2006 (7) TMI 393 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 53/97-Cus. and 52/03-Cus. regarding wastage norms for imported raw materials by an EOU.
2. Applicability of Para 6-8(e) of the Export-Import Policy and Appendix 14L of the Handbook of Procedures in determining duty liability on wastage.
3. Authority of the Development Commissioner to fix norms for wastage.
4. Permission for destruction of waste and scrap by customs authorities to avoid duty liability.
5. Compliance with conditions for destruction of waste as per relevant notifications.

Analysis:

1. The case involves a dispute over the duty liability on excess wastage of imported raw materials by an EOU. The Appellant argued that the Notification No. 53/97-Cus. and 52/03-Cus. did not specify any norms for wastage when raw materials are used in production. The Tribunal found that the notifications exempt duty on scrap and waste if destroyed, which aligns with the Appellant's situation of genuine waste/scrap not intended for clearance to DTA.

2. The Appellant contended that under Export Import Policy 2002-2007, destruction of wastage with customs authorities' permission exempts duty. The Commissioner Appeals held that the Appellant exceeded prescribed norms for wastage, but the Tribunal disagreed, citing the lack of approval by the Board of Approvals for norms set by the Development Commissioner. The Tribunal upheld the duty exemption upon destruction with permission, disregarding a later directive for destruction.

3. The issue of the Development Commissioner's authority to set norms for wastage was raised. The Commissioner Appeals approved certain wastage percentages, but the Tribunal found the lack of Board of Approvals' approval for these norms. Consequently, the Tribunal ruled that the provisions of the Export-Import Policy would apply, and duty would not be payable if goods were destroyed with permission.

4. The Tribunal emphasized the importance of obtaining permission for destruction of waste and scrap to avoid duty liability. The Appellant had requested such permission due to environmental hazards caused by accumulated waste. The Tribunal noted that the Assistant Commissioner had not disputed the waste's nature as genuine, allowing for its destruction as per the relevant notifications.

5. Ultimately, the Tribunal set aside the Assistant Commissioner's order, allowing the appeal based on the Appellant's compliance with the conditions for destruction of waste outlined in the notifications. The decision highlights the significance of adherence to regulatory requirements for duty exemption on waste and scrap generated during production processes.