JUDGMENT

Kirpal, J.-The appellant is engaged in the manufacture and sale of two-wheeler vehicles and it has been granted central excise licence by the respondent for the manufacture of the scooters together with the parts and accessories.

2. For the purpose of manufacturing of scooters and parts and accessories thereof the appellant purchases duty paid steel sheets on which the duty of excise at the rate of Rs. 715 per ton is paid by it under Tariff Heading 7212.50. With effect from 1st March, 1986 the Modvat Credit Scheme was introduced to give credit to the manufacturers in respect of the duty of excise already paid by them and allow them the benefit of set off of such credit of duty already paid against the duty payable by them on the scooters as well as parts and accessories thereof.

3. After working of these sheets for the manufacture of parts of scooters some portions of the sheets remain. Some of these portions are used by the appellant for the manufacture of small parts of the scooters.

4. The dispute which arises in the present case is as to how should these portions be classified. According to the respondent these portions, which the Tribunal has for the sake of convenience described as off-cuts , being fit to be used for the manufacture of further articles are nothing but steel sheets and they should have been cleared at the rate of duty at which they were brought in the factory and credit taken, i.e., at the rate of Rs. 715/- per ton. The contention of the appellant before the excise authorities was that it is only some portions of off-cuts, depending upon their sizes, which are used for the manufacture of some small parts of the scooter. These portions or off-cuts cannot be classified as sheets and their correct classification would be that of waste and scrap. According to the appellant the duty which is payable on waste and scrap of steel under the tariff item 7203.20 is Rs. 365/- per ton and it is at this rate that the duty should be claimed from it.

5. The contention of the appellant was neither accepted by the assessing authority, i.e., Assistant Collector nor by the Collector, Appeals. A second appeal to the Tribunal met with the same fate, hence this appeal.

6. On behalf of the appellant, Sh. Joseph Vellapally, learned senior counsel, has contended that after the sheets have been cut and used for the manufacture of scooter, the part which remains is only waste and scrap. It is only some of these pieces of steel which is used for the manufacture of ancillary items and the correct tariff heading under which these pieces would fall is 7203.20, the rate being Rs. 365/- per ton. In the alternative it was submitted by him that these cut pieces would fall under heading 7210.10. The contention of Sh. A. Subba Rao, learned counsel for the respondent, however, was that the appellant had bought sheets and had claimed credit at the rate of Rs. 715/- per ton and now when parts thereof are used in manufacture of other items these portions of off-cuts would correctly be classified under heading 7212.32.

7. It would, at this stage, be appropriate to set out the three competing entires. These are as follows :

"72.03 Waste and Scrap

7203.10 -Of iron  Rs. 80 per tonne

7203.20 -Of steel  Rs. 365 per tonne

72.10 -Angles, shapes and sections of iron or steel, not elsewhere specified (other than slotted angles and slotted channels), rolled, forged, extruded, formed, finished, slotted angles.

7210.10 -Angles, shapes and Rs. 365 sections (other than slot- per tonne ted angles and slotted channels)

7210.20 -Slotted angles  15%

72.12 -Coils for re-rolling, sheets, plates, and universal plates of iron or steel, hot or cold rolled, whether galvanised or not; forms such as ridges, channels (other than slotted channels) made from sheets, plates, or universal plates; and tin plates and tinned, lacquered or varnished sheets including tin taggers and cuttings or such plates, sheets or taggers; slotte