Quantity-based exemption limits can bar scrap relief under Notification No. 89/95-C.E. for waste from such clearances.

Waste and scrap arising in the manufacture of goods cleared under an exemption limited by quantity in a financial year were not eligible for exemption under Notification No. 89/95-C.E. The notification exempts waste, pairings and scrap generated from exempted goods, but its explanation excludes goods exempted by notifications granting relief on the basis of value or quantity of clearances. Where the assessee availed Notification No. 6/2000-C.E. for clearances up to a specified aggregate quantity, that exemption operated as a quantity-based concession rather than full exemption. Accordingly, the goods could not be treated as fully exempted goods for purposes of Notification No. 89/95-C.E., and the scrap exemption was unavailable.

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Issues: Whether waste and scrap arising in the manufacture of exempted goods was entitled to exemption under Notification No. 89/95-C.E. where the assessee was also manufacturing other excisable goods cleared under a notification granting exemption up to a specified quantity in a financial year.

Analysis: Notification No. 89/95-C.E. exempts waste, pairings and scrap arising in the course of manufacture of exempted goods, but the explanation excludes goods exempted by a notification where exemption is granted on the basis of value or quantity of clearances in a financial year. The assessee was availing exemption under Notification No. 6/2000-C.E. (S. No. 77), which limited exemption to the first clearance of an aggregate quantity not exceeding 2500 MT. Such a notification operates as an exemption based on quantity of clearance, and therefore goods cleared under it cannot be treated as fully exempted goods for the purposes of Notification No. 89/95-C.E.

Conclusion: The benefit of Notification No. 89/95-C.E. was not available to the assessee in respect of the waste and scrap.

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