JUDGMENT
V.K. Agrawal, Member (T)
1. The issue involved in this appeal, filed by M/s. Bhupendra Steels (P) Ltd., is whether the final products manufactured by them are eligible for exemption under Notification No. 208/83-C.E., dated 1-8-83.
2. Shri K.K. Anand, learned Advocate, mentioned that the Appellants manufacture Iron, and Steel products and claim benefit of Notification No. 208/83-C.E.; that the Central Excise duty has been demanded from them on the ground that the inputs used by them are not covered by the Headings/sub-headings mentioned in the notification and that the inputs were not ‘pieces roughly shaped’. The learned Advocate submitted that off cuts of flats, bars, rods, angles, sheets, punched sheets or cuttings or end cuttings of these products whether roughly shaped or not are not waste and scrap falling under Heading 72.03 of the Schedule to the Central Excise Tariff Act but are pieces roughly shaped falling under Heading 72.08 or alternatively angles, shapes and section falling under sub-heading 7210.10 of the Tariff. He relied upon the decision in the case of L.M.L. Ltd. v. CCE, Kanpur – 1997 (94) E.L.T. 273 (S.C.). He also submitted that as per the definition given in Note 6 to Section XV of the Tariff, waste & scrap of iron or steel means the waste or scrap fit for the recovery of metal or for use in the manufacture of chemicals; that the material purchased by the Appellants was fit for purposes other than recovery of metal also. He also relied upon the decision in the case of Tata Iron & Steel Company Ltd. v. CCE, Patna [1987 (30) E.L.T. 771 (Tribunal) = 1987 (12) ECR 681], wherein it was held that classification of goods is to be determined by their nature and size and not by their end use; that as the inputs are pieces roughly shaped or alternatively shape and section, these are covered by the notification.
3. Countering the arguments, Ms. Neeta Lal Butalia, learned SDR, submitted that the benefit of notification is available subject to the condition that the inputs specified in the table annexed to the notification are used to manufacture specified final products and the duty of excise leviable has already been paid; that it has been held by the Constitutional Bench of the
Supreme Court in CCE v. Dhiren Chemical Industries – 2002 (139) E.L.I. 3 (S.C.) that where the raw material is not liable to excise duty or such duty is nil, no excise duty is, as a matter of fact, paid upon it and to goods made out of such material, the notification, exempting finished goods if made from materials on which appropriate duty has already been paid, will not apply; that inputs in the present matter, are iron and steel scrap purchased from the open market which included items like trimming and forgings, and dismantled machines, old broken engineering goods, punched steel metal containers and other broken articles of iron which are non-duty paid and are not specified inputs. She also submitted that the Adjudicating Authority has given a specific finding in the Adjudication Order that the words “pieces roughly shaped” had been inserted on the invoices from the traders later by the Appellants; that accordingly goods are not classifiable as “pieces roughly shaped”; that all the inputs were discarded items as there were defects. Finally the learned SDR mentioned that the Tribunal in their own case [Bhupendra Steel (P) Ltd. v. CCE – 1994 (70) E.L.T. 151] has denied them the benefit of Notification No. 208/83-C.E. In reply the learned Advocate mentioned that the show cause notice was never issued on the ground of inputs being non duty paid and as such decision in Dhiren Chemical cannot be applied.
4.1 We have considered the submissions of both the sides. The learned Advocate has placed heavy reliance on the definition of waste and scrap as given in Note 6 to Section XV of the Tariff. Prior to 1988 the definition reads as under :-
“Waste and scrap of iron or steel fit only for the recovery of metal or for use in the manufacture of chemicals, but does not include slag, ash and other residues.”
4.2 The definition from 1988 reads as under : –
“Metal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons.”
5. It has been the case of the Revenue that the Appellants had purchased trimmings and forgings, old dismantled machines, old broken engineering goods, punched steel metal containers and other broken articles. These certainly cannot be treated as “pieces roughly shaped.” They have not rebutted the findings of the Adjudicating Authority effectively that these words were written later on the invoices issued by the traders. As far as the period after the introduction of present definition in Note 6 is concerned the inputs are squarely covered by the definition of waste and scrap and as waste and scrap does not find any mention in the Notification No. 202/88 or 90/88, the benefit of the notification has been correctly denied to them. Even in respect of earlier definition, the Appellants have not proved that the material purchased by them could be used for purposes other than for the recovery of metal. As the benefit of Notification is being sought by them, the onus is on the Appellants to prove that they have used the inputs specified in the notification. The facts in LML cases are different inasmuch as the appellants therein were working on duty paid steel sheets for the manufacture of parts of scooters and some portions of the sheets remained and some of these portions were used by the Appellants for the manufacture of small parts of the scooters. The Appellants have not brought any evidence on record to show
that the materials purchased by them are such small portions. Accordingly we hold that the benefit of notification is not available to their final products as the inputs used by them are not specified in the notifications. The appeal is thus rejected.