1998 (3) TMI 475 - AT - Central Excise

Analysis of Duty Exemptions for Ferro Alloys & Scrap Clearance: Implications for Manufacturers

STEEL AUTHORITY OF INDIA LTD. Versus COLLECTOR OF C. EX., BOLPUR

The Tribunal analyzed the duty exemptions under Notification No. 198/84-C.E. and Entry at S. No. 5 of Notification No. 62/85-C.E. regarding ferro alloys ... Waste and scrap Issues:Interpretation of Notification No. 198/84-C.E. and Entry at S. No. 5 of Notification No. 62/85-C.E. regarding duty exemption for ferro alloys and scrap clearance.Detailed Analysis:Issue 1: Interpretation of Notification No. 198/84-C.E. and Entry at S. No. 5 of Notification No. 62/85-C.E.The case involved the interpretation of Notification No. 198/84-C.E. and Entry at S. No. 5 of Notification No. 62/85-C.E. The appellants, a Public Sector Undertaking, received ferro alloys duty-free under Notification No. 198/84 for manufacturing goods under Item No. 25, not exempted from duty. They also cleared scrap under Entry at S. No. 5 of Notification No. 62/85-C.E. The dispute arose when duty was demanded on the scrap cleared at nil rate of duty. The department contended that both end products should have been cleared on payment of duty. The appellants argued they followed all conditions and should not be denied benefits. The Tribunal analyzed the two notifications and the conditions they imposed.Issue 2: Burden of Duty under the NotificationsThe Tribunal observed that under the notifications, duty shifts from the first manufacturer to the receiving manufacturer if goods are not used as intended. The burden of paying duty shifted to the present assessees under Notification No. 198/84 for ferro alloys not used in dutiable products. Similarly, under Entry at S. No. 5 of Notification No. 62/85-C.E., the burden was on the present assessees as the primary manufacturers of scrap. The Tribunal agreed that as long as the appellants followed the conditions, they were entitled to clear the scrap under the notification. It noted that the department sought duty on waste chargeable to nil rate, which was not justified.Issue 3: Remand for Settlement of DutyThe Tribunal referred to specific appeal numbers and noted the replacement of Notification No. 198/84 and Entry at S. No. 5 in later periods. Despite the changes, the language of the exemptions remained the same. Consequently, the Tribunal set aside the impugned orders and remanded the proceedings to the Assistant Collector for duty settlement based on their observations. The appeals were decided by way of remand, ensuring a proper review of the duty implications under the notifications.In conclusion, the Tribunal's analysis focused on the correct application of duty exemptions under the relevant notifications and the shift in duty burden from the first manufacturer to the receiving manufacturer. The decision to remand the proceedings for duty settlement reflected a fair consideration of the appellants' compliance with the notification conditions and the department's duty demands.