2004 (5) TMI 371 - AT - Central Excise

Summary

Issues Involved:
- Availability of benefit of Notification No. 49/97-C.E. to waste and scrap of iron and steel lying in stock as on 1-9-1997 with a company.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi raised the issue of whether the benefit of Notification No. 49/97-C.E., dated 1-8-1997 applied to waste and scrap of iron and steel held in stock as of 1-9-1997 by a specific company. In the absence of representation from the Respondents during the hearing, the Tribunal proceeded with the appeal based on the records and the arguments presented by the learned SDR. The Respondents were involved in the manufacture of M.S. Bars, subject to duty based on the annual production capacity since 1-9-1997 under Section 3A of the Central Excise Act. The waste and scrap generated during the manufacturing process of M.S. Bars was claimed to be exempted under Notification No. 49/97-C.E. effective from 1-9-1997. The Assistant Commissioner had demanded duty and imposed a penalty, contending that the exemption under the said Notification applied only to waste and scrap generated during manufacturing by units under the compounded levy scheme under Section 3A, not to waste and scrap held in balance on 1-9-1997. However, the Commissioner (Appeals) set aside the Adjudication Order, stating that the exemption covered waste and scrap generated both before and after the issuance of the Notification. The Commissioner referred to Circular No. 327/43/97-C.E., emphasizing the exemption of waste and scrap arising during manufacturing processes.

The learned SDR argued that the waste and scrap in question did not meet the conditions specified in the Notification for exemption. The waste and scrap had arisen during the manufacturing process when duty was payable under Section 3 of the Act, not under Section 3A. Even after the introduction of the Compounded Levy Scheme, duty was payable on the final goods, not under Section 3A. Therefore, the Tribunal concluded that the conditions outlined in the Notification were not satisfied concerning the waste and scrap in question. Consequently, the benefit of Notification No. 49/97-C.E. was deemed unavailable for the waste and scrap in question, upholding the duty demand. The Tribunal clarified that no penalty was imposable as the issue centered on the interpretation of the Notification. The appeal was disposed of accordingly.