TaxTMI 
TaxTMI 
1989 (5) TMI 326
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....tment's case is that some of the residue is in the form of off-cuts and these are being fit to be used in manufacture of further steel articles and these in fact are being used in some cases in the ancillary units of their factory for manufacture of small parts of scooter. The department's contention, therefore, is that these off-cuts are nothing but steel sheets and they should have been cleared at the rate of duty at which they were brought in the factory and a credit thereof was taken under the Modvat Scheme. In other words, the rate of duty applicable to these off-cuts, according to the department, should be Rs. 715/- per M.T., the rate applicable to the sheets. 2. The appellant company, on the other hand, contends that these off-cuts are nothing but waste and scrap fit only for recovery of metal and therefore, they can be cleared on payment of duty at the rate of Rs. 365/- per M.T. Alternatively, the appellants claim that these are angles, shapes and sections not elsewhere specified (NES) falling under Tariff sub-heading 7210.10. 2.1. Dealing with the contention of the appellants before her, regarding the classification of off-cuts as waste and scrap under Tariff....
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....olled flat product rolled in rectangular section of thickness below 5 mms, and supplied in straight lengths, the width of which is at least hundred times the thickness and the edges are either milled, trimmed, sheered or clam cut and includes a corrugated sheets." [Emphasis supplied by the Ld. Representative] He urges that after the processing of the sheet the residue is never in rectangular section and therefore, on this ground alone the residue cannot be treated as a sheet as defined in the Tariff Act and the classification has to be made according to this statutory definition. According to the learned Representative the off-cuts do not answer the description of the sheet since they are of irregular size and shape. They are neither flat nor rectangular in shape nor they are of thickness below 55 mms, and do not have straight length and width with their edges, not being milled or trimmed, the off-cuts in question cannot be regarded as sheets. In support of his proposition the learned Representative cites the CEGAT's decision in the case of L.M. Van Moppes Diamonds Tools of India v. Collector of Central Excise [1986 (24) E.L.T. 623 (Tri.)]. He relies on (i) Hindusta....
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....heets for making out components and parts for scooters within the factory and there is no removal of steel sheets as such. 4. Alternative submission of the learned Representative for classification of the off-cuts is under sub-heading 7210.10 which is a residuary sub-heading for angles, shapes and sections NES. In support of this submission, the. learned Representative relies on the analogy of a letter dated 29th/30th April 1987 addressed by the Collector of Central Excise, Indore to the Government of India seeking clarification in regard to cutting of plates for the purpose of classifying the same under Tariff sub-heading 7210.10 and not as plates as themselves (i.e. not under sub-heading 7212.40). He submits that the aforesaid letter of CCE Indore was duly considered by the Government of India which by its letter dated 21-8-1987 agreed with the views expressed by the Collector of Central Excise, Indore and accepted the classification of cuttings of plates under 7210.10. 5. Replying to the various contentions of the learned Representative, Shri V.M. Doiphode, the learned SDR for the department has urged that off-cuts are not used for recovery of metal. Therefore, the content....
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....Other sections include such miscellaneous shapes as teal II-piles, sheet piling, the plates, cross-ties, and those for special purposes. The production of shapes, as enumerated above, involves a number of processes which are generally common to all of them. These processes include beating of the bloom rolling to proper contour and dimensions, cutting while hot to lengths that can be handles, cooling to atmospheric temperature, straightening, cutting to ordered lengths, inspecting and shipping". He submits that these processes are not undertaken by the appellants and therefore, off-cuts can by no stretch of imagination be treated as angles, shapes and sections falling under sub-heading 7210.10. As regards the question on discrimination vis-a-vis another manufacturer of scooters in U.P., the learned SDR points out that discrimination is not a relevant issue before the Tribunal. The Tribunal has to decide in accordance with law and this is not the proper form before which an issue of discrimination can be raised. 6. Replying to the points raised by the learned SDR, the learned Representative for the appellants pointed out that the Tribunal's judgment No. 111-112 dated 27-2-1986....
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.... of credit that has been allowed in respect of such inputs under Rule 57A. (2) Notwithstanding anything contained in Sub-rule (1), a manufacturer may, with the permission of the Collector of Central Excise and subject to such terms and conditions and limitation as he may imposed, remove the inputs as such, or after the inputs have been partially processed during the course of manufacture of final products, to a place outside the factory, - (a) for the purposes of test, repairs, refining, reconditioning or carrying out any other operations necessary for the manufacture of the final products and return the same to his factory for further use in the manufacture of the final products, provided that the waste, if any, arising in the course of such operations is also returned to the said factory, or (b) for the purpose of manufacture of intermediate products necessary for the manufacture of the final products and return the said intermediate product to his factory for further use in the manufacture of the final products, provided that the waste, if any, arising in the course of manufacture of such intermediate products is also returned to the said factory. [Provid....
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....onsumption or for export on payment of appropriate duty. Proviso to Sub-rule (i) also provides that where the input is removed from the factory for home consumption on payment of excise, such duty of excise shall in no case be less than the amount of credit taken under the scheme. Sub-rule (2) provides for situation where the input is to be removed for partial processing or it is to be removed after partial processing for certain other processes and brought back to the factory of the user for ultimate use in the final product. Sub-rule (3) provides for utilisation of Modvat credit for specific purposes. We are not concerned with this sub-rule in this case. Sub-rule (4) provides for removal of waste on payment of duty as if such waste is manufactured in the factory or for its removal without of duty if it is not liable duty or duty has been specifically exempted on such waste or the waste may be destroyed in the presence of a proper officer on the application by the manufacturer if found unfit for further use or not worthy the duty payable thereon. Sub-rule (5) provides that no part of the Modvat credit of duty shall be utilised except as provided in Sub-rule (3); we are not concern....
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....nition of 'waste and scrap'. Any other use of the 'residue' to be described as 'waste and scrap' must be eliminated before it can be termed as 'waste and scrap'. 8.2. There is yet another reason which compels us to discard the contention of the appellants that off-cut is not in rectangular shape and in straight length to term it as sheet. If we accept this contention, then an entire sheet can be converted into a non-sheet by cutting one small corner of the sheet and thereby earn a cash credit of Rs. 350/- per metric tonne (Rs. 715-365) without doing anything else. Entire purpose of the Modvat Scheme of avoiding the cascading effect of duty on the final product would be subverted. The scheme would turn into a gold-mine for an assessee rather than of reducing the burden of duty on the final product. By taking an extreme example of the aforesaid type, we are not saying for a moment that the appellants are indulging in it. Our purpose lies in pointing out the infirmity in the contention of the appellants. Such a contention, if accepted would lead to evasion of duty. Accordingly, it deserves to be turned down and we do so unhesitatingly. 9. Neverthe....