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                                                                REPORTABLE                     IN THE SUPREME COURT OF INDIA                     CIVIL APPELLATE JURISDICTION

             CIVIL APPEAL NO. 172 of 2003

Bhupendra Steel (P) Ltd.                         .....Appellant(s)

                               - Versus -

Commissioner of Central Excise              .....Respondent(s)

                          J U D G M E N T

BHAN, J.

1.    This Appeal has been filed by the appellant-assessee

under Section 35-L of the Central Excise Act, 1944 (for

short ’the Act’) against Final Order No.186/2002-B dated

14.05.2002 passed by the Customs, Excise and Gold (Control)

Appellate Tribunal, New Delhi (for short ’the Tribunal’) in

Appeal No.E/5482/92-B.

2.    The   point    involved    in       this   appeal   is,   whether   the

final products manufactured by the appellant are eligible

for   exemption       under     Notification          No.208/83-CE    dated

1.8.1983, as amended from time to time.

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3.     Briefly stated the facts giving rise to the filing of

the present appeal, are as under:

4.     Appellant-assessee,           hereinafter       referred      to    as    the

’assessee’ is engaged in the manufacture of Steel bars and

rods    falling      under    sub-heading      7228.30    and     steel     ingots

falling    under       sub-heading     7226.20    of    Central      Excise      and

Tariff    Act,       1985    (for    short     ’the    Tariff     Act’).         The

Government of India vide Notification No.208/83-CE dated 1st

August, 1983, as amended by Notification No.90/88-CE dated

1.3.1988       and     Notification        No.202/88-CE      dated     20.5.1988

exempted certain final products falling under Chapter 72

from the whole of central excise duty, if they are produced

out of the specified inputs described in (co.2) of the said

notification on which the duty has already been paid.                            As

per the explanation to the notification, inputs purchased

from the market will be deemed to be duty paid except such

stocks as are clearly recognizable as being non duty paid

and charged to nil rate of duty.

5.     Three show cause notices were issued to the assessee

for the periods October, 1987 to March, 1988, April, 1988

to     June,    1988    and       September,    1988    to    February,         1989

demanding      duty          of    Rs.2,65,849.57,      Rs.4,41,394.50           and

Rs.59,569.82 respectively.

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6.    The assessee had purchased iron and steel scrap from

the local market and used the same in the form of specified

inputs   (for    availing     the       benefit     of    exemption       under

Notification Nos. (i) 208/83-CE dated 1.8.1983; (ii) 90/88-

CE dated 1.3.1988 and (iii) 202/88-CE dated 20.5.1988) for

the manufacture of steel ingots.             The samples drawn at the

time of seizure established that the assessee had purchased

iron and steel, bazaar scrap including turning and boring,

old   dismantled   machinery,       old    broker      engineering    goods,

punch steel metal, containers and other broken articles of

iron and steel including small percentage of sample pieces

of rods, flats end cutting, on which duty might not have

been paid at the time of clearance.

7.    In its replies to the each of the three show cause

notices referred to above, the assssee reiterated that all

the   inputs    which   had   been        used    by     the   assessee     are

classifiable only under sub-item (8) of erstwhile T.I. 25

because all these goods are roughly shaped and have not

been specified anywhere else.            T.I. 25 (8) of the erstwhile

Tariff read as under: -

     "(8) Pieces roughly shaped by rolling or forging       of iron or steel, not elsewhere specified".

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8.     Prior       to     28.2.1986       the       Central        Excise    Tariff    was

contained in the Schedule to the Central Excises and Salt

Act,   1944.            Consequent      to        the   enactment     of    the   Central

Excise Tariff Act, 1985, the Tariff was delinked from the

Central Excises & Salt Act.                       The said Tariff Act 1985 came

into effect from 28.2.1986.                        In Section XV of the Central

Excise Tariff Act, Chapter 72 provided for iron and steel

and Chapter 73 for articles of iron and steel.                               Heading No.

72.03 provided for waste and scrap of iron and steel and

Heading No. 72.08 provided for "pieces roughly shaped by

rolling       or    forging        of     iron          or   steel,    not     elsewhere

specified".         Heading No. 72.08, thus, was the same as T.I.

25(8) of the erstwhile Tariff.

9.     Likewise,          "waste        and       scrap"      as     defined      in   the

erstwhile tariff means: -

      "Waste and scrap of iron or steel fit only for        the recovery of metal or for use in the        manufacture of chemicals, but does not include        slag, ash and other residues".

The    same    definition          continued            in   the     new    Tariff.

However, by the Finance Act, 1988, "waste and scrap"

came to be defined in Section Note 6 to Section 15, as

meaning:

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     "metals, and metal goods definitely not usable as       such because of breakage, cutting up, wear or       other reasons".

10.   Even   though       the    Tariff     had    undergone      some    changes

before and after the Central Excise Tariff Act, 1985, the

assessee, in all its replies, referred only to T.I. 25(8)

of erstwhile Tariff.             Be that as it may, the Department’s

submission    is    that,        as   far   as    the    entitlement      of   the

assessee to the benefit of the Notification is concerned,

the   position          remained      the   same    before    and    after     the

Central Excise Tariff Act, 1985.

11.   Insofar      as     the     facts     of     the    present     case     are

concerned, the benefit of the notifications is available to

an assessee      who      used    specified      inputs.     In     the   present

case, the claim made by the assessee has been that the

inputs   used      were     "pieces     roughly      shaped".        These     are

described as such in all the three notifications where the

reference is specifically to "pieces roughly shaped".

12.   The Assistant Commissioner in her order held that they

are not pieces roughly shaped under 7208.00 but are melting

scrap which is not duty paid.                     She also found that the

words "pieces roughly shaped" had been inserted later in

the invoices from the traders.                   It was further held that

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inputs brought in by the assessee are neither covered by

the    erstwhile       Tariff    Item        25(8)     nor   under     7208.00     as

specified under Notification No. 208/88-CE dated 20.5.1988.

In the      Order-in-Appeal        dated      13.8.1992,      the    Commissioner

(Appeals) found that the finding recorded by the Assistant

Commissioner to the effect that the inputs procured by the

assessee from the open market were being used by them by

way of melting and then obtaining their final products, had

not been contradicted or rebutted by the assessee in the

Appeal.          The    Commissioner          (Appeals)      referred     to     the

definition of the term "waste and scrap" before and after

1988 and held that the inputs have been correctly held to

be waste and scrap by the Assistant Commissioner.

13.    The Tribunal in its order dated 14.5.2002, approved

the order of the Commissioner (Appeals) and held that the

benefit     of    the    Notification          is     not    available    to     the

assessee since the inputs used by them are not specified in

the Notifications.         The Tribunal confirmed that the finding

that the words "pieces roughly shaped" were written later

on    the   invoices      issued     by       the     traders,   had     not     been

rebutted by the assessee and also that they fell within the

definition       of     "waste     and       scrap"    before    and    after    the

amendment.

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14.    Attention of the Tribunal had also been drawn to its

earlier decision in the case of the same assessee, where

the benefit of Notification No. 208/83-CE had been denied

to the assessee [1994 (70) ELT 151].                 The said decision was

taken in appeal before this Court by the assessee and this

Court in Bhupendera Steels (P) Ltd. v. CCE [(2002) 7 SCC

528] held that tariff Item 25(8), as it then was, would not

cover pieces of bars, rods, flats, etc. which are cut-off

from the main item.           This Court also took note of the

Revenue’s allegation that the assessee had purchased the

ends   of   flats   from    scrap       dealers,     which     had    not    been

denied.     This also indicates that ends of flats do not fall

under Item 25(8).          Since the Notification does not cover

either "waste and scrap" or "flats", the assessee would not

be entitled to exemption under Notification No.208/83. It

was further held that it was for the assessee to show under

what sub-item the inputs used by them fall.                   Since they did

not fall under sub-item (8) of T.I. 25 and taking into

consideration    the   fact   that       the    ends   of    flats    had    been

purchased    from   scrap    dealers,         this   Court    held    that   the

inputs did not fall under sub-item (8).

15.    Counsel   appearing    for       the    assessee      fairly   conceded

that insofar as period from October, 1987 to March, 1988 is

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concerned, the point in issue stands concluded against the

assessee by a judgment of this Court in assessee’s own case

i.e. Bhupendera Steels (P) Ltd (supra).

16.   Insofar as the subsequent periods are concerned, they

are governed by Notification Nos. 90/88 dated 01.03.1988

and 202/88-CE dated 20.5.1988 which provides:

     "In exercise of the powers conferred by sub-rule       (1) of rule 8 of the Central Excise Rules, 1944,       and in supersession of the notification of the       Government of India in the Ministry of Finance       (Department   of   Revenue)    No.    208/83-Central       Excise, dated the 1st August, 1983, the Central       Government   hereby    exempts     goods    of   the       description specified in column (3) of the table       hereto annexed (such goods being hereinafter       referred to as "final products") and falling       within Chapter 72, 73 or 84 of the Schedule to       the Central Excise Tariff Act, 1985 (5 of 1986),       from the whole of the duty of excise leviable       thereon which is specified in the said Schedule:

     Provided that such final products are made from       any goods of the description specified in the       corresponding entry in column (2) of the said       Table (such goods being hereinafter referred to       as "inputs") and falling within the Chapter 72 or       73 of the said Schedule on which the duty of       excise leviable under the said Schedule or the       additional duty leviable under the Customs Tariff       Act, 1975 (51 of 1975), as the case may be, has       already been paid:

     Provided further that no credit of the duty paid       on the inputs has been taken under rule 56A or       rule 57A of the said rules.

     Explanation   -    For    the purposes   of   this       notification,   all    stocks of  inputs   in  the       country, except such stocks as are clearly       recognizable as being non-duty paid, shall be

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     deemed to be inputs on which duty has already       been paid.

       S.            Description           of        Description         No.           inputs                          of       final                                                       products         (1)           (2)                             (3)         01.           XXX                             XXX         02.           Ingots   or    other            XXX                       primary forms of                (i) XXX                       (i)non-alloy steel              (ii) XXX                       (ii)      stainless             (iii) other                       steel   and    (iii)            alloy steel;                       other alloy steel;              semi-                       semi-finished                   finished                       products    of   (i)            products of                       non-alloy      steel            (i)      non-                       (ii)      stainless             alloy steel                       steel   and    (iii)            (ii)                       other alloy steel;              stainless                       pieces       roughly            steel     and                       shaped by rolling               (iii) other                       of iron or steel;               alloy steel;                       ...                             pieces                                                       roughly                                                       shaped     by                                                       ruling     of                                                       iron       or                                                       steel; bars                                                       and rods, ...        03.      XXX                                   XXX        04.      XXX                                   XXX       [Notification No. 90/88-C.E.,              dated 1-3-1988]

17.   A   bare      reading    of    the    aforesaid    two    notifications

shows     that      assessee   has    to    satisfy   two      conditions   for

availing      the    exemption      under   both   the   notifications      (i)

that the products are made from any goods of description

specified in the corresponding entry in column 2 and (ii)

they should fall within Chapter 72 of the Tariff Act.

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18.    The submission put forth, at the time of hearing, by

the learned counsel for the assessee before this Court,

that the input would fall under heading 72.08, namely, flat

rolled products of item etc.,                  runs contrary to what has

been    held    by     this    Court    in     the   assessee’s    own    case,

referred       to    above.       As     the    Notifications      themselves

provided, the inputs had to be pieces roughly shaped by

rolling or iron or steel.               Obviously, enough, they cannot

be flat rolled "products" or iron.                   As held by this Court,

pieces of bars, rods, flat etc., which are cut off from the

main   item,        cannot    qualify    as    pieces   which     are    roughly

shaped by rolling or forging.

19.    The learned counsel         for the appellant placed reliance

on the definition of            "waste and scrap" as given in Note 6

to Section XV of the Tariff.                 Prior to 1988 the definition

read as under:

      "Waste and scrap of iron or steel fit only for        the recovery of metal or for use in the        manufacture of chemicals, but does not include        slag, ash and other resides."

20.    The definition 1988 onwards read as under:

      "Metal waste and scrap from the manufacture or        mechanical working of metals, and metal goods        definitely   not  usable   as   such  because of        breakage, cutting-up, wear or other reasons."

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21.   The   Revenue’s   case   has    been    that   the   assessee   had

purchased trimmings and forgings, old dismantled machines,

old   broken     engineering     goods,        punched     steel   metal

containers     and   other   broken   articles.       These   certainly

cannot be treated as "pieces roughly shaped".

22.   As far as the period after the introduction of present

definition in Note 6 is concerned, the inputs are squarely

covered by the definition of waste and scrap and waste and

scrap does not find any mention in Notification No. 202/88

or 90/88.

23.   For the reasons stated above, we do not find merit in

this appeal and dismiss the same with costs.

                                             ......................J.                                              (ASHOK BHAN)

                                            ......................J. New Delhi;                                   (DALVEER BHANDARI) May 16, 2008

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