TaxTMI 
TaxTMI 
2004 (3) TMI 177
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....ent of duty, claiming the benefit of exemption under Notification No. 5/98-C.E. (as amended). The ferrous and non-ferrous waste and scrap which arose in the course of the above activity were also cleared without payment of duty, for which the benefit of exemption under Notification No. 89/95-C.E., dated 18-5-95 was claimed. The department issued six show cause notices for different periods comprised in November, 1996 to November, 2001, out of which only four show cause notices are relevant to the present case. Each of the four show cause notices contested the classification claim of the party and proposed to classify all the motor vehicles under Heading 87.07. Each notice alleged that the benefit of exemption under Notification No. 5/98 was....
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....42/- -Do- The present appeals are against the above demands of duty on scrap and the above penalties. 2. Heard both sides. Ld. Counsel for the appellants submitted that the benefit of exemption under Notification No. 89/95 had been wrongly denied in respect of the scrap, which had arisen in the course of manufacture of goods which were exempted from payment of duty. Counsel pointed out that goods of Headings 87.02 and 87.04 were exempt from duty in terms of Notification No. 5/98-C.E. and the change of classification of the goods to Heading 87.07 did not alter the position in effect as the duty on goods falling under Heading 87.07 had been waived by Central Government by Notification No. 27/2002-C.E. (N.T.), dated 23-7-2002 issued u....
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....ed goods are also manufactured." (Emphasis supplied) The meaning of the expression "exempted goods" occurring in the above proviso was provided by an Explanation which reads :- "Explanation. - For the purpose of this notification, the expression "exempted goods" means excisable goods which are chargeable to "Nil" rate of duty or, are exempted from the whole of the duty of excise leviable thereon by any other notification (not being a notification where exemption from the whole of duty of excise is granted based upon the value or quantity of clearances made in a financial year) issued under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 or sub-section (1) of Section 5A of the said Act." Ld. Counsel has argued to the effect....
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....note that this notification belongs to the excluded category mentioned in the Explanation ibid vide the bracketed portion and, therefore, applicability of the notification would not render the goods "exempt" for the purpose of the proviso to Notification 89/95-C.E. Thus, during the relevant period, when the scrap was cleared without payment of duty, dutiable products were manufactured in the factory. Therefore, the scrap manufactured and cleared by the appellants attracted the proviso to Notification No. 89/95-C.E. and, consequently, the benefit of exemption under the Notification was not available to the scrap. Accordingly, we hold that duty of excise is recoverable on the subject clearances of scrap. We have not found any effective challe....