2007 (9) TMI 193 - AT - Central Excise

Payment of duty on exempted good (waste & scrap) by mistake doesn t make them other than exempted Not. 62/95 exempting coaches, coach components & containers as waste & scrap so provision of not. 89/95 aren t attracted in this case & assessee is entitled to benefit of that notification

Summary

Issues:
Challenge against demand of duty on waste and scrap cleared by appellant, interpretation of Notification No. 89/95-C.E., applicability of proviso to the Notification, benefit of Notification to the assessee, demand of duty on grounds of limitation.

Analysis:

The appeal was filed by the Integral Coach Factory (ICF) against a demand of duty on ferrous and non-ferrous waste and scrap cleared during a specific period. The challenge was based on the denial of the benefit of Notification No. 89/95-C.E., which exempted waste, parings, and scrap arising during the manufacture of exempted goods from excise duty. The proviso to the Notification excluded waste, parings, and scrap cleared from a factory where excisable goods other than exempted goods were also manufactured. The dispute arose as the Revenue claimed that the appellant had cleared excisable goods on payment of duty during the period in question, leading to the denial of the Notification's benefit.

The Revenue argued that the appellant's claim for the benefit of the Notification was barred due to the proviso since they had cleared excisable goods on payment of duty during the disputed period. However, the appellant contended that the payment of duty on those goods was a mistake and did not change their status as exempted goods under a different Notification. The Tribunal found merit in the appellant's argument, emphasizing that goods exempted under another Notification remained exempted goods as per the Explanation provided in Notification No. 89/95-C.E. The erroneous payment of duty on these goods did not alter their exempted status, and the proviso was not applicable in this case.

The Tribunal concluded that the department had misconceived the exemption issue and overlooked the Explanation to the Notification. Therefore, the demand of duty was not sustainable, and the appellant was entitled to the benefit of the Notification. As a result, the impugned order was set aside, and the appeal was allowed without delving into the limitation issue raised by the appellant.

In summary, the Tribunal ruled in favor of the appellant, holding that the demand of duty on waste and scrap was not valid due to the misinterpretation of the Notification and the erroneous application of the proviso by the Revenue. The appellant was deemed eligible for the benefit of the Notification, and the demand was not sustainable based on the facts presented during the proceedings.