2015 (4) TMI 160 - AT - Central Excise

100% EOU - Denial of exemption claim - DTA Clearances - Whether the scrap generated in the appellant s unit and cleared into DTA is eligible for basic customs duty exemption under notification no.21/2002-Cus - Held that - exemption notification unconditionally exempts the melting scrap . According to the department, the scrap being cleared into DTA is not melting scrap. In our prima facie view, the stand of the department is incorrect and without any basis, as the only use of scrap is for re-melting. In view of this, the impugned order denying the basic customs duty exemption under notification no.21/2002-Cus (Sl.No.332) for the purpose of calculation of duty payable in respect of the DTA clearances of scrap in terms to proviso to Section 3(1) of the Central Excise Act, 1944 is not correct. As regards the denial of exemption notification no.23/03-Cus sic - notification no.23/03 CE the only ground adopted by the department is that the scrap generation norms have not been provided but this stand also prima facie is not correct in view of the letter dated 26.05.2010 of the DGFT addressed to the appellant company. - impugned order is not correct and as such, the appellant have strong prima facie case in their favour. - The requirement of pre-deposit of duty demand, interest and penalty by the appellant company and the requirement of pre-deposit of penalty by Shri Praveen Garg, Ex Finance Head is waived for hearing of their appeals and recovery thereof is stayed - Stay granted.

Summary

Issues Involved:
1. Quantification of duty payable for DTA clearances of waste
2. Fixation of waste norms

Analysis:
1. Quantification of Duty Payable for DTA Clearances of Waste:
The appellant, a 100% EOU engaged in manufacturing automobile parts for export, faced a dispute over the duty payable for clearances of waste into DTA. The department argued that the scrap sold into DTA was not melting scrap and thus not exempt from basic customs duty. However, the Tribunal found the department's stance baseless as the scrap was intended for re-melting, making it eligible for the exemption under notification no.21/2002. Therefore, the impugned order denying the exemption was deemed incorrect, ensuring the appellant's strong prima facie case in their favor.

2. Fixation of Waste Norms:
Another point of contention was the fixation of waste norms by the Development Commissioner. The department claimed that since waste norms were not established, the appellant could not avail themselves of the exemption under notification no.23/2003. However, the Tribunal noted that the waste norms had indeed been finalized by the Development Commissioner in 2010, as evidenced by a letter dated 26.05.2010 addressed to the appellant company. This finding contradicted the department's argument, indicating that the denial of the exemption based on the absence of waste norms was incorrect.

In conclusion, the Tribunal found the impugned order to be flawed on both issues. As a result, the requirement for the appellant to pre-deposit duty demand, interest, and penalty, as well as the penalty for the appellant's former Finance Head, was waived. The stay applications were allowed, recognizing the appellant's strong prima facie case and the inaccuracies in the department's arguments.