M/S. L.M.L. LIMITED versus COLLECTOR OF CENTRAL EXCISE, KANPUR

Citation: [1997] SUPP. 3 S.C.R. 507 · Decided: 21-08-1997 · Supreme Court of India · Bench: J.S. VERMA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

MIS. L.M.L. LIMITED 
A 
v. 
COLLECTOR OF CENTRAf. EXCISE, KANPUR 
AUGUST 21, 1997 
(J.S. VERMA, CJ. AND B.N. KIRPAL, J.) 
B 
Central Excises and Salt Act, 1944-Chapter 72-Central EXcise 
Rules-Rule 4-Tariff items 72.03, 72.10, 72.12--0ff-cuts or portions of 
steet-Used in the manufacture of small parts of scooters-Classification 
of-Whether can be treated as steel sheets fa/ling under 7212.5(}-Held, . C 
11~The off-cuts being different sizes and shapes, classified as shapes falling 
under 7210.10. 
The appellant is a manufacturer of scooters and parts and acees-
sories thereof. The appellant purchased duty paid steel sheets under Tariff D 
heading 7212.50. The MODVAT credit scheme was introduced in March 
1986 to give the benefit of set off for the duty already paid against the duty 
payable by them on the scooters as well as parts and accessories thereof. 
After usage, of the steel sheets, the Appellant was using some remaining 
portions of "off-cuts" for manufacture of small parts of scooters. 
The Respondent demanded that the off-cuts being fit to be used for 
the Jl!anufacture of further articles they should be classified as steel sheets 
and that they should have been cleared at the l"dte of duty at which they 
were brought in the factory and credit taken. 
E 
Before the Assistant Collector the appellant contended that it was F 
only some portions of off-cuts which were used for manufacture of small 
parts, that these portions or off-cuts cannot be classified as sheets and that 
their classification would be that of waste and scrap under Tariff item 
7203.20. The Assistant Collector rejected the contention of the Appellailt 
and the appeals before Collector (Appeals) and the Tribunal were dis~ G 
missed. 
In appeal to this court it was contended by the Appellant that after 
the sheets have been cut and used for the manufacture of scooter, the part 
which remains is only waste and scrap, that it is only some of these pieces 
of steel which is nsed for the manufacture of ancillary items and that the H 
507 
508 
SUPREME COURT REPORTS [1997) SUPP. 3 S.C.R. 
A correct tariff heading under which these pieces would fall is 7203.20 at Rs. 
365 per ton or under 7210.10. 
The Respondents contended that the appellant bought sheets and 
had claimed credit at the rate of Rs. 715 per ton and that now when the 
parts thereof are used in manufacture of other items these portions or 
B off-cuts would be classified under 7212.12. 
Allowing the Appeal, this Court 
HELD : 1. The off-cuts which are used would clearly answer to the 
expression "shape" contained in tariff item 72.10. It is clear that the off-cuts 
C which are odd shaped and are used by the appellant do not answer to the 
description of sheet but can only be regarded as "shapes" falling under tariff 
entry 7210.10. [512-C] 
2. The off-cuts which remain after the parts of the scooter had been 
manufactured by using the steel sheets no longer retain their rectangular 
D shapes. These off-cuts which are of different shapes and sizes would clearly 
fall under the tariff entry 72.10. [512-B] 
3 .. The portions of cut sheets which are not used for recovery of metal 
or in the manufacture of chemicals cannot be cleared under tariff items 
E 
72.03. [511-G-HJ 
4. The appellant is entitled to clear the off-cuts of steel sheets by 
paying duty under tariff entry 72.10 at the rate of Rs. 365 per ton. [512-E] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3239 of 
F 1989. 
G 
From the Judgment and Order dated 2.5.89 of the Customs Excise 
and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 
E/3414/87-B in (Order No. 46 of 1989-B). 
Joseph Vellapally, R. Santhanam and KJ. John for the Appellant. 
A. Subba Rao, Mrs. Dipti Jain, V.K. Bajpai for P. Parmes~aran Adv. 
for the Respondent. 
The Judgment of the Court was delivered by 
H 
KIRPAL, J. The appellant is engaged in the manufacture and sale of 
L.M.L. LTD. v. C.C.E. KANPUR [KIRPAL,J.] 
509 
two-wheeler vehicles and it has been granted central excise licence by the A 
respondent for the manufacture of the scooters together with the parts and 
· accessories. 
For the purpose of manufacturing of scooters and parts and acces-
sories 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 B 
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 d
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