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Regarding Central Excise Duty on Steel Formers Consumed Captively in
Induction Furnace
Central
Excise Circular No. 690 dated 20th January 2003
I
am directed to say that doubts have been raised regarding leviability of Central
Excise Duty on "Steel Formers" consumed captively in the Induction
Furnaces. "Steel formers" are hollow cylindrical profiles. They are
placed inside the crucible of the Induction Furnace. The space between the
crucible and the former is packed with ramming mass (mixture of Sodium Silicate
& Boric Acid) and asbestos sheets. Then the hollow portion inside the former
is charged with scrap iron, sponge iron, etc. When the furnace is switched on,
the ramming mass melts & forms a coating on the crucible. The scrap iron
also melts and along with it so does portion of the "former". The
liquid metal is then poured in to moulds to form billets or ingots. A
"former" melts partially on each charge & gets consumed completely
after 10 to 15 charges.
2. The matter has been examined in the Board.
Considering the nature of the product "Steel Former", which has a
distinctive name, character and use, there is no doubt that it is an excisable
commodity and its classification would be under heading 73.06, as a hollow
profile.
3. Since the "steel former" is
actually consumed and is contained in the ingots and billets manufactured in the
units, it is in the nature of an "input". Notification No.67/95-CE
dated 16.3.95 was amended by Notification No. 59/97-CE dated 30.8.97 so as to
exclude ingots and billets (final products) falling under sub headings 7206.90
and 7207.90 from the coverage of the captive consumption notification. In other
words, any "input" manufactured inside a factory working under the
compounded levy scheme, and consumed captively in the manufacture of ingots and
billets, would be liable to duty.
4. The compounded levy scheme was introduced
with effect from 1.9.97 and, therefore, the amendment done to Notification No.
67/ 95 on 30.8.97 was a conscious one. The compounded levy scheme was applicable
to ingots and billets of non-alloy steel falling under sub headings 7206.90 and
7207.90, manufactured in an induction furnace unit. The scheme was withdrawn on
1.4.2000 (vide Notification No. 16/ 2000-CE dated 01.03.2000). As such duty was
payable on "Steel Formers" captively consumed by Induction Furnace
Units working under the Compounded Levy Scheme, during the period 01.09.1997 to
31.03.2000.
5.
Trade and field formations may be informed accordingly.
6.
Receipt of this Circular may please be acknowledged.
7.
Hindi version will follow.
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