2004 (9) TMI 413

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....lkar, JDR, for the Respondent. [Order]. - M/s. Diamond Tools Pvt. Ltd., the appellants are a SSI unit engaged in the manufacture of Spanners falling under Chapter Heading No. 82.04 of Central Excise Tariff Act. They are availing of Modvat credit on the inputs used in the manufacture of the final product. They are maintaining separate accounts for the final products, which are exported. They wer....

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....could not have been recovered from them without issue of demand and the rejection of their claim by the lower authorities is not proper. The benefit of Notification 16/97-C.E., dated 1-4-1997 and similar other Notifications of subsequent years cannot be denied to them on the ground that Modvat credit has been taken on the inputs and that the waste and scrap has been cleared in contravention of the....

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....input stage credit; they will have to pay merit duty. Their contention that waste and scrap is not a manufactured product and their reliance on the Apex Court's judgment in Khandelwal Metal & Engineering Works v. Union of India case 1985 (20) E.L.T. 222 (S.C.) is misplaced. Hon'ble Supreme Court in this case in Para 34 has inter alia held that production of waste and scrap is a necessary incident ....