2016 (3) TMI 156 - AT - Central Excise

Eligibility of duty exemption for captively consumed goods available under notification No. 89/95-CE to the CR sheets - process of slitting /shearing resulted in manufacture of intermediate product CR sheets classifiable under 7209 30 and 7211 51 - Held that - The denial of exemption is not supported by legal provision when the assessee have all along manufactured and cleared railway coaches on exemption for home consumption except for one consignment of export. There is no other finding to the effect that the assessee has been clearing non-exempted goods so as to deny the exemption available to waste and scrap. We also find that in a separate proceedings the duty on waste and scrap attributable to coaches exported out of India have been confirmed and the amount has already been paid by the assessee. We find that the original authority in that order categorically found that the assessee are liable to pay Central Excise duty of ₹ 5,81,185/- on waste and scrap arising from the manufacture of 72 bogies cleared by them under bond without payment of duty to Vietnam. He also noted that the said duty stand paid by the assessee on 25.5.2002. In this background, we find the confirmation of demand by the present impugned order on the waste and scrape on this ground again is untenable and requires to be set aside. Considering the above discussions and findings, we allow the appeal of the assessee.

Issues: Appeal against duty demand on scrap and penalty; Appeal for penalty equal to duty; Denial of exemption for waste and scrap; Admissibility of exemption under Notification No. 89/95-CE.

Analysis:
1. The case involved an appeal by the assessee against the duty demand on scrap and penalty imposed by the learned Commissioner. The Revenue also filed an appeal seeking a penalty equal to the duty amount under section 11AC. The primary contention was regarding the duty demand on scrap generated during the manufacturing period, specifically focusing on the exemption under Notification No. 89/95-CE. The assessee argued that duty on the scrap had already been paid during a previous adjudication proceeding related to the export of bogies to Vietnam. The original authority had mixed up various issues concerning duty liability on different products and the applicability of exemptions, leading to a demand for duty on scrap.

2. The assessee contested the demand on scrap, emphasizing that the duty liability on scrap generated during the production of bogies for export had already been settled in a previous order. They argued that the denial of exemption for waste and scrap based on one instance of export was legally unsustainable. The Revenue, on the other hand, maintained that since the exported goods were not exempted, the conditions of Notification No. 89/95-CE were not met, justifying the duty demand on scrap generated by the assessee. The learned AR supported the original authority's findings and reiterated that the demand was correctly confirmed.

3. Upon examination of the appeal records, the Tribunal found discrepancies in the original authority's decision. The authority had denied exemption on waste and scrap for an entire eight-year period based on a single export transaction of bogies, which was deemed legally unsound. The Tribunal highlighted that the exemption on scrap should not be denied solely on the basis of one non-exempted clearance. It was noted that in a separate proceeding, duty on waste and scrap related to exported coaches had already been confirmed and paid by the assessee. Therefore, the confirmation of the demand on scrap in the present order was deemed untenable and was set aside. The Tribunal allowed the appeal of the assessee, leading to the disposal of the Revenue's appeal for penalty enhancement.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the legal basis for the decision, and the Tribunal's reasoning in allowing the appeal against the duty demand on scrap and penalty.

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