2004 (12) TMI 527 - AT - Central Excise

Summary

Issues:
Denial of benefit under Notification No. 202/88-C.E. due to non-duty paid inputs.

Analysis:
The case involved the denial of the benefit of Notification No. 202/88-C.E. to the appellants because the inputs used in the final product were deemed as non-duty paid. The appellants argued that as per the Explanation to the Notification, all stocks of inputs, except those clearly recognizable as non-duty paid, should be deemed as duty paid. They purchased scrap of old and used rails and other scrap from the market for manufacturing the final product. The Revenue contended that the scrap used was clearly recognizable as non-duty paid, citing a decision of the Hon'ble Supreme Court in a similar case.

The admitted facts revealed that the appellants purchased old and used rails from auctions and scrap from the market for manufacturing the final product while availing the benefit of Notification No. 202/88-C.E. The condition of the notification required the finished goods to be manufactured from duty paid inputs. Referring to the Supreme Court decision in a similar case, it was established that waste and scrap purchased from the open market could not be considered as duty paid unless proven otherwise. The Supreme Court emphasized that unless it can be demonstrated that the waste and scrap were previously subject to excise duty, it cannot be assumed that they are duty paid, especially when not all scrap and waste material used had been dutiable earlier. The Court clarified that waste and scrap are not always manufactured products or excisable, leading to the dismissal of the appeal based on the precedent set by the Supreme Court.

In conclusion, the Tribunal found no merit in the appeal based on the Supreme Court's decision and dismissed the appeal accordingly.