1998 (5) TMI 179 - AT - Central Excise

Appellants' Classification Dispute Resolved: Benefits Granted

The appellants disputed the classification of zinc dross and ash, arguing for it to be waste and scrap under Heading 7902.00 instead of unwrought zinc. ... Classification Issues: Classification of zinc dross and ash under central excise tariff headings; Benefit of Notification No. 178/84; Availment of Modvat credit by the manufacturers.Classification of Zinc Dross and Ash:The dispute revolved around the correct classification of zinc dross and ash by the appellants, arising during the manufacturing of castings. The department classified it as unwrought zinc under sub-headings 7901.00 and 7901.20, while the appellants argued for it to be waste and scrap under Heading 7902.00. The Collector of Central Excise, in the impugned order, upheld the appellants' classification under Heading 7902.00 and granted the benefit of Notification No. 178/84 until 13-5-1988, which was later denied post the amendment in Notification No. 185/88. The appellants were granted the benefit for clearances made on 2-3-1990 after reversing Modvat credit, but duty was confirmed for clearances on 27-3-1989.Benefit of Notification No. 178/84:Notification No. 178/84 provided benefits subject to conditions, including non-availment of Modvat credit on inputs. The amendment through Notification No. 185/88 restricted the benefit if Modvat credit was availed. The appellants contended that they did not avail Modvat credit for the inputs related to zinc dross and ash cleared on 27-3-1989. The adjudicating authority, however, presumed otherwise based on the appellants' overall Modvat credit history since 1986-87. The Tribunal found the presumption unjustified, emphasizing that being under the Modvat scheme did not automatically mean credit was taken for all inputs. The matter was remanded for verification of Modvat credit availment based on statutory records.Availment of Modvat Credit by Manufacturers:The appellants maintained that they did not avail Modvat credit for the disputed inputs leading to zinc dross and ash cleared on 27-3-1989. The Tribunal noted the appellants' specific contentions and their willingness for verification by the department from relevant records. It highlighted that the absence of duty paid documents could mean non-availment of Modvat credit, requiring verification. The Tribunal set aside the impugned order, directing the adjudicating authority to examine the factual position regarding Modvat credit availment from maintained records, ultimately disposing of the appeal through remand.