P.C. Jain, Member (T)

1. This bunch of appeals raises common substantive issues. Therefore, they are being dealt with in a common order.

2. Briefly stated common undisputed facts are that the appellant mills are manufacturers of iron and steel products having rolling mills. They are getting re-rollable scrap from the market and manufacturing rounds, bars, flats and rods. Invoices of purchase indicate that the scrap used by them is ship breaking scrap and/or re-rollable scrap. In some of these matters purchase invoices merely mentioned re-rollable scrap.

2.1 A common question that arises in all these matters is whether the rolling mills are entitled to the benefit of Notification No. 208/83 as amended from time to time.

2.2 In order to understand the controversy it is appropriate to reproduce relevant portions of Notification 208/83, as it stood from time to time :-

2.3 With effect from 1-3-1986 new Central Excise Tariff under Central Excise Tariff Act, 1985 came into existence having six digit Tariff Headings. Consequent to change in Tariff, Table to the Notification No. 208/83 also underwent a change which is reproduced as below :-

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2.4 Simultaneously, a new Heading 72.15 in the new Tariff was introduced as follows :-

In other words, goods and materials of iron and steel obtained as a result of dismantling of ships, boats and other floating structures were made specifically liable to duty under the said Tariff Heading 72.15. It is to be noted at this stage that Tariff Heading 72.15 did not find a place in Col. 2 relating to description of inputs of the Table to Notification No. 208/83.

2.4A Similarly Tariff Heading 73.09 was introduced in the New Tariff w.e.f. 1-3-1986 relating to goods and materials arising in the course of breaking up of ships and boats and other floating structures.

2.5 Later on by Notification 101/87-C.E., dated 27-3-1987 an amendment was made in Notification No. 208/83-C.E. by virtue of which Tariff sub-headings 7215.00 and 7309.00 were also introduced in Col. 2 against S. No. 2 of the Table to Notification 208/83. Effect of this notification is that ship breaking scrap has been declared as 'input' for manufacturing the final products mentioned against S. No. 2 in Col. 3 of the Table to the said notification. In other words, the controversy whether ship breaking re-rollable scrap is a specified input for manufacture of final products mentioned in Notification No. 208/83 ceased with effect from this date i.e. 27-3-1987.

2.6 It would be seen that in order to avail benefit of Notification No. 208/83 following conditions need to be satisfied :-

(i) Final products mentioned in the Table against a serial number in the Table should be manufactured out of the specified inputs mentioned against that serial number in Col. 2. In other words, both the final products and corresponding inputs are specified in the notification itself.

(ii) The specified inputs falling under specified item should have paid duty either under the Central Excises and Salt Act or countervailing duty (CVD) under the Customs Act.

(iii) No credit of the excise duty or CVD, as the case may be, paid on such inputs has been taken under Rule 56A or Rule 57A of the Central Excise Rules.

2.7 Explanation to the notification clarifies that all stocks of inputs in the country except such stocks clearly recognisable as being non-duty, paid shall be deemed to be duty paid inputs.

2.8 First controversy which arises in these matters is whether ship breaking scrap before amendment of Notification No. 208/83 by Notification 101/87 can be considered as a specified input to which Notification 208/83 is applicable. Even this period before 27-3-1987 has been divided into two categories i.e. the period prior to 1-3-1986 when there was no concept of ship breaking in the Central Excise Tariff and the period after 1-3-1986 to 26-3-1987 when the Central Excise Tariff specified ship breaking scrap as a separate dutiable items under Headings 72.15 and 73.09 but did no