1999 (6) TMI 453 - AT - Central Excise

Clinker used captively in the manufacture of cement - Exemption under Notification No. 7/92-C.E.

Summary

Issues:
1. Interpretation of Notification No. 7/92-C.E. regarding duty exemption for clinker used in cement manufacturing.
2. Determination of wastage of clinker during the manufacturing process.
3. Scope of show cause notices in demanding duty on clinker not used in cement production.

Analysis:

Issue 1: Interpretation of Notification No. 7/92-C.E.:
The appeal involved the interpretation of Notification No. 7/92-C.E., which exempted clinker used in cement manufacturing from duty. The Assistant Collector and the Commissioner (Appeals) held that duty was chargeable on clinker not used in cement production. The appellant argued that wastage of clinker during the manufacturing process should not disqualify it from the duty exemption. Citing the case of Union of India v. Indian Aluminium Co., the appellant contended that some wastage is natural in the manufacturing process and should not affect duty exemption eligibility.

Issue 2: Determination of Wastage:
The main contention revolved around the wastage of clinker during the conversion process into cement. The appellant claimed that a certain percentage of clinker naturally gets wasted during manufacturing, which should not disqualify it from duty exemption. The Revenue argued that if clinker was not used in cement production, duty should be charged on the unused quantity. The tribunal acknowledged the natural wastage during manufacturing and emphasized the need to ascertain whether the clinker was genuinely wasted during the process or not.

Issue 3: Scope of Show Cause Notices:
The tribunal deliberated on whether the authorities had exceeded the scope of the show cause notices in demanding duty on clinker not used in cement production. The appellant contended that the authorities went beyond the allegations in the notices by denying the existence of clinker wastage during manufacturing. The tribunal clarified that if the clinker was genuinely wasted in the manufacturing process, the duty exemption should apply even to the wasted quantity. The matter was remanded to the Assistant Commissioner to determine the factual position regarding clinker wastage during cement manufacturing and provide an opportunity for the appellant to present evidence supporting their claim.

In conclusion, the tribunal allowed the appeal by remand to ascertain whether the clinker was wasted during the manufacturing process or not, emphasizing the importance of factual determination in deciding the duty exemption eligibility for the clinker used in cement production.