Exemption for waste and scrap from a 100% export oriented unit defeated the excise duty demand and penalty.

Entitlement to the benefit of Notification No. 83/90 dated 20.03.1990 was ative for the duty demand on clearance of waste and scrap from a 100% export oriented unit. The Tribunal noted that in earlier proceedings it had already been held that the assessee was covered by the exemption notification, and the impugned demand was only a consequence of the earlier higher-rate assessment. Once the exemption entitlement stood recognised, the foundation for the central excise duty demand and related penalty could not survive. The demand and penalty were therefore held unsustainable, and the appeal was allowed in favour of the assessee.

---

---

Issues: Whether the demand of central excise duty and penalty on clearance of waste and scrap from a 100% export oriented unit was sustainable after the Tribunal had already held that the benefit of the relevant exemption notification was available.

Analysis: The clearance of waste and scrap had been assessed on the basis of the higher rate of duty, but the Tribunal noted that in the earlier proceedings it had already been held that the appellant was entitled to the benefit of Notification No. 83/90 dated 20.03.1990. Once that entitlement was recognised, the demand raised in the impugned order became only a consequence of the earlier view on rate of duty. The foundation of the demand, therefore, could not survive.

Conclusion: The demand and penalty were not sustainable and the appeal was allowed in favour of the assessee.

---