Jyoti Balasundaram, Member (J)

1. The appellant in its factory at Durgapur manufactures Pig Iron, Steel Ingots and Iron Steel products. Prior to August, 1983 the said products were classifiable under erstwhile Tariff Items 25, 26 and 26AA respectively. The appellant had been paying Central Excise duty on the said items following the "later the better" principle; as such no Central Excise duty was paid on such Iron in crude form when used for the manufacture of Iron Steel Products. Appropriate Central Excise duty was determined and paid on Iron or Steel products when cleared. In the manufacture of Steel Ingots and various Iron Steel products Steel Melting Scrap arises. Steel Melting Scrap arising in the process of manufacture is captively consumed and is also cleared by the appellant to the Mini Steel Plants manufacturing Steel Ingots, Steel Castings or semi-finished Steel with the aid of Electric Arc furnace at "Nil" rate of duty after observing the procedure set out in Chapter X of the Central Excise Rules, 1944 (hereinafter to be referred to as the Rules) in terms of Notification 150/77 dated 18-6-1977 as amended by Notification No. 209/77 dated 2-7-1977.

2. By the show-