M/S. ELPHINSTONE METAL ROLLING MILLSversusCOLLECTOR OF CENTRAL EXCISE, BOMBAY

          MIS. ELPHINSTONE METAL ROLLING MILLS                         A
                            v.
          COLLECTOR OF CENTRAL EXCISE, BOMBAY

                            MAY 5, 2004
                                                                       B
        [S. RAJENDRA BABU, CJ., AND G.P. MATHUR, J.]

      Central Excises and Salt Act, 1944 :

        First Schedule-Tariff items No. 26A(l)(la) and 26A(2)-Copper C
sheets and circles, copper wire bars, copper wire rods and castings and
copper slabs and billets-Manufactured out of old copper scrap and scrap
-ofwire bars-Claim for exemption under Notification Nos. 74165-CE dated
 1. 5.1965 and 119166-CE dated 16. 7. I 966-Held, unless scrap and waste
can be demonstrated to have been duty paid goods, they cannot be assumed D
to be so-Tribunal rightly declined to accept the claim.

     Show cause notice-Limitation-Held, would apply only from the
date offinalisation of classification.

      Appellant, a manufacturer of copper sheets and circles falling E
under Tariff Item 26A(2), copper wire bars, copper wire rods and
castings falling under Tariff Item 26A(la) and copper slabs and billets
falling under Tariff Item 26A(l), claimed exemption from excise duty
under Notification No. 74/65-CE dated 1.5.1965 and Notification No.
ll9/66-CE dated 16.7.1966, as amended, on the ground that these items F
were manufactured out of old copper scrap and scrap of copper wire
bars. Show cause notices were issued to the appellant stating that the
claim for exemption/concession under the Notifications could not be
accepted. The claim was rejected by the appellate authority. The
Tribunal also declined to accept the claim holding that the exemption G
was subject to the condition that the raw material out of which final
product was manufactured should be duty paid. Aggrieved, the
manufacturer filed the present appeal.

     It was contended for the appellant that the raw material, i.e. H
                                  163
    164               SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.

A the copper scrap, had been purchased from the open market and,
    therefore, it should be deemed that the same was duty paid; and that
    the show cause notice was issued after 16 months of filing of the
    classification.

B         Dismissing the appeal, the Court

         HELD : 1. Unless the scrap and waste that has been used can be
    demonstrated to have been duty paid goods, it cannot be assumed that
    they are so, particularly when it cannot be said with certainty that all
C   scrap and waste material used had been subject to excise duty earlier.
    The waste and scrap was dutiable only when it is a manufactured
    product 11nd not otherwise. The object of exemption was to avoid
    cascading effect in the matter of payment of excise duty. [166-E-FJ

          2. As regards the limitation, thE classification list filed by
D the appellant on 25.3.1983 was not approved and a show cause
    notice was issued on 23.7.1984. The apF1roval was accorded only on
    15.9.1984. As there was no approval of the classification list and there
    was no final assessment, in the circumstances of the case, the bar of
    limitation would apply only from the date of the finalization of the
E   classification. (166-G-H; 167-Al

         Samrat International (P) Ltd. v. Collector of Central Excise, (1992)
    58 ELT 561 and Collector of Central Excise, Baroda v. Cotspun Limited,
    (1999) 113 ELT 353; held inapplicable.
F
         CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3504 of
    1997.

          From the Judgment and Order dated 8.1.97 of the Central Excise,
G Customs and Gold (Control) Appellate Tribunal, New Delhi in F.O. No.
    62/97-B in A. No. E/3303/87-Bl.

          Joseph Vellapally and Rajesh Kumar for the Appellant.

        A.K. Ganguli, Ms. Nisha Bagchi, P. Manish and B.K. Prasad for the
H   Respondent.
ELPHINSTONE METAL ROLLING MILLS v. C.C.E. [RAJENDRA BABU, CJ.]           165

     The Judgment of the Court was delivered by                                A
      RAJENDRA BABU, CJ. : The appe~lant is engaged in the
manufacture of (i) Copper Sheets and Circles falling under Tariff
Item No.26A (2) out of Copper Scrap and Copper Wire Bars, (ii) Copper
Wire Bars, Copper Wire rods .and castings not otherwise specified B
falling under Tariffitem 26A(la), and (iii) Copper slabs and billets falling
under Tariff Item 26A(l) out of old Copper Scrap and Scrap of Copper
Wire bars.                                       .
                                                 '



         It is contended by the appellant that they are entitled to claim C
exemption under Notification No.74/65-CE dated 1.5.1965 as amended for
the product Copper Sheets and Circles falling under Tariffltem 26A(2) and
exemption under Notification No.119/66-CE dated 16. 7. 1966 as amended
for the products Copper Wire Bars, Copper Wire rods and Castings not
otherwise specified falling under Tariff Item 26A(la) and Copper slabs and D
billets falling under Tariff Item 26A(l) in its classification list dated
25 .3 .1983 using the raw materials mentioned as aforesaid for the relevant
period.

       The Adjudicating Authority, the Appellate Authority and the CEGAT
did not accept the claim made by the appellant. The contention put forth E
before us is that the Notification in question dated 19.8.1980 exempting
manufacturer of Copper, that is to say, plates, sheets, circles, strips and foils
in any form or size falling under Tariff Item 26A(2) in the manufacture
of which Copper in any form is used and on the virgin copper or the
copper content of the alloy, the prescribed amount of duty of excise to F
be paid or is deemed to have been paid prescribing duty at the rate of
Rs. 700 PMT.

        Under Notification dated 19.6.1980, it is claimed that the waste or
scrap obtained from copper as Copper alloy where the prescribed amount G
of duty of excise has been paid on the copper or the copper content of the
alloys would be exempted from taxation and the appellant had filed
classification on that basis.

       Show cause notices were issued to the appellant to the effect that H
    166                 SUPREME COURT REPORTS [2004) SUPP. 2 S.C.R.

A thoir claims for exemption/concession asked for under Notifications in
    question cannot be accepted. There is the contention of the appellant
    that this notice has been issued sixteen months after the filing of the
    Classification.

B          The Tribunal took (he view that the exemption is subject to the
    condition that the raw material out of which final product is manufactured
    should be duty paid, either the proof of such payment of duty on raw
    materials should be appropriate or there should be a deeming order that
    such raw materials are deemed to be treated as duty paid.

c           The claim of the appellant that the scrap had been purchased from
    the open market and, therefore, it should be deemed that It has been duty
    paid, the Assistant Collector took the view that the products are manufactured
    out of scrap purchased in the open market for which no duty paying
D   documents; are producedi exemption could not be extended to these
    products. The Waste and Scrap was dutiable only when it was a manufactured
    product and was otherwise excisable under the provision of the Act. All
    waste and scrap is neither a manufactured product nor is excisable and on
    this basis held that the appellant is not entitled to the benefit of the relevant
    Notifications.
E
            We think the view taken by the Tribunal cannot be considered to
    be as inappropriate. Unless the scrap and waste are goods that had been
    used can be demonstrated to have been a duty paid goods, it cannot be
    assumed that they are so, particularly when it cannot be said with certainty
F   that all scrap and waste material used has been subject to excise duty
    earlier. The waste and scrap was dutiable only when it is a manufactured
    product and not otherwise. The object of exemption being to avoid
    cascading effect in the matter of payment of excise duty.

G           Therefore this contention on behalf of the appellant is rejected.
    So far as the question of limitation is concerned, we find that the
    classification list filed by the appellant dated 25.3.1983 was not approved
    and a show cause notice was issued on 23.7.1984. The approval was
    accorded 0111ly on 15.9.1984. As there was no approval of the classification
H   list and there was no final assessment, we think, in the circumstances of
ELPHINSTONE METAL ROLLINGMILLS v. C.C.E. [RAJENDRA BABU, CJ.)     167
the case the bar of limitation would apply only from the date of the A
finalization of the classification and we do not find that the decisions
relied upon by the appellant either in Samrat international (P) Ltd.
v. Collector of Central F.xcise, (1992) 58 ELT 561 or in Collector
of Central F.xcise, Baroda v. Cotspun Limited, (1999) 113 ELT 353
have any application to the present facts of the case.                   B
       Appeal, therefore, stands dismissed.

R.P.                                                Appeal dismissed.