ORDER
P.K. Kapoor, Member (T)
1. The appellants have an electric furnace and are engaged in the manufacture of steel ingots. As against tariff rate of Rs. 350/-per MT during the material time, steel ingots covered by CET heading No. 26 when manufactured by the electric furnace were exempt from central excise duty in excess of Rs. 200/- per MT in terms of Notification No. 53/80 dated 13-5-1980. This concession was subject to the condition that ingots were manufactured out of raw materials specified in the notification. The appellants claimed that during the period 1-4-1981 to 30-9-1982 they received 273.273 MT of defective steel ingots out of which they produced after remelting 240.636 MT of ingots. The Assistant Collector issued a show cause notice on 20th May, 1983 seeking to recover differential duty at Rs. 130/- per MT on the ground that defective steel ingots not being one of the specified raw materials the benefit of concessional rate of duty at Rs. 200/- per MT in terms of Notification No. 53/80-C.E., dated 13-5-1980 was not admissible. The appellants contended that the ingots produced by them did not attract any duty since recasting of defective ingots did not amount to manufacture. They also claimed that they were entitled to the benefit of the concessional rate of duty under Notification No. 53/80-C.E., dated 13-5-1980 since defective steel ingots could also be deemed as “Steel Melting Scrap”. The Assistant Collector did not accept the appellants’ contentions and confirmed the demand vide his order dated 8-9-1983. The appeal filed by the appellants was rejected by the Collector (Appeals).
2. On behalf of the appellants we heard the learned advocate Shri G.S. Bhangoo. He contended that recasting or remaking of the defective ingots into ingots did not amount to manufacture since as a result of this process no new product results. In this regard he referred to the Supreme Court’s decision in the case of Union of India v.Delhi Cloth and General Mills [AIR 1983 SC 79]. He also placed reliance on the decision of the Tribunal in the case of Orissa Cement Ltd. v. Collector of Central Excise and Customs [1990 (50) ELT 130] and Tata Tea Limited v. Collector of Central Excise [1990 (50) ELT 96]. Shri Bhangoo added that his alternative plea was that defective steel ingots could be deemed as “steel melting scrap” and ingots produced in electric furnace out of defective ingots or melting scrap enjoyed the concessional duty under Notification No. 53/80.
3. On behalf of the department the learned JDR, Shri Sohal argued that the process of recasting of defective ingots after melting would constitute manufacture since the defective ingots lose their identity and are transformed into an altogether new product. He contended that the case law cited on behalf of the appellants was not relevant since in those cases the items which were worked upon even after processing were not transformed into any new product. He added that the appellants’ claim that defective steel ingots could be deemed as steel melting scrap was also devoid of any force. He contended that in the absence of any evidence to the effect that the ingots used by the appellants for remelting were defective to such extent so as to be unfit for any other use, ingots in question could not be accepted as constituting steel melting scrap.
4. The first point raised by the appellants is that steel ingots used by them being defective were to be treated as ‘steel melting scrap’ entitling them to the concessional rate of duty on the manufacture of steel ingots in terms of Notification No. 53/80 as amended. In this regard it is seen that in the relevant Central Excise Tariff schedule the term ‘steel melting scrap’ was not defined. Hence, as observed by the Supreme Court in the case of Star Paper Mills Ltd. v. CCE [1989 (43) ELT 178 (SC)] it would be permissible to refer to the dictionary meaning of the word scrap. According to the Chambers Twentieth Century Dictionary word ‘Scrap’ means “a small fragment: a piece of left-over food : a remnant : a punched-out picture, cutting, or the like, intended or suited for preservation in a scrap-book: residue after extraction of oil from blubber, fish etc.: metal clippings or other waste : anything discarded as worn-out, out of date, or useless”. According to the same dictionary ‘Scrap Iron’ means “Scraps of iron, of use only for melting”.
5. It, therefore, follows that steel melting scrap would consist of old and discarded items of steel which are unfit for any use other than melting for extraction of metal. In this case recasting of the ingots after melting is indicative of the fact that the nature and the extent of the defect in the ingots in question was such that they had been rendered unfit for any use other than melting for retrival of metal. Had the ingots used by the appellants for melting been usable for any other purpose such as re-rolling on account of the defects being minor, it would not have been prudent on the part of the appellants to melt them for recasting. We, therefore, accept the appellants’ claim that the steel ingots produced by them out of defective ingots could be deemed as having been produced out of “steel melting scrap” entitling them to the concession under Notification No. 53/80.
6. The alternative plea advanced by the appellants is that they were not liable to pay the duty demanded since remaking of defective ingots into ingots after melting and recasting did not amount to manufacture. In support of their claim they have placed reliance on the Tribunal’s decision in the case of Orissa Cement Ltd. v. CCE (Supra) in which it was held that refund of duty under Rule 173L was admissible even when the returned defective bricks were crushed to a powder and re-manufactured afresh after mixing with other material. Similarly in the ease of Tata Tea Ltd. v. CCE (Supra) which has also been relied by the appellants it was held by the Tribunal that benefit of Rule 173L was admissible when dust tea received back in another unit of the appellants for the purpose of manufacturing tea of another variety. It is seen that these decisions are not relevant to the case before us since in respect of the defective ingots in question the appellants had not claimed refund under Rule 173L by fulfilling the prescribed procedural requirements and on the basis of the proof of payment of duty on the returned defective steel ingots.
7. In view of the foregoing the order appealed against is set aside and the appeal is allowed.