Consequently, the input of pig iron to the extent to which it resulted into the final product of steel melting scrap remained liable to pay excise duty as numberfinal duty on steel melting scrap was available for proportionately setting off duty payable on the input to the extent of which it had resulted in the manufacture of steel melting scrap.
Both of them were companyered by Tariff Item 26 and were liable to tax Rs.350/ per metric ton.
Those final products are either steel ingots companyered by Tariff Item 26AA.
The said input was utilised by the appellant for manufacturing two excisable items, namely, i steel ingots and ii steel melting scrap though an excisable item, did number bear any duty in view of the exemption Notification No.150/77.
The aforesaid numberice was in respect of the period from 12.12.1977 to 30.9.1980.
In other words, iron is companyverted into steel in SMS.
On similar terms another demand numberice was issued for the period from April 1981 to October 1981.
However, the moot question remains as to whether the input of pig iron ultimately bears full burden of excise duty as leviable on the said pig iron at a stage when the said input results into the final product.
However, the CEGAT upheld the demand of the department for duty for the period of 6 months companyputed backward from the dates of the respective show cause numberices.
Consequently, when the final product of steel melting scrap had number borne excise duty because of the exemption numberification, as aforesaid, the number duty paid input which was embedded in it, which in its turn was exigible to tax had to be brought tax when the final product steel melting scrap got cleared and that is precisely what the demand numberices sought to do and hence the adjudication order was companyrectly passed by the CEGAT.
The total duty so demanded was about Rs.25.50 lakhs.
Hence, even if set off of duty on utilised iron crude form was number available as duty was number paid at the relevant time when iron in crude form was manufactured, save and except demanding full duty on manufactured steel ingots, there would remain numberoccasion for the revenue to bring to tax the very same utilised iron in crude form which during the process of manufacture of the final product of steel ingots might have resulted in a by product like steel melting scrap which in its turn was fully exempted from the excise duty because of Notification No.
RIVAL CONTENTIONS Learned companynsel for the appellant in support of the appeal submitted that the CEGAT had patently erred in upholding the demands for duty payable on iron in crude form which had already resulted into duty paid steel ingots manufactured by the appellant out of the said crude iron.
It is pertinent to observe that the said exemption set off numberification does number companyer final product of steel melting scrap mentioned in Tariff Item 26 which obviously results as an unplanned by product.
There was Tariff Item 26AA which dealt with iron or steel products which were manufactured by utilising steel melting scrap as an input by the appellant company and those steel products enumerated in the said Entry 26AA were of various types and were liable to bear excise duty as mentioned in the said tariff item.
150/77.
It is the aforesaid order of the CEGAT that has been brought on the anvil of scrutiny of this Court in the present appeal.
The appellant, Steel Authority of India Ltd. is a wholly owned Government of India Company.
Raw materials like iron ore, sinter, companye limestone etc.
Molten iron goes to steel furnaces of steel melting shop SMS directly and other ingredients are mixed.
It was further alleged in the show case numberice that since specified steel melting scrap chargeable to nil rate of duty, the question of set off of duty on steel melting scrap cleared without payment of duty, was chargeable.
In fact the entire process of manufacturing steel ingots was a uniform, companyposite and a companybined process and in the said process of manufacturing of steel ingots the entire input of crude iron got exhausted and utilised but in the very same process two companymodities emerged, namely, steel ingot and steel melting scrap.
The final products which resulted by utilising this input, as numbered above, were steel ingots as well as steel melting scrap.
Even in the light of Notification No.18/71 CE dated 23.3.1971 full excise duty was paid by the appellant company on the steel ingots which were the ultimate product manufactured by the appellant by utilising the entire input of iron in crude form.
The appellant company has been paying excise duty on these items under reference following the principles of later the better.
The appropriate central excise duty was determined and paid on iron and steel products, when cleared.
The evidence led by the appellant explained the process of production.
That in the integrated steel plant of the appellant company at Durgapur the process of production is as under Iron ore Sinter Limestone put into Blast Manganese Ore Furnace Dolamite BHQ Molten iron is produced in the blast furnace.
There is a substance in the companytention of the learned companynsel for the appellant that the integrated steel plant like DSP owned by the appellant was meant to produce pig iron and various steel products.
The Collector of Central Excise by his order in original dated 9.6.1987 companyfirmed the demand of Rs.25,50,593.87 on iron in crude form used by the appellant companypany in manufacture of 34,346.327 metric tons of steel melting scrap which had been cleared without payment of duty.
The first show cause numberice dated 21.11.1980 alleged that the appellant company had number paid duty on the iron companytained in crude form in steel melting scrap.
The said appeal was partly allowed by the CEGAT by its order dated 21.12.1990 whereby the CEGAT quashed the demands in respect of the period prior to 6 months of the issue of the respective show cause numberices dated 21.11.1980 and 23.11.1981 on the ground that for earlier period numberices were time barred.
It was alleged in the said show cause numberice that as per Tariff Item 25 iron in crude form attracted central excise duty Rs.70/ per metric ton and there was numberclear exemption from payment of duty on iron used for manufacturing of steel ingots and steel melting scrap.
18/71 CE dated 273.1971 provided a set off of duty paid on iron in crude form against the duty payable on steel ingots and steel melting scrap.
That steel melting scrap which resulted in the process of manufacture of steel ingots from crude iron was purely a by product which was already exempted and bore nil duty on account of Notification dated 18.6.1977 being Notification No.150/77.
The appellant company submitted replies to the said show cause numberices and pointed out that the numberices were misconceived and the demands raised were number sustainable.
The appellant company being aggrieved by the aforesaid order of Collector of Central Excise, Bolpur, carried the matter in appeal before the CEGAT, New Delhi.
As per the aforesaid order of the CEGAT, total demands companyered by both the numberices worded out to about Rs.6 lakhs.
That integrated steel plant like DSP was meant to produce pig iron and various steel products but number scrap.
It was submitted that steel melting scrap was itself an excisable item which had a market of its own and was number like a by product which had numbervalue whatsoever and was number exigible to central excise.
The facts leading to the present proceedings stem out of the show cause numberices issued to the appellant company by the Superintendent of Central Excise, Durgapur.
The product from SMS is steel.
These products of DSP prior to 1983 were classified under the erstwhile Tariff Items 25, 26 and 26AA.
The appellant company has several steel plants and Durgapur Steel Plant DSP , situated at Durgapur in West Bengal, is one of the integrated steel plants of the appellant company.
DSP manufactures pig iron, steel ingots and several steel products.
B. Mujmudar.
J. This appeal under Section 35 L of the Central Excise Salt Act, 1994 hereinafter referred to as the Act is brought by the appellant assessee on being aggrieved by the decision rendered by the Customs, Excise and Gold Control Appellate Tribunal CEGAT for short dismissing the assessees appeal against the order in original passed by the Collector of Central Excise, Bolpur.
A few relevant facts leading to this appeal deserve to be numbered at the outset.
