Nil-rate clearance of sesame seed waste bars duty demand under the proviso for non-excisable waste and scrap.

The proviso to paragraph 6 of Notification No. 22/2003-CE applies only where the cleared waste or scrap is not excisable. Sesame seed waste was treated under the relevant notification and departmental circular as waste from food industries cleared at nil rate of duty under Notification No. 23/2003-CE, so it was not a non-excisable item. Because that condition precedent was absent, the demand based on the proviso had no legal foundation and was not sustainable. The impugned orders were set aside and the assessee's appeals were allowed.

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Issues: Whether the duty demand on clearance of sesame seed waste was sustainable under the proviso to paragraph 6 of Notification No. 22/2003-CE dated 21.03.2003, and whether such waste was covered as excisable waste cleared at nil rate of duty under Notification No. 23/2003-CE dated 31.03.2003.

Analysis: The proviso to paragraph 6 of Notification No. 22/2003-CE applied only where the articles, including waste and scrap, were not excisable. The notification and the departmental circular showed that waste from food industries, including waste of sesame seeds, was treated as cleared at nil rate of duty under Notification No. 23/2003-CE. Since sesame seed waste was thus not a non-excisable item, the condition precedent for invoking the proviso to paragraph 6 was absent. The very foundation of the demand therefore failed.

Conclusion: The duty demand was not sustainable and the issue was decided in favour of the assessee.

Final Conclusion: The impugned orders were set aside and the appeals were allowed.

Ratio Decidendi: A demand based on the proviso to paragraph 6 of Notification No. 22/2003-CE can be sustained only when the cleared waste or scrap is not excisable; where the relevant waste is covered by a notification granting nil-rate clearance, the proviso cannot be invoked.

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