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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether waste, parings and scrap arising from polyurethane bread, an exempt intermediate product, satisfied the condition in Notification No. 14/92 that such waste must arise from goods on which duty had already been paid, so as to qualify for the concessional rate under Sl. No. 19.
Analysis: The waste and scrap arose during cutting of polyurethane bread into blocks. The intermediate bread was produced from duty-paid inputs and was itself covered by Notification No. 217/86. The Board's instructions treated nil duty or fully exempt duty as duty already discharged for the purpose of such notifications. The earlier decision relied upon by the Revenue was distinguished in subsequent Tribunal precedent, which recognized that the benefit of the notification could not be denied where the waste arose from an exempt intermediate product manufactured from duty-paid materials.
Conclusion: The waste, parings and scrap were held to have arisen from goods on which duty of excise had already been discharged in the relevant legal sense, and the assessee was entitled to the benefit of Notification No. 14/92.
Ratio Decidendi: Waste arising from an exempt intermediate product manufactured out of duty-paid inputs is to be treated as arising from goods on which duty has already been paid for the purpose of the exemption notification, where the applicable Board instructions and governing notification so indicate.
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