1. This appeal, filed before the Tribunal under the provision of Section 35B of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act), is directed against the order passed by the Collector of Central Excise, Bombay-II on 9-4-1984, modifying the order of the Assistant Collector of Central Excise, Bombay dated 31-10-1981.
The impugned order of the Collector was passed, in review, on a petition for this purpose having been made to him by the appellants herein, under the provisions of Section 35A of the Act, as then prevailing.
2. The proceedings against the appellants were initiated by means of a show cause notice, issued on 14th October, 1980, received by them on 31st October, 1980, whereby they were required to show cause as to why excise duty of Rs. 18,10,545.90 plus special excise duty of Rs. 82,975.58, to talling to Rs. 18,93,521.48, be not recovered from them on the ground that they had effected clearances of products manufactured by them falling under Tariff Item 26A without payment of any excise duty, by wrongful utilization of Exemption Notifications No.54/62, dated 24-4-1962 and 119/66, dated 16-7-1966. The basis of the charge was that they had manufactured and cleared products, manufactured by them out of imported copper scrap by availing set off of central excise duty of Rs. 3,000/- per metric ton, whereas it was discovered that they had not paid the corresponding countervailing duty as contemplated by the said notifications, and had thus wrongly availed of the benefit of said notifications.
3. The show cause was contested by the appellants by means of reply dated 15-1-1981 but the Assistant Collector confirmed the demand.
Feeling aggrieved by the said order the appellants approached the Collector of Central Excise for review, on the plea that the Assistant Collector had erred in holding that they had manufactured products wholly out of imported copper scrap, and that they had statutory records to satisfy the authorities that they had used both indigenous as well as imported scrap for the purpose, and that the figures were capable of being segregated, and that even if it is to be held that they were not entitled to benefit of these notifications, in respect to imported scrap, then also the demand should be modified, and confined the quantity, manufactured out of imported scrap. They, however, added that the demand for differential duty, raised by means of show cause notice dated 31-10-1980 was barred by time, and was not sustainable, for a period beyond six months of the notice.
4. After the Assistant Collector confirmed the notice, the Collector (Appeals) in his review order held that duty demand in relation to the quantity manufactured out of indigenous scrap was not sustainable inasmuch as it was possible to ascertain the quantity of the indigenous material that had gone into manufacture of the final products produced by the appellants. He, however, rejected the plea of the appellants as to time-bar on the view that it was a clear case of suppression of the fact that appellants had been making use of imported scrap also, in their products, and to that extent the extended period, as permissible under Rule 10 as it then existed, was available. He accordingly modified Assistant Collector's order to the effect that demand only to the extent of that quantity of finished products, that had been manufactured out of imported scrap, and on which no countervailing duty has been paid, was maintained. As a sequel to this order the Range Supdt. issued a demand dated 15-5-1980 (Annexure B to the appeal), quantifying the duty amount at Rs. 3,66,478.50. The demand for differential duty thus stands reduced from Rs. 18,93,521.48 to Rs. 3,66.478.50 as a result of the order in review, which is now under appeal before us.
5. Shri A.V. Phadnis, Advocate appearing for the appellants before us, conceded at the outset that as a result of Bench decision the in case of Kishore Metal & Wire Industries, Bombay v. Collector of Central Excise, Bombay [1984 (4) E.T.R. 340], he was not pressing Clauses (ii) and (iii) of Notification No. 119/66-CE, dated 16th July, 1966. He however, urged that appellants were nevertheless entitled to the benefit of aforesaid notification by virtue of Clause (iv) thereof inasmuch as even the imported goods have to be treated to have been purchased from the market, within the meaning of said clause. He contended that major portion of the imported scrap had been purchased by the appellants on the high-seas, and that only a small quantity had been imported directly, and that at least, the quantity, which was subject matter of the Highseas Purchase Agreement, was entitled to benefit of this notification, because that has to be treated on the same footing as purchased from the market. He further argued that even if we were to hold that quantity of imported scrap could not be extended benefit of this notification, then the demand beyond six months was not enforceable inasmuch as the appellants had been duly filing classification lists, and RT 12 returns disclosing the whole quantity of scrap used by them, and there was no concealment on their part nor any suppression of facts.
6. Shri N.I. Ramanathan, S.D.R., countered the last mentioned argument by placing reliance on judgment of the Tribunal in the case of Abilities (India) Ltd., Ghaziabad v. Collector of Central Excise, Meerut, reported in 1984(16) E.L.T. 619 (Tribunal) to the effect that even when classification lists are filed the absence of remarks which would disclose full relevant and necessary facts, was tantamount to suppression or concealment, and thus the extended period of limitation was available. He also controverted the plea that goods, which were subject matter of Highseas Purchase Agreement, could be equated with those purchases from the market, by emphasising that the whole concept of purchases from the market, was distinguishable from that of imported goods, and that by no stretch of reasoning the imported goods could be treated as those purchased from the market, within the meaning of Clause (iv) of the notification under reference.
7. Shri Phadnis in rejoinder, while reiterating his pleas, further added, that even if the Tribunal's judgment in the case of Kishore Metal & Wire Industries (supra), was followed on merits, then on the basis of ratio of that judgment, allowance should be made in this case also for the burning or melting losses.
8. We have given our careful thought to all the contentions, convassed before us. We consider it expedient to reproduce Notification No.119/66-C.E., dated 16th July, 1966 for proper appreciation of the issues involved. It reads as :- "Copper in any crude form fully exempt if made from old scrap; or duty paid scrap etc.
In exercise of the powers conferred by Rule 8(1) of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the M.F. (D.R.) No. 53/62-C.E., dated 24-4-1962, the Central Government hereby exempts copper in any crude form including ingots, bars, blocks, slabs, billets, shots and pellets, falling under sub-item (1), and wire bars, wire rods, and castings of copper falling under sub-item (la) and waste and scrap of copper falling under sub-item (lb) of Item No. 26A, from the whole of the duty of excise leviable thereon, if made from any of the following materials or a combination thereof, namely : - (ii) Waste or scrap obtained from copper and copper alloys where the prescribed amount of duty of excise, or, as the case may be, the additional duty leviable under Section 2A of the Indian Tariff Act, 1934 (32 of 1934), has been paid on the copper or the copper content of alloys; or (iii) virgin copper in any crude form on which the prescribed amount of duty of excise, or, as the case may be, the additional duty leviable under Section 2A of the Indian Tariff Act, 1934 (32 of 1934), has already been paid; (iv) copper in any crude form purchased from the market on or after the 20th day of August, 1966; or (v) waste or scrap of copper and copper alloys, falling under sub item (1b) of the said Item No. 26A, in respect of which the appropriate amount of duty of excise, or, as the case may be, the additional duty leviable under Section 3 of the Customs Tariff Act, 1975 (51 of 1975), has already been paid on the copper or the copper content of the alloys." 9. The applicability of Clauses (ii) and (iii) is ruled out, and even learned counsel did not canvass these clauses in support of the merits of his case, and rather conceded that, on the ratio of judgment in Kishore Metal & Wire Industries, Bombay v. Collector of Central Excise, Bombay, these clause would not apply to the present case also. He, however, pressed the case on the basis of Clause (iv), but we find ourselves unable to accept the argument that the imported goods, whether as a result of direct imports or in pursuance of Highseas Purchase Agreement, can be equated with goods purchased from the market, because we are of our clear view that this concept has reference to only local purchases in contradistinction to importation of goods. It would make hardly any difference, that the imports were made, as a result of some agreements entered into by appellants with the other importers, when the goods were on the high-seas. The authority cited by the learned counsel for the appellants to the effect that purchases made directly from the manufacturers at the factory gate, were on the same footing as of open market, is clearly distinguishable from the case in hand, where the goods are admittedly imported goods.
10. It is not disputed that so far no countervailing duty has been paid on the imported scrap, and thus we find no fault in the findings of the lower authorities that the products manufactured out of imported scrap, which has not paid any countervailing duty, was not entitled to benefit of Notification No. 119/66. The plea, that on the basis of the Tribunal judgement in Kishore Metal & Wire case, allowance should be made for burning/melting losses can also not be accepted inasmuchas we consider that the quantity of burning or melting losses is to be pleaded and proved before the lower authorities, whereas it was never done. This new plea which is to be determined on the basis of facts cannot be entertained at this stage. It may be noted that in Kishore Metal & Wire case, this plea seems to have been taken right from the very beginning, and there was evidence of the extent of such losses and it was in this context, that and the same was allowed. We, therefore, feel handicapped in entertaining this plea at this stage.
11. We also find that Collector (Appeals) was right in holding that since the classification lists filed by the appellants did not disclose the facts about imported scrap having also gone into the manufacture of products, and to that extent there was concealment of essential facts, which were necessary for the excise authorities to know before they could determine the applicability of Notification No. 119/66, or extent of goods, to which the same could be applied. The appellants, withheld this vital information. It is thus a manifestly a case of concealment of basic facts and in that view of the matter, following our judgment in the case of 'Abilities (India) Ltd. (supra), we hold that the extended period of limitation was available, with the result that demand for duty in so far as it relates to products manufactured out of imported scrap, was wholly enforceable.
12. We also do not find it possible to accept the plea that since proceedings, to determine whether countervailing duty was payable or not, were pending; this demand of duty may be kept in abeyance inasmuch as in case the countervailing duty were held to be payable, then these products, would be entitled to benefit of Exemption Notification No.119/66. We do not have any indication as to the stage those proceedings were pending, or about the likely result of the same. We, therefore, do not feel inclined to suspend this duty demand which we have found to be fully enforceable on merits. It is for the appellants to safeguard their rights appropriately, while paying the duty amount. With these observations, we confirm the order in review of the Collector, dated 9-4-1984, and dismiss the present appeal.