Exclusion of scrap clearances from exemption turnover under duty-paid removal rules preserves the small-scale exemption benefit.

Waste or scrap cleared on payment of duty under Rule 57F(5) could not be counted in the aggregate value of clearances for Notification No. 1/93-C.E. because that aggregate covered only clearances made without duty or at the concessional rate under the notification. Where the record did not show that the scrap clearances were made under the notification, their value could not be included in the exemption computation. The demand based on crossing the exemption limit was therefore unsustainable, and the assessee retained the exemption benefit.

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Issues: Whether the value of scrap cleared on payment of duty under Rule 57F(5) could be included in the aggregate value of clearances for the purpose of Notification No. 1/93-C.E.

Analysis: Rule 57F(5) permitted removal of waste arising from processing of inputs on payment of duty. The aggregate value limit under Notification No. 1/93-C.E. covered clearances made without payment of duty or at the concessional rate under the notification. Clearances effected on payment of duty otherwise than in terms of the notification could not be counted towards that aggregate value. As the record did not show that the scrap clearances were made under the notification, there was no basis to include their value in the exemption computation.

Conclusion: The scrap cleared on payment of duty was not includible in the aggregate value of clearances, and the demand based on crossing the exemption limit was unsustainable.

Final Conclusion: The assessee was entitled to the exemption benefit and the impugned order was set aside.

Ratio Decidendi: Clearances of waste or scrap made on payment of duty under the relevant rule cannot be included in the aggregate value of clearances for an exemption notification unless the notification itself governs those clearances.

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