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Issues: (i) whether refund was admissible in respect of duty paid on returned capital goods when credit had been taken only to the extent of 50%; (ii) whether sale of old used material, scrap and waste arising from dismantling of equipment was liable to central excise duty; and (iii) whether penalty under Section 11AC of the Central Excise Act, 1944 was sustainable.
Issue (i): whether refund was admissible in respect of duty paid on returned capital goods when credit had been taken only to the extent of 50%?
Analysis: The duty credit had been availed only to the extent of half of the duty amount, and the goods were returned because they did not conform to specifications, though full duty had been paid.
Conclusion: Refund was admissible only to the extent of the credit lawfully taken, and the assessee was held entitled to refund of Rs. 27,750.50.
Issue (ii): whether sale of old used material, scrap and waste arising from dismantling of equipment was liable to central excise duty?
Analysis: The Tribunal followed its earlier view that scrap and waste arising in the course of dismantling of damaged equipment are not excisable and therefore do not attract duty.
Conclusion: The material was held not liable to duty, and refund of Rs. 1,33,162 was allowed.
Issue (iii): whether penalty under Section 11AC of the Central Excise Act, 1944 was sustainable?
Analysis: In view of the substantial relief granted on the main disputes, the basis for penalty was not made out.
Conclusion: Penalty under Section 11AC was set aside.
Final Conclusion: The assessee succeeded on the principal issues and the appeal was disposed of by granting refund relief and deleting the penalty, with the remaining items not pressed.
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