ORDER
G.R. Sharma, Member (T)
1. The captioned two appeals are filed by the appellants against the findings of the Ld. Commissioner (Appeals) who in the impugned order held that untrimmed sheets are marketable but are eligible to the concession under Notification No. 134/94, that Notification No. 1 /93 is not applicable to untrimmed sheets; that benefit of Notification No. 135/94 is not available to unwrought copper slab and that slab of copper is dutiable and is not eligible to the benefit of Notification No. 19/88.
2. The facts of the case in brief are that the appellants are engaged in the manufacture of Brass and Copper Sheets and Circles and unwrought copper; brass and copper sheets and circles are supplied by the appellants to the customers to use them in the manufacture of utensils and handicrafts. The manufacturing process involves melting of brass scrap, copper scrap and zinc scrap. Molten metal is then cast into billets/slabs, they are hot-rolled into untrimmed sheets and further are cold rolled into trimmed sheets. In the process untrimmed sheets emerge at the intermediate stage and trimmed sheets emerge at the final stage. In the process of manufacture, unwrought copper known as slabs is also obtained. These slabs are used to manufacture trimmed sheets which were sold to utensil manufacturers. Waste in the form of dross and skimmings and scrap of copper also arise. Waste and scrap of copper is recycled. The appellants classified the trimmed sheets under heading No. 74.09 of Central Excise Tariff and paid duty at the rate of 15% ad valorem till 27-10-1994. They also availed Modvat credit of duty paid on the inputs. No duty was, however, paid on untrimmed sheets since the same was not considered as excisable product being not marketable.
3. Notification No. 42/94, dated 1-3-1994 was amended by Notification No. 135/94, dated 27-10-1994. S.No. 9 was introduced to the notification in terms of which the goods falling under Heading No. 74.09 other than untrimmed sheets or circles of copper if intended for use in the manufacture of utensils and handicrafts were exempt from payment of duty. Simultaneously, Notification No. 134/94, dated 27-10-1994 was issued exempting untrimmed sheets or circles of copper falling under heading No. 74.09 of the Schedule to the Central Excise Tariff from so much duty of excise leviable thereon as was in excess of Rs. 2,000/- per ton, provided no credit of duty on the inputs was taken. The appellants filed classification list claiming the benefit of S.No. 9 of Notification No. 42/94 as amended in respect of trimmed sheets, S.No. 8 for the unwrought copper known as slabs and S.No. 10 for copper waste and scrap. The appellants also claimed the benefit of Notification No. 19/88 for the copper slag/dross. Show Cause Notices were issued wherein it was proposed to amend the classification list filed by the appellants by treating the untrimmed sheets/circles as excisable commodities. It was also proposed to re-classify the slag/dross of copper. In reply to SCN the appellants submitted that untrimmed sheets were not marketable and hence not excisable. The Asstt. Commissioner adjudicated the case confirming the demand on untrimmed sheets and slabs of copper by denying them the benefit of Notification No. 135/94 and 134/94 and classified slag/dross under Chapter Heading 2620.00. On appeal before the Commissioner of Central Excise (Appeals), the Commissioner (Appeals) held as indicated above.
4. Shri G. Shiv Das, ld. Counsel appearing for the appellants submitted that untrimmed sheets are not excisable products since the same are not marketable; that there was no evidence placed on record to show that untrimmed sheets are marketable or even capable of being marketed; that the well settled position in law is that the goods are not excisable unless they are marketable. Ld. Counsel cited and relied upon the decision in the following cases in support of his contention :
1. Dhamngadhara Chemical Works Ltd. v. Union of India -1997 (91) E.L.T. 253 (S.C.)
2. Union of India v. Delhi Cloth & General Mills Co. Ltd. -1997 (91) ELT. 23 (S.C.)
3. Union of India v. Delhi Cloth & General Mills Co. Ltd. -1997 (92) E.L.T. 315 (S.C.)
4. Bhor Industries Ltd. v. CCE, Bombay -1998 (100) E.L.T. 12 (S.C.)
Ld. Counsel submitted that the onus to prove the marketability of the goods is on the Department. In support of his contention he cited and relied upon the decision of the Apex Court in the case of Nirlon Synthetic Fibres & Chemicals Ltd. v. Collector reported in 1996 (86) E.L.T. 457 (SC). He submitted that this onus has not been discharged by the Revenue.
5. Ld. Counsel submitted that the appellants are a Small Scale Unit and were entitled to the benefit of Notification No. 1/93 on untrimmed sheets even if it is assumed to be dutiable. He submitted that admitted position was that untrimmed sheets are captively consumed in the manufacture of trimmed sheets. He referred to Explanation II and VI of Notification No. 1/93 dated 28-2-1993 as amended and submitted that Explanation II stipulated that for the purposes of computing the aggregate value of clearances under this Notification, the clearances of any excisable goods which are chargeable to Nil rate of duty or which are exempted from the whole of duty of excise leviable thereon by any other notification (not being a notification where exemption from the whole of duty of excise leviable thereon is granted based upon the value or quantity of clearances made in a financial year) issued under Sub-rule (1) of rule 8 of the said Rules or Sub-section (I) of Section 5A of the said Act, shall not be taken into account. Ld. Counsel submitted that while computing the aggregate value of clearances the value of trimmed circles/sheets will not be included in-as-much as trimmed sheets qualified for exemption under Notification No. 135/94.
6. Referring to Explanation VI, ld. Counsel submitted that Explanation VI provides
“Where any specified goods (hereinafter referred to as inputs) are used for further manufacture of specified goods within the factory of production of inputs, the clearances of such inputs for such use shall not be taken into account for the purposes of calculating the aggregate value of clearances under this notification”.
7. Ld. Counsel submitted that the admitted position was that un-trimmed sheets were captively consumed in the factory of the appellant or manufacturer of trimmed sheets. He submitted that according to the above Explanation while computing the aggregate value of clearances for purposes of Notification No. 1/93, the value of untrimmed sheets will not be includible. He submitted that reading these two provisions of Explanation II & VI together clearly shows that even if untrimmed sheets are considered as dutiable they will always be exempted for purpose of Notification No. 1/93 as the appellants were not manufacturing any other items and therefore, the aggregate value of clearances shall always remain less than the limit prescribed for exemption.
8. Ld. Counsel further submitted that the Unwrought copper slabs are exempt under Notification No. 42/94 as they are ultimately used in the manufacture of utensils and handicrafts. He submitted that the finding of the authorities below that there should be direct use for benefit under his notification is misconceived. He submitted that the benefit cannot be denied on the ground that these slabs are used in the manufacture of utensils through a number of stages mainly untrimmed and trimmed circles. In support of his contention Ld. Counsel cited and relied upon the decision of this Tribunal in the case of Goodlass Nerolac Paints Ltd. v. CCE reported in 1991 (51) E.L.T. 351.
9. On the excisability of copper slag/dross the counsel submitted that it is not excisable. In support of his contention he cited and relied upon the decision of the Hon’ble Supreme Court in the case of UOI v. Indian Aluminium Co. reported in 1995 (77) E.L.T. 268. Alternatively, Ld. Counsel submitted that the benefit of Notification No. 19/88 would be available to slag and it cannot be denied on the ground that on the inputs used in the manufacture of trimmed sheets, Modvat credit was taken. It was submitted by the Ld. Counsel that during the material period, the appellants had not taken Modvat credit.
10. Shri H.K. Jain, Ld. DR appearing for the respondent submitted that in so far as denial of benefit under Notification No. 134/94 on untrimmed sheets is concerned, untrimmed sheets are marketable in-as-much as the appellants themselves had claimed the benefit of Notification No. 134/94 on untrimmed sheets; that untrimmed sheets are identifiable goods and they are stated under S. No. 9 of Notification No. 42/94. He submitted that since the tariff recognises the existence independent of any thing else of untrimmed sheets and since the appellant themselves had claimed the benefit of this Notification in the classification list, therefore, untrimmed sheets are marketable.
11. In so far as the benefit of Notification No. 1/93 is concerned, Ld. DR submitted that since untrimmed sheets will be dutiable and their value of clearances will be added therefore, the benefit of Notification No. 1 /93 will not be available to the appellants. In regard to unwrought copper slabs and copper slabs, Ld. DR submitted that the appellants are purchasing such scrap from market, they are not directly used in the manufacture of utensils and handicrafts and unwrought copper and copper slabs go through a number of processes before being used in the manufacture of utensils and handicrafts since they are not directly used in the manufacture of utensils and handicrafts, therefore, the benefit of Notification No. 42/94 will not be available to the itmes. On the excisability of slag, Ld. DR reiterated the findings of the Ld. Commissioner (Appeals).
12. Heard the submissions of both the sides and perused the evidence on record and the case law cited and relied upon. Insofar as the durability of untrimmed sheets is concerned, we find that the contention of the appellant was that they are not marketable. The Department alleged that since they have been declared as a separate item and since they are mentioned in exemption Notification, therefore, they are marketable. On careful analysis of the rival submissions, we find that no evidence has been placed on record to prove that untrimmed sheets are marketable and since marketability of these goods is not proved, therefore, they will not be liable to duty. Additionally, we find that Explanation VI to Notification No. 1/93 stipulates that the goods captively consumed within the factory of production, the clearances of such inputs for such use shall not be taken into account for the purposes of calculating the aggregate value of clearances under this Notification. Untrimmed sheets are used captively for manufacture of trimmed sheets. Trimmed sheets are exempted therefore, for purpose of calculating the aggregate value of clearances, untrimmed sheets become important and since the value of clearances of untrimmed sheets which are captively used is not to be taken into account, therefore, the aggregate value of clearances shall never exceed the upper limit for exemption under Notification No. 1/93 which shall never be reached and the goods shall always remain eligible for exemption insofar as untrimmed sheets are concerned.
13. In regard to the admissibility of the benefit of Notification No. 1 /93, we find that the benefit of this notification is admittedly available to the appellants. It has been denied only on the ground that the value of untrimmed sheets will be added for calculating the aggregate value of clearances and since there is a limit, therefore, the benefit of Notification No. 1/93 will not be available, is wrong. Explanation VI to this Notification is very clear which inter alia provides that if the goods are captively consumed in the factory of manufacture then the value of goods so captively consumed shall not be taken into account for computing the aggregate value of clearances and thus the value shall not exceed the fully exempted limit as the appellants are not manufacturing any other product.
14. Having regard to the discussions, we hold that no duty shall be chargeable on untrimmed sheets.
15. In so far as unwrought copper and slabs are concerned, we find that they will be eligible for exemption under Notification No. 42/94 in-as-much as they are used as basic inputs for manufacture of trimmed sheets which are finally used in the manufacture of utensils and handicrafts. There is nothing in Notification No. 42/94 to indicate that it limits the exemption only to goods which are directly used in the manufacture of utensils and handicrafts.
16. In so far as slag/dross of copper and copper alloys are concerned, we note that the decision of the Apex Court in the case of UOI v. Indian Aluminium Co. will be fully applicable to this case. In that case the Apex Court held that dross and skimmings of aluminium are not goods and hence not dutiable.
17. Having regard to the above discussions and findings, the two appeals are allowed. Consequential relief, if any, shall be admissible to the appellants in accordance with law.