Amitasha Enterprises Pvt. Ltd vs Commissioner Of Central Excise, Nagpur

(Arising out of Order-in-Appeal No. RK/299/NGP-I/2004 dated 15.10.2004 passed by Commissioner of Central Excise & Customs (Appeals), Nagpur)

For approval and signature:

Honble Mr. P.K. Jain, Member (Technical) and Honble Mr. S.S. Garg, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :

CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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Amitasha Enterprises Pvt. Ltd. Appellant Vs. Commissioner of Central Excise, Nagpur Respondent

Appearance: Shri Nimesh Mehta, Advocate, for appellant Shri V.K. Agrawal, Additional Commissioner (AR), for respondent

CORAM: Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S.S. Garg, Member (Judicial)

Date of Hearing: 9.6.2015 Date of Decision: 15.6.2015

ORDER NO

Per: P.K. Jain

Brief facts of the case are that the appellant is engaged in the manufacture of transmission line towers. For the manufacture of such towers, they used angles and plates as inputs and availed cenvat credit on the same. While manufacturing transmission line towers, angles and plates of smaller dimensions are left out. They are selling these in the market. While clearing the said goods, they treated the same as waste of ferrous of iron and steel and classified the same under sub-heading 7204.90 and paid the duty accordingly. A demand notice was issued proposing to classify the said goods under the original heading in which they were received, viz. as angles and plates and also take the value at which such goods were received by them. Demand notice dated 22.2.2000 was covering the period 23.7.1995 to 27.9.1996 invoking the extended period of limitation. The case was made based upon an information and visit of the Preventive Branch of the Central Excise Headquarters, Nagpur. The demand notice was confirmed by the original authority. Aggrieved by the said order, the appellant filed appeal before the Commissioner (Appeals) who ordered for certain pre-deposit. The case was dismissed by the Commissioner (Appeals) for non-compliance of the provisions of Section 35F of the Central Excise Act, 1944. Thereafter the appellant filed appeal before this Tribunal and this Tribunal vide order No. C-III/1468-69/03/WZB dated 21.10.2003, remanded the case to the Commissioner (Appeals) for decision on merits as the appellant had pre-deposited an amount of Rs.48,122/- through cenvat credit account. The appeal was decided by the first appellant authority vide order dated 30.3.2004 in which the lower authority confirmed the duty of Rs.5,28,899/-, recovery of interest with effect from 28.9.1996 and the penalty amount under Section 11AC was reduced to an amount equivalent to the duty. Thereafter the appellant filed an appeal before this Tribunal and this Tribunal in turn remanded the matter back to the Commissioner (Appeals) to take into account certain case laws. After the said direction, the Commissioner (Appeals) has passed the present order. Aggrieved by the said order, the appellant is before us.

2. The main contention of the learned counsel for the appellant was that the department is considering the goods removed by them as input cleared as such, which is factually incorrect. What has been cleared by them are small remnant pieces of angles and plates which were not the inputs received by them. He further submitted that the value of such small pieces is far lower than that of the prime size angles and plates. He further submitted that it is very clear from the invoices that they have sold the goods at less than half the original price on which they had received and thus the goods cleared are nothing but waste and scrap and they have paid the duty correctly.

3. The learned Additional Commissioner (AR), on the other hand, submitted that the issue is well settled by the Honble Supreme Courts decision in the case of LML Ltd. vs. CCE, Kanpur reported in 1997 (94) ELT 273 (SC), which has again been reaffirmed by the Honble Supreme Court in the case of CCE vs. Bhushan Steels and Strips Ltd. reported in 2010 (257) ELT 5 (SC). He submitted that in view of the said two decisions, the goods cannot be classified as waste and scrap classifiable under heading 7204.90. These items have to be classified appropriately in the respective headings and would, therefore, be chargeable to 15% duty as proposed in the show cause notice.

4. We have considered the rival submissions. In our view, there are two issues to be considered in this case. The first is relating to the classification and hence rate of duty. The second issue is relating to the value of the goods involved.

5. As far as the first issue is concerned, the Honble Supreme Court in the case of LML Ltd. (supra) as also Bhushan Steels and Strips Ltd. (supra) has discussed the issue and in para 14, 15 and 16 has observed as under:-

14.?In L.M.L. Ltd. case this Court held that cut sheets which are used in the manufacture of ancillary items cannot be regarded as waste and scrap as the same were used by the assessee for producing some other items, as in the present case. It was observed :

10.?It is quite evident that those portions of cut sheets which are used in the manufacture of ancillary items cannot be regarded as waste and scrap. As per the aforesaid definition it is only that waste and scrap of iron or steel which is fit only for the recovery of metal or for use in manufacture of chemicals which could fall under that category. These portions of cut sheets which are used in the manufacture of ancillary items cannot be regarded as having been used for recovery of metal or for use in the manufacture of chemicals. This being so, those portions of cut sheets which are not used for recovery of metal or in the manufacture of chemicals cannot be cleared under Tariff Item 72.03. At the same time the definition of the word sheet as contained in Chapter 72 would clearly indicate that the cut sheets which are used by the appellant do not fall under that category. The definition of sheet, inter alia, states that it has to be a hot or cold-rolled flat product, rolled in rectangular section of thickness below 5 millimetres and supplied in straight lengths. It was not disputed that the offcuts which remain after the parts of the scooter had been manufactured by using the steel sheets no longer retain rectangular shapes. These offcuts are of different shapes and sizes and, in our opinion, they would clearly fall under Tariff Entry 72.10. (emphasis in original) It was held in the above case that the offcuts of steel sheets being of different shapes and sizes would fall under Tariff Entry 72.10 which after restructuring of the tariff have become equivalent to Entry 72.16.

15.?We agree with the view taken by the Tribunal. HSN Explanatory Notes in Chapter 72 provide that waste and scrap is generally used for the recovery of metal by re-melting or for the manufacture of chemicals. It further provides that Heading 72.04 excludes articles which, with or without repair or renovation, can be reused for their former purposes or can be adapted for other uses; it also excludes articles which can be refashioned into other goods without first being recovered as metal.

16.?It is apparent from the reading of HSN Explanatory Notes that if the goods can be reused without first being melted, are excluded from the purview of Heading 72.04. They would also not fall under Tariff Entries 72.08, 72.09 and 72.11 as the offcuts are of different shapes and sizes and would not fall under these tariff items. Thus, the Tribunal has, and in our view, rightly held that the side slittings, end cuttings and others will be classifiable under Heading 72.16 of the Schedule to the Tariff Act being offcuts of different shapes and sizes. The finding recorded by the Tribunal that no penalty is imposable in the present matters having not been challenged in these appeals, is confirmed.

In view of the said decision of the Honble Supreme Court, in our view, the classification of the goods followed by the appellant is incorrect and is required to be rejected. The goods would be classifiable under the respective headings and would be chargeable to 15% duty as proposed in the show cause notice.

6. As far as the value of the goods is concerned, we note that when the goods were purchased by them, they were of bigger dimensions and the goods sold by them are of smaller dimensions and of varying sizes. In view of such position, such goods will fetch far less value compared to the goods purchased by them. The invoices of the goods sold by them are already available with the department and form part of the demand notice. We do not see any reason not to accept the value declared in such invoices. The Revenue has also not produced evidence that the appellant has collected any amount over and above the value declared in such invoices. In view of this position, the invoice value may be accepted and duty computed @ 15% on the declared value.

7. As far as the extended period of limitation is concerned, we find that the whole case was made based upon an information and after visit to the unit. From the declaration filed by the appellant, it is not possible to make out that what they were selling was small sizes angles and plates. In view of the said position, in our view, invoking the extended period was correct.

8. Since we have ordered that the invoice value may be accepted, the duty liability will required to be recomputed by the adjudicating authority. Further, the interest and penal liability will also change. Accordingly we allow the appeal by way of remand for recomputing the duty, interest and penalty.

9. The appeal is disposed of in above terms.

(Pronounced in Court on 15.6.2015)

(S.S. Garg) Member (Judicial) (P.K. Jain) Member (Technical)

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