2003 (12) TMI 654 - AT - Central Excise

Summary

Issues:
Exemption under Notification No. 1/93 for small-scale unit manufacturing brass parts. Inclusion of waste and scrap value in calculating aggregate value of goods cleared. Interpretation of Explanation 6 of the notification regarding captively consumed goods. Appellant's contention on recycling waste and scrap as captive consumption.

Analysis:
The case involved an appellant, a small-scale unit manufacturing brass parts eligible for exemption under Notification No. 1/93. The issue arose when certain waste and scrap generated during the manufacturing process were cleared to another manufacturer for recycling into original metal rods. The impugned orders raised a duty demand based on including the value of waste and scrap in the aggregate value of goods cleared by the appellant. The appellant argued that the recycled scrap should be treated as excludable under Explanation 6 of the notification, supported by various decisions.

The Revenue contended that Explanation 6 only covers goods used for further manufacture within the factory of production, not outside premises. Despite the absence of representation from the appellant during the hearing, the tribunal proceeded to dispose of the appeal. Upon review, the tribunal considered the appellant's submission that the recycling of scrap should be treated as captive consumption, emphasizing that the exemption under the notification is for goods manufactured and sold by the small-scale unit, not for waste and scrap that arise incidentally during production.

The tribunal found merit in the appellant's case, ruling that waste and scrap cannot be considered specified goods manufactured by the appellant. Therefore, the value of waste and scrap should not be included in calculating the aggregate value of goods cleared. This decision aligned with the object and purpose of the notification. Consequently, the appeal was allowed in favor of the appellant, providing consequential relief as applicable.