Exemption for aluminium and copper scrap applied where processed inputs satisfied MODVAT and procedural conditions.

Waste and scrap arising from processed bare aluminium and copper wires, and from insulated wires and cables, were treated as exempt where MODVAT credit had been availed on the inputs and the conditions in the relevant notifications and Rule 57F(4) were satisfied. The record showed the inputs had borne additional duty, the scrap resulted from processing, and the department's objection for lack of proof of such duty payment was not accepted. On that basis, the scrap was held not liable to central excise duty and the demand failed.

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Issues: Whether duty was payable on scrap of bare aluminium and copper wires, and on scrap of insulated wires and cables, when MODVAT credit had been availed on the inputs and the scrap was claimed to be covered by the relevant exemption notifications.

Analysis: The classification list had shown nil duty and the department had verified the MODVAT records and duty-paying documents. The evidence indicated that the inputs had borne additional duty and that the scrap arose from the processing of such inputs. Rule 57F(4) permitted waste arising from processed inputs to be removed either on payment of duty or without payment of duty where the prescribed conditions and procedure were satisfied. The exemption notifications relied upon by the appellants exempted waste and scrap of aluminium and copper when the stipulated conditions were met, and the departmental objection that no proof existed of payment of additional duty on the inputs was not accepted on the record.

Conclusion: The scrap was not liable to central excise duty and the demand was unsustainable.

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