ORDER
V.K. Agrawal, Member (T)
1. These are three application as under for the purpose of waiver of pre-deposit and stay of the demand of the Central Excise duty and penalty imposed by the Commissioner of Central Excise under three separate orders.
DUTY PENALTY
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M/s. Luxmi Rolling Mills Rs. 69,06,873.56 70 lakhs
Shri Vishwakarma Steels & Rs. 44,50,814.00 45 lakhs
Allied Industries
M/s. Ankur Steels Rs. 54,37,808.44 55 lakhs
3. As the issue involved in the three applications is the same these are being disposed of by this common order.
4. Shri Gopal Prasad, ld. Counsel, submitted that the three applicants were purchasing used rail sleepers, rails, wheels etc. either from auction directly from the Railways or from the Traders who have purchased these materials from Railways. As these materials are re-rollable covered by SI. No. 2A of Notification No. 202/88, the benefit of the duty exemption provided under the said notification to the finished products was available to them. He, further, mentioned that when these materials were purchased by Railways, these were duty paid as no exemption was available to them, in all these products. Use all these products will not take away the duty paid character and as these were clearly recognisable as duty paid, the department’s contention that these are non-duty paid is not correct. The burden to prove that the inputs were non-duty paid is on the department which has not been discharged. He also placed reliance on the decision of the Larger Bench of this Tribunal in the case of Machine Builders v. CCE -1996 (83) E.L.T. 576 (Tribunal) in which it was held that it is for the Revenue to verify the claim by conducting such enquiries as is necessary. The ld. Counsel also drew our attention to the explanation to Notification No. 202/88 which provided that for the purpose of notification all stocks of inputs in the country except such stocks as are clearly recognisable as being non-duty paid shall be deemed to be duty paid input.
5. Shri D.S. Negi, ld. SDR submitted that all the applicants had pur- chased waste and scrap and not rail sleepers, wheels etc. Railways have sold them only as waste and scrap and as no duty was paid on such waste and scrap these cannot be regard as duty paid. These waste and scraps sold by Railways hau not been generated from any manufacturing activities. He further mentioned that it has not been disputed or controverted that there was sale and purchase of waste and scrap by the Railways. Regarding the applicability of the explanation the ld. DR submitted that the explanation speaks about “All stocks of inputs in the country”; that this expression means, the stock which was lying at the time of promulgation of the notification and not anything which was not in existence at that time. Finally he submitted that the benefit of Notification No. 202/88 is available only if the inputs specified in the notification are used for manufacturing of finished products; that waste and scrap found place nowhere in the description of the inputs given in the table annexed to the notification. Ld. DR also drew the analogy from the waste and scrap generated from the ship breaking and relying upon the decision in the case of Tigrania Metal & Steels v. CCE, Aurangabad -1994 (73) E.L.T. 76 (Tribunal) and Andhra Re-rolling Works Ltd. v. U.O.I. and Ors. -1986 (25) E.L.T. 3 (S.C.) submitted that the material received from breaking of ship was described as waste and scrap and not the various products which were used in the ship building. In his reply Shri Gopal Prasad, ld. Counsel submitted that they have from the beginning purchased rail sleepers etc. and not waste and scrap. Gopal Prasad also relied upon the Board’s Circular 27/89, dated 21-8-1989 in which it was clarified that “Heading 72.04 read with Note 6(b) of Section XV and HSN Explanatory Notes” would cover such waste and scrap as would generally be used for remelting and consequently would not cover re-rollable scrap. In reply ld. DR submitted that the word re-rolling has not been described anywhere in the tariff. These were words used in the Trade. The waste and scrap is not mentioned in the notification as one of the inputs.
6. We have considered the submissions made by both sides and observed that the various contentions made by both sides regarding the terminology of the re-rolling material waste and scraps and whether the inputs were recognisable as duty paid or not has to be considered at the time of regular hearing. We also found that the issue involved is arguable. For the purpose of hearing the appeals on merits, the applicants are required to deposit the sums as under:
Luxmi Rolling Mills Rs. 7 lakhs Shri Vishwakarma Steels & Allied Rs. 4.5 lakhs Industries M/s. Ankur Steels Rs. 5.5 lakhs
The amount specified above are required to be deposited within 10 weeks and on such deposits we waive the pre-deposit of the remaining amount of duty and penalty and stay recovery of the same during the pendency of the appeal. Failure to comply with the direction will result in the dismissal of the appeals without any further notice. All the three matters to come up for mention compliance on 1-2-1999.