2004 (8) TMI 266 - AT - Central Excise

Tribunal denies duty exemption on waste, scrap, upholds demand. Penalties modified.

The Tribunal held that the respondents were not entitled to the benefit of exemption under Notification No. 89/95-C.E. for payment of duty on waste and ... Waste and scrap Issues:1. Benefit of exemption Notification No. 89/95-C.E. for payment of duty on waste and scrap.Analysis:1. The appeals were filed by the Revenue against two different orders, which were being disposed of through a common order due to common facts and issues. The first appeal was against the duty demand and penalty imposed on the respondents for waste and scrap cleared during a specific period. The second appeal was against the disallowance of the claim regarding the benefit of Notification No. 89/95-C.E. for payment of duty on waste and scrap arising in the course of manufacture of exempted goods.2. The central issue in both appeals was whether the respondents were entitled to the benefit of exemption Notification No. 89/95-C.E. for payment of duty on waste and scrap during the disputed period. The notification exempts waste, parings, and scrap arising in the course of manufacturing exempted goods from excise duty, subject to certain conditions.3. The relevant portion of Notification No. 89/95-C.E. was crucial for deciding both appeals. The notification exempts waste and scrap arising in the course of manufacturing exempted goods from excise duty, provided that such waste and scrap are cleared from a factory where only exempted goods are manufactured.4. The Tribunal observed that the respondents had cleared waste and scrap from a factory where excisable goods other than exempted goods were also manufactured. Therefore, they could not claim the benefit of the notification for duty exemption. The contention that the respondents later stopped manufacturing excisable goods and filed a classification declaration claiming exemption was not accepted.5. It was emphasized that exemption notifications must be strictly interpreted to prevent undue benefits to the assessee and loss to the Revenue. Since the respondents cleared waste and scrap from a factory manufacturing excisable goods, they were not entitled to the exemption under the notification. The duty demand was rightly confirmed by the adjudicating authority.6. The Tribunal distinguished the present case from a previous judgment cited by the counsel, emphasizing that the circumstances were different. The judgment cited did not apply to the current situation where waste and scrap were cleared from a factory producing both exempted and excisable goods.7. Consequently, the impugned orders allowing the benefit of the notification and setting aside the duty demand were set aside. The original orders confirming the duty demand were restored, but the penalty imposed was modified and set aside due to the lack of warranting circumstances. Both appeals of the Revenue were accepted accordingly.