1998(03)LCX0149

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri G.A. Brahma Deva, Member (J) and V.K. Agrawal, Member (T)

METAL CONTAINERS (P) LTD.

Versus

COMMISSIONER OF C. EX., ALLAHABAD

Final Order No. E/447/98-B1, dated 3-3-1998 in Appeal No. E/191/91-B1

CASE CITED

Collector v. Krishna Carbon Paper Co. — 1988(09)LCX0051 Eq 1988 (037) ELT 0480 (S.C.) — Referred                    [Para 3]

Advocated By : Shri V.K. Purwar, Director, for the Appellant.

Shri D.S. Negi, SDR, for the Respondent.

[Order per : V.K. Agrawal, Member (T)]. - This is an appeal filed by M/s. Metal Containers Pvt. Ltd. against the Order-in-Appeal No. 5/CE/Appl/ 90-Alld/89, dated 31-10-1990.

2. The issue involved in this appeal is about the classification of scrap of non-alloy steel whether under sub-heading No. 7204.10 or 7204.90 of the Schedule to the Central Excise Tariff Act. The lower authority has observed that in various bills of entry, the description of the material had been mentioned as steel bulk low carbon M.S. defective sheets and if the raw material is steel, the finished product and the waste arising therefrom would also be of steel. The Commissioner (Appeals) has classified the scrap of non-alloy steel under sub-heading 7204.90 of the Central Excise Tariff.

3. The appellants have submitted that the terminology `non-alloy steel’ is used interchangeably with `carbon steel’ to indicate steel other than `alloy steel; that very low carbon steel with very low contents of manganese and sili- con etc. and marketed under trade/commercial nomenclature like iron sheets or iron wires are all to be considered under the description non-alloy steel or carbon steel; that sheets of iron or sheets of non alloy steel used by them and covered under the heading `flat rolled products of iron or non-alloy steel’, are basically one and the same thing; that they are basically iron sheets and noth- ing else and as such scrap is nothing but iron scrap correctly classifiable under sub-heading 7204.10. Shri V.K. Purwar, Director, at the time of regular hearing referred to Note 5 to Section XV of the Tariff according to which `except where the headings otherwise require, articles of base metal (including articles of mix- ed materials treated as articles of base metal under the Interpretative Rules) containing two or more base metals are to be treated as articles of the base metal predominating by weight over each of the other metals. For this purpose :

(a) Iron and steel, or different kinds of iron or steel, are regarded as one and the same metal;

(b) An alloy is regarded as being entirely composed of that metal as an alloy of which, by virtue of Note 3, it is classified; and

(c) A cermet of Heading No. 81.13 is regarded as a single base metal.

He contended that according to the said Note, iron and steel or different kinds of iron or steel would be regarded as one and the same metal. He also submitted that trade nomenclature has to be accepted as held by the Supreme Court in the case of Collector, Central Excise v. Krishna Carbon Paper Co. - 1988(09)LCX0051 Eq 1988 (037) ELT 0480 (S.C.) = 1989 (020) ECR 0273 (SC); that no show cause notice was issued to them before approving the classification list. He, however conceded that no harm has been caused to him as the second classification list was also about the classification of scrap of non alloy steel. Shri D.S. Negi, ld. SDR pointed out that there are different sub-headings in the Central Excise Tariff for the scrap depending on the metal; that the appellants were using the bulk steel and no reference to trade parlance is warranted as there is no ambiguity in the matter.

4. We have gone through the submissions of both the sides. We observe that the Heading 72.04 of the Tariff reads as under :-

5. It is observed that sub-heading 7204.10 covers scrap of iron only whereas the scrap involved in the present matter is of non alloy steel. There is no basis for the appellants to contend that iron or steel are the same metal. The reliance on Note 5 to Section XV of the Tariff or on Import and Export Policy-April, 1985 - March 1988 is misplaced. Note 5 to Section XV deals with the classification of composite articles based on predominance of weight and for that purpose iron and steel are regarded as one and the same metal. In fact the said note supports the case of the department inasmuch as for the purpose of ascertaining the predominance of metal in a composite article iron and steel are to be regarded as one and the same metal and not otherwise.

6. It is also observed that Shri Purwar admitted at the time of hearing that the unit was using mild steel as input. Accordingly the scrap generated in appellant’s unit cannot be regarded as scrap of iron classifiable under sub-heading 7204.10 of the Tariff. It is rightly classifiable under sub-heading 7204.90. In view of this, the appeal is dismissed.

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Equivalent 1998 (103) ELT 238 (Tribunal)