Nil duty on captive-consumption inputs cannot defeat exemption for waste and scrap under the relevant notifications.

Nil duty paid on PVC compounds was treated as sufficient duty payment for the purpose of exemption under Notification No. 53/88-C.E. and Notification No. 14/92-C.E. The benefit of those notifications could not be denied merely because the PVC compounds were captively consumed and cleared under Notification No. 217/86-C.E., with no duty actually paid at that stage. On that basis, denial of exemption for waste and scrap generated from the PVC compounds was unsustainable, and the exemption was held admissible.

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Issues: Whether the benefit of Notification No. 53/88-C.E. dated 1-3-1988 and Notification No. 14/92-C.E. dated 1-3-1992 could be denied in respect of waste and scrap generated from PVC compounds on the ground that no duty had been paid on the PVC compounds because they were captively consumed and cleared under Notification No. 217/86-C.E. dated 2-4-1986.

Analysis: The issue was treated as already settled by binding precedent. It was noted that nil duty paid on goods is to be regarded as appropriate duty paid for the purpose of the exemption notifications. It was also recognized that the benefit of an exemption notification cannot be denied merely because the inputs were received without payment of duty under a captive consumption exemption.

Conclusion: The denial of exemption was unsustainable and the benefit of the notifications was held admissible to the appellants.

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