2013 (7) TMI 274 - AT - Central Excise

Stay Application - 100% EOU - Duty applicable on the waste and scrap cleared to the Domestic Tariff Area - Eligiblity for exemption for basic Custom duty under notification No. 21/2002-Cus dated 1.3.2002 Held that - Melting scrap of Iron & steel is exempted on S. No. 200 of the Notification. - There is no condition in the Notification for availing the exemption. Exemption from (SAD) under Notification No. 23/2003-CE Dated 31.03.2003 Held that - Under Para 6.8(e) of the Foreign Trade Policy waste and Scrap arising out of the manufacture can be sold in the domestic policy area as per standard Input Output norm notified under duty exemption scheme and in respect of items not covered by the norms Development Commissioner may fix ad-hoc norms for the period for six months - Applicant has applied for fixation of ad-hoc norms to the Development Commissioners on 04.07.2009 where as the applicant was selling their scrap to DTA since 29.03.2008 - prior to 04.07.2009 the applicant is not eligible for the benefit of exemption from SAD - Directed the applicant to deposit an amount of Rs. 10 lakhs as pre-deposit stay granted partly.

Summary

Issues:
Stay application for waiver of pre-deposit and recovery of duty and penalty; Exemption eligibility for basic Custom duty and special additional duty (SAD); Time limitation for demand; Conditions for availing exemptions under relevant notifications.

Analysis:
The case involved a stay application by M/s. Meneta Automotive Components Pvt. Ltd. seeking waiver of pre-deposit and recovery of duty and penalty imposed by the Commissioner Central Excise Rohtak. The company, a 100% EOU unit, was engaged in manufacturing Back Plate & Anti Noise Shims. The issue arose from the clearance of Iron Steel scrap generated during production, which was excisable and cleared to the Domestic Tariff Area (DTA) without paying basic Custom duty, special additional duty, and education Cess. The Revenue challenged the exemption eligibility of the company on the grounds that the scrap was sold to traders, not used as melting scrap by steel manufacturers.

The advocate for the applicant argued for exemption under notification No. 21/2002-Cus for melting scrap of Iron or Steel and exemption from SAD under Notification No. 23/2003-CE. The applicant contended that they sold the scrap to traders, paid applicable VAT/Sales Tax, and were entitled to exemptions. They also argued against the demand based on time limitation and Cess payment for clearances to DTA. The Revenue, however, maintained that the applicant failed to pay basic Custom duty and fulfill conditions for exemption under the relevant notifications.

The Tribunal found that the applicant had a strong case for exemption from basic Custom duty under Notification 21/2002 as there were no conditions attached to the exemption for melting scrap of Iron & steel. However, regarding the exemption from SAD under Notification 23/2003, the Tribunal noted that the applicant had applied for ad-hoc norms after selling scrap to DTA, rendering them ineligible for the exemption for the period before the application. Considering the amount of SAD involved and the issue of time limitation, the Tribunal directed the applicant to deposit Rs. 10 lakhs as pre-deposit within 8 weeks. Upon compliance, recovery of the balance dues was stayed until the appeal's disposal.

In conclusion, the judgment addressed the exemption eligibility for basic Custom duty and SAD, time limitation for demand, and conditions for availing exemptions under the relevant notifications. The Tribunal allowed exemption from basic Custom duty but required a pre-deposit for SAD due to the applicant's delayed application for ad-hoc norms, emphasizing compliance within the specified timeframe for further proceedings.