2001 (4) TMI 722 - AT - Central Excise

Summary

Issues:
1. Whether the value of clearances of waste and scrap of copper cleared at normal rate of duty should be added to the aggregate value of goods cleared to determine the exemption under Notification No. 1/93.
2. Interpretation of the term "specified goods" as per Notification No. 1/93.
3. Impact of paying full Tariff Rate (normal rate of duty) on certain goods listed in the Annexure on the benefit of the notification.

Analysis:
1. The appellants, a Small Scale Industry (SSI) unit, claimed SSI exemption under Notification No. 1/93 for their manufacture of copper winding wires but did not claim the exemption for copper scrap cleared at the normal rate of duty. The dispute arose when a duty demand was made by including the value of scrap in the aggregate clearance value, potentially crossing the exemption slab of 50 lakhs. The Assistant Collector upheld the demand, stating that the value of waste and scrap should be included in determining the exemption under the notification. The Commissioner (Appeals) also confirmed this decision, emphasizing that as per Explanation II of the notification, the value of scrap should be added to the aggregate clearance value. However, the Tribunal disagreed, stating that if goods are cleared at the normal rate of duty, they should not be considered as "specified goods" for the purpose of calculating the exemption slab under the notification.

2. Examining Notification No. 1/93, the Tribunal noted that the term "specified goods" is not explicitly defined in the notification. However, it was observed that specified goods are those exempted by the notification, listed in the annexure, and cleared for home consumption by the manufacturer. The Tribunal highlighted that for goods to be considered "specified goods," they must meet all three conditions simultaneously. If goods are not duty-exempt, even if listed in the annexure, they do not qualify as "specified goods." Citing a previous decision by a Larger Bench, it was emphasized that goods falling outside the exemption clause of the notification, such as those cleared at the normal rate of duty, should not be treated as "specified goods" for exemption calculation purposes.

3. The Tribunal referred to a previous decision by a Larger Bench which clarified that if a manufacturer opts to pay the full Tariff Rate (normal rate of duty) for certain goods listed in the annexure, it does not disqualify other goods listed in the annexure from availing the notification's benefit. Therefore, goods cleared at the normal rate of duty should not be considered as "specified goods" for the purpose of calculating the exemption slab. In this case, the Tribunal concluded that charging duty on waste and scrap at the normal rate and then including their value in the aggregate clearance value for calculating the duty slab under the notification was incorrect. Consequently, the Tribunal set aside the lower authority's order and allowed the appeal.