Jyoti Balasundaram, Member (J)

1. Aggrieved by the orders of the Collector of Central Excise, Rajkot, reclassifying gullies/patlies of copper/brass under Heading 7403.21 of the Central Excise Tariff Act, 1985, confirming demands for duty on gullies/patlies and sheets and circles of copper/brass and imposing penalties upon the appellant firms and their partner, the appellants have preferred the above appeals. In E/896/91 (Ajit Metal Industries) a duty demand of Rs. 99,742.50 (BED Rs. 91,418.40 + SED Rs. 8324.10) has been confirmed on 30.225 M.Ts. of gullies/patlies manufactured and cleared for captive consumption during the period 1-8-1985 to 1-4-1986 and duty of Rs. 17,08,678.58 (BED Rs. 16,54,695.34 + SED Rs. 53,983.24) has been demanded on 493.97 M.Ts. of sheets and circles of copper/brass manufactured and cleared between 1-8-1985 and 30-6-1990. Penalty of Rs. 2,25,000 has been imposed on the firm. E/903/91 arises out of the same order, against the penalty of Rs. 25,000/- imposed upon the partner of Ajit Metals. In E/902/91, the duty on 213.746 M.Ts. of gullies/patlies works out to Rs. 7,05,361.80 (BED Rs. 6,49,858.20 + SED Rs. 55,503.60) and duty on 875.004 M.Ts. of sheets and circles of copper/brass works out to Rs. 29,92,560.35 (BED Rs. 28,92,581.37 + SED Rs. 99,978.98) - the period of clearance is the same as in E/896/91. Penalty is to the tune of Rs. 5 lakhs. A penalty of Rs. 50,000/-imposed upon the partner of Ashwin Metal Works by the same impugned order has been challenged in E/904/91.

2. The facts of the case are as below :

The appellants are engaged in the manufacture of (i) sheets and circles of copper/brass; (ii) gullies/patlies of copper/brass; (iii) waste and scrap of copper /brass, all products falling under Tariff Item 26A of the CE Tariff as it existed prior to 28-2-1986 and thereafter under Chapter 74 of the Central Excise Tariff Act, 1985. Classification lists were filed wherein Item (i) was declared under Tariff Item 26A(6) of the erstwhile tariff and thereafter under sub-heading 7404.00 or 7409.20 CETA during the period prior to and subsequent to 1-3-1988, Item (ii) was declared under Tariff Item 26A(4) prior to 28-2-1986 as castings and thereafter under sub-heading 7410.00 or 7419.91 CETA as other articles of copper and Item (iii) was declared under erstwhile Item 26A(2) prior to 28-2-1986 and thereafter under sub-heading 7402.00 or 7404.00 CETA.

3. It appeared to the Department that gullies/patlies of copper/brass are in the form of "slab" manufactured by way of melting of various materials namely waste and scrap, zinc and lead and are appropriately classifiable under TI 26A(1) of the C.E.T. as it existed prior to 28-2-1986 and thereafter under sub-heading 7401.00 or 7403.21 of the CETA, 1985 during the period prior to and subsequent to 1-3-1988. It further appeared that (a) partial exemption/concessional rate of duty in respect of sheets and circles of copper/brass, @ Rs. 700/- per m.t. Rs. 1,200/- per m.t. or Rs. 1,260/- per m.t. and (b) exemption from payment of whole of excise duty in respect of gullies/patlies of copper/brass in terms of Notification Nos. 174/84, dated 1-8-1984,149/86, dated 1-3-1986, 98/88, dated 1-3-1988 and Notification No. 178/88, dated 13-5-1988 as amended by Notification No. 68/89, dated 1-3-1989 was wrongly availed of by the appellants as the condition stipulated in the Notifications namely that copper and articles thereof falling under TI 26A of the Central Excise Tariff or under Chapter 74 of the Central Excise Tariff Act, 1985 used in manufacture of these products should have discharged duty liability under Section 3 of the Central Excises and Salt Act, 1944 or additional duty under Customs Tariff Act, 1975, as the case may be, had not been fulfilled and that the inputs of copper and articles thereof were clearly recognisable as non-duty paid (exemption from payment of whole of duty of excise was claimed by the appellants in respect of waste and scrap of copper/brass