Job-work clearances and waiver of pre-deposit secured where waste and scrap treatment did not defeat exemption benefits.

Clearance of waste and scrap sent to a job worker did not, on a prima facie view, require invocation of Rule 16A of the Central Excise Rules, 2002, and the benefit of Notification No. 214/86-CE was not denied merely because duty had been paid by the job worker on the returned manufactured goods. The department also failed to show that the value of the job-work material had to be included in the total clearance value of finished goods for para 3A of Notification No. 8/2003-CE. On that basis, complete waiver of pre-deposit of duty, interest and penalty was granted and recovery was stayed pending the appeals.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery in respect of the duty, interest and penalty demanded on waste and scrap cleared to a job worker.

Analysis: The demand arose from clearance of waste and scrap sent for conversion by a job worker, who had paid duty on the returned manufactured goods. On a prima facie view, there was no requirement to invoke the procedure under Rule 16A of the Central Excise Rules, 2002 or to deny the benefit of Notification No. 214/86-CE dated 25.3.1986 merely because duty had been paid by the job worker. The department also had not shown that the clearance value of the job-work material affected the total clearance value of the finished goods for the purposes of para 3A of Notification No. 8/2003-CE dated 1.3.2003.

Conclusion: The appellants made out a prima facie case for complete waiver of pre-deposit of duty, interest and penalty, and recovery was stayed during pendency of the appeals.

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