1998 (11) TMI 283 - AT - Central Excise

Tribunal rules in favor of Diamond Rolling Mills in duty exemption appeal

The Tribunal ruled in favor of the appellants, M/s. Diamond Rolling Mills, in their appeal against the duty demand and penalties imposed for M.S. Round ... Iron and steel products - Exemption under Notification No. 208/83-C.E. Issues:Appeal against Order-in-Original regarding duty exemption under Notification No. 208/83 for M.S. Round bars manufactured from ship breaking scrap.Detailed Analysis:1. Issue of Duty Exemption Eligibility:The appellants, M/s. Diamond Rolling Mills, faced a demand for duty on M.S. Round bars removed in 1987 under Notification No. 208/83 due to allegations that the finished goods were made from non-duty paid ship breaking scrap. The Additional Commissioner confirmed the duty demand and imposed penalties. The appellants argued that goods cleared at a NIL rate of duty under an exemption notification should still be considered as cleared on payment of duty at the appropriate rate. They cited legal precedents supporting their stance.2. Interpretation of Notification No. 208/83:The Respondent contended that the benefit of Notification No. 208/83 required that inputs must have suffered duty instead of being exempted, as ship breaking scrap was exempted from duty payment under another notification. The Second Proviso to the notification was highlighted, indicating that some duty should have been paid on the inputs for the exemption to apply. Legal cases such as Trigrama Steel and Andhra Re-rolling Works were referenced to support this interpretation.3. Judicial Precedents and Interpretation:The Tribunal analyzed the conditions of Notification No. 208/83, emphasizing that the final products must be made from inputs on which excise duty or additional customs duty has already been paid, and no credit of duty paid on the inputs should have been taken. The Tribunal referred to the Supreme Court's decision in Usha Martin Industries case, where a broad interpretation was given to the term 'appropriate duty' and exemption was allowed even for goods made from raw materials not subject to any excise duty.4. Decision and Ruling:The Tribunal rejected the argument that the word 'appropriate' must be prefixed before duty in the notification for the Usha Martin Industries case ratio to apply. It clarified that the duty leviable is the appropriate duty, and the second proviso of the notification only restricts the availing of credit for duty paid on inputs. The Tribunal concluded that the appellants were eligible for the benefit of Notification No. 208/83 for the finished goods manufactured by them, setting aside the impugned order and allowing both appeals.In conclusion, the Tribunal's detailed analysis focused on the interpretation of the exemption notification, the eligibility criteria for duty exemption, and the application of legal precedents to determine the appellants' entitlement to the benefit under Notification No. 208/83.