ORDER
S.L. Peeran, Member (J)
1. This Revenue appeal arises from the OIA No. 110/2004-CE dated 15.12.2004. Para 3 of the order is reproduced herein below:
3. I have gone through the records of the case and the submissions made by the appellants at the time of personal hearing. The issue involved in the appeal is whether the appellants are entitled to the benefit of notification No. 202/88 well as 90/88 or not. The appellants are manufacturers of M.S. Rods, out of re-rollable material and scrap purchased from the open market. The appellants have manufactured M.S. Rods (919.166 MT) and cleared the same without payment of excise duty by claiming the exemption under notification No. 90/88 and 202/88. This is the contention of the appellants that inputs/raw materials utilized by them for the manufacture of M.S. Rods answer to the description of inputs/raw materials given in column 2 of these two notifications. They also contended that the said raw material/scrap has been purchased from the open market (under the cover of invoices/bills) and the same has to be deemed as duty paid. I find that the above contention of the appellants is in conformity with the Circular of the Ministry dated 21.9.89, which has been issued with specific reference to notification No. 202/88 dated 20.5.88. I am in agreement with the contentions raised by the appellants in this regard and hold that the impugned order dated 29.10.2004 is contrary to the contents of the Ministry’s Circular dated 21.9.89 and the wordings of the notifications 90/88 and 202/88 and hence is not sustainable. The matter was remanded by the Honourable Tribunal in 1996 to the adjudicating authority to give a specific finding on two important aspects of this matter, namely, whether the description of re-rollable scrap answers to the description of inputs mentioned in column 2 of the above said notification and whether the proceedings are hit by the limitation of time (as pleaded by the appellants)? I find that the adjudicating authority has not given any finding on the above aspects. Hence the order is not legal and proper and deserves to be set aside on this count. The adjudicating authority has gone beyond the scope of the remand order. The order is, therefore, a non-speaking order and is not tenable. From the facts of the case, I find that the demand is barred by limitation of time as there is no mention in the show cause notice whether there is any suppression of facts or willful mis-statement on the part of the appellants. The adjudicating authority has not taken into consideration, the plea of limitation raised by the appellants, which has a vital bearing on the whole issue. Hence, the order is bad under the law and is not tenable. I also find that the adjudicating authority has passed the impugned denovo order without giving a chance of personal hearing to the party. The adjudicating authority fixed the personal hearing on 27.9.2004, but due to absence/non-availability of the adjudicating officer, no personal hearing took place on the said date. Not giving a chance of personal hearing, amounts to violation of principles of natural justice. Hence, the proceedings are not sustainable under the law. It is also not explained how the matter was taken up for denovo adjudication after a lapse of eight years. If the department had a case against the appellants, it should have taken the required action in time. Even as per explanation under notification No. 202/88 which reads that “for the purpose of this notification, all stocks of inputs in the country, except such stocks as are clearly recognizable as being non duty paid or charged to NIL rate of duty, shall be deemed to be the inputs on which duty has already been paid.” In view of this, all re-rollable scraps purchased by the appellants from the dealers in the open market, is to be treated as duty-paid and exemption as envisaged under the provisions of notifications 90/88 and 202/88 is to be extended to the appellants. There is no need to bring the changed definition of metal waste/ and scrap which reads as “metal waste/ and scrap from the manufacture or mechanical working of metals and metal goods non-usable as such because of breakage, cutting, wear or other reasons”. By adopting this changed definition, it was alleged in the show cause notice that M.S. Rods manufactured out of scrap will not be covered by notification No. 90/88 and 202/88. This reasoning of the department is not acceptable. In view of Ministry’s Circular No. 27/89 dated 21.9.89, and the explanation given in the notification, the products manufactured by the appellants, are eligible for exemption from duty. The issue regarding classification of iron and steel waste and scrap under Central Excise Tariff Act, 1985, was examined by the Ministry (CBEC, New Delhi). The contents of Ministry’s circular are reproduced for the sake of easy reference. “I am directed to say that a doubt has arisen on the classification of Iron and Steel waste and scrap in the CET, 1985. The matter has been examined by the Board and it is felt that heading 7204 would not cover an article which could be converted into another article by hot rolling without it being necessary to remit the metal first The Board, therefore concluded that heading No. 7204 read with Note 8a to Section XV and HSN Explanatory Notes at pages 987-988 would cover only such waste and scrap as would generally be used for re-melting and consequently would not cover re-rollable scrap. Such waste and scrap which is not for re-melting will have to be classified in the other appropriate headings of the tariff. Therefore, the denial of benefit of exemption Notification No. 202/88 dated 20.5.88 on the grounds that re-rollable scrap is waste and scrap falling under heading 7204 is not correct.” On the other hand the department has not proved through tangible evidence that the scrap purchased from the open market and used in the manufacture of M.S. Rods was non-duty paid in nature. The said onus has not been discharged successfully by the department Hence, the impugned order is not tenable and is liable to be set aside. I, therefore, pass this order.
ORDER
The appeal filed by the appellants is allowed. The impugned order is set aside.
2. In terms of the above order extracted, the Commissioner (Appeals) has found fault with the adjudicating authority for having gone beyond the scope of the remand directions given by the Tribunal. He has also found that the original authority has delayed in taking up the matter for denovo adjudication by eight years. As can be seen from the above, the Commissioner (Appeals) has followed the Ministry’s Circular with regard to the nature of the case involved. The department has also not proved through tangible evidence that the scrap purchased from the open market and used in the manufacture of M.S. Rods was non-duty paid in nature.
3. We have heard the learned JDR and the learned Counsel.
4. The ground taken by the Revenue is that the terms of the Notification have to be strictly construed and the Scrap purchased was not re-rollable one and hence the findings are not correct.
5. On our careful consideration, we notice that the Commissioner (Appeals) has set aside the order on the grounds already noted supra. The appellant’s contention is that they have purchased re-rollable scrap from the market for the purpose of manufacture of MS rods. The department has not challenged the manufacture of MS rods. There is also no plea that the assessee has purchased some other scrap and not the one which is required for re-rollable scrap. Therefore, the findings recorded is correct. There is no merit in this appeal and the same is rejected.
(Pronounced and dictated in open Court)