.2. The Tribunal analyzed the arguments and found merit in the department's position. It clarified that 'virgin' and 'crude form' are distinct concepts, as evident from the language of the exemption notification. The Tribunal emphasized that ingots, whether alloyed or unalloyed, could be considered metal in crude form but not necessarily virgin unless directly from ore per the IS definition. The IS definition was crucial in distinguishing virgin from secondary metal. Consequently, the department's appeal was allowed, and the cross objection was rejected.3. A separate order by another Member (J) disagreed with the previous decision. The dispute arose from the manufacturing of Aluminium Castings from Aluminium Base Alloy ingots. The department argued that the benefit of the notification did not apply as the goods were not manufactured from waste or scrap. The assessees contended that the ingots were virgin aluminium in crude form, as they had not been used earlier and were obtained directly from the melting process. The ld. Collector (Appeals) supported the assessees' position, citing the Explanation II to Tariff Item No. 77, which clarified that aluminium includes alloys where aluminium predominates by weight over other metals.4. The ld. Collector (Appeals) held that ingots were virgin aluminium in any crude form, making the assessees eligible for exemption under the notification. The argument was supported by the definition of 'virgin' from the Oxford Dictionary, emphasizing that the ingots had not undergone any other process before manufacturing castings. The Tribunal concurred with this interpretation, noting that as the ingots were in crude form, they qualified as virgin aluminium and were entitled to the notification's benefit.5. The decision highlighted the importance of the Explanation II to Tariff Item 27, which clarified the inclusion of alloys in the definition of aluminium. The Tribunal dismissed the appeal, affirming that the ingots, being in crude form, were considered virgin aluminium and thus eligible for the exemption under the notification.This comprehensive analysis delves into the core issue of whether aluminium alloy ingots from scrap can be classified as virgin aluminium under the relevant notification, providing a thorough examination of the arguments presented and the Tribunal's ultimate decision.