2007 (4) TMI 54 - AT - Central Excise

Dutiability Department contended that appellant is liable to duty on the waste and scrape arise during manufacture of exempted products and accordingly demand were made alongwith penalty Held that demand and penalty sustained

Summary

Issues:
1. Applicability of Notification No. 89/95-C.E. dated 18-5-1995 to waste and scrap arising in the course of manufacturing exempted goods.
2. Demand of duty on waste and scrap cleared without payment during a specific period.
3. Interpretation of the proviso to the Notification regarding waste, parings, and scrap cleared from a factory manufacturing excisable goods other than exempted goods.
4. Adjudication of the appeal against the duty demand amounting to Rs. 21,791.

Analysis:

1. The appellants were involved in manufacturing printed cartons/boxes of paper board subject to excise duty and printed labels, maps, charts subject to a 'nil' rate of duty. Waste and scrap of paper board arose during the production of exempted products, which were cleared without duty payment under Notification No. 89/95-C.E. The proviso to the Notification excluded waste, parings, and scrap cleared from a factory manufacturing excisable goods other than exempted goods from the exemption.

2. Lower authorities demanded duty on the waste and scrap based on the proviso to the Notification. The appellate authority set aside the penalties imposed but upheld the duty demand. The appeal was filed against the duty demand of Rs. 21,791, which was the subject of contention.

3. The appellants contended that waste and scrap of paper were not 'manufactured' for excise duty purposes. However, the Notification considered such waste and scrap as 'goods' liable for duty if not exempted. The main ground of appeal was the non-applicability of duty due to the waste arising in the course of manufacturing exempted goods. The lower authorities rightly held that since dutiable goods were also produced in the factory, the appellants were not eligible for the exemption under the proviso to the Notification.

4. Despite no representation from the appellants, the grounds of appeal were considered, and the learned SDR was heard. The appellate tribunal upheld the lower authorities' decision, concluding that the appellants' claim for exemption was invalid due to the proviso to the Notification. The appeal was dismissed, and the impugned order demanding duty on the waste and scrap was sustained.

This detailed analysis of the legal judgment highlights the issues involved, the arguments presented by the parties, and the tribunal's decision based on the interpretation of the relevant legal provisions and notifications.