2000 (7) TMI 173 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 1/93-C.E., dated 28-2-1993 regarding small scale exemption and duty payment on waste and scrap.

Analysis:
The case involved a dispute regarding the application of Notification No. 1/93-C.E., dated 28-2-1993, concerning small scale exemption and payment of duty on waste and scrap. The appellants, engaged in manufacturing machinery and machinery parts, paid duty on waste and scrap of copper under the mistaken belief that it was not covered under the small scale exemption during the relevant period. The jurisdictional Central Excise Authorities contended that by paying duty on waste and scrap, the appellants were not entitled to the benefit of the small scale exemption for their main manufactured final product, as per para 4 of the Notification. A demand of duty and penalty were imposed based on this interpretation.

The appellants argued that para 4 of the Notification referred to an option by the assessee and did not apply to a situation where duty was paid on waste and scrap due to a genuine belief formed from the authorities' communication. They also contended that the benefit of the Notification could be claimed for some products and not for others, based on the Tribunal's decision in Kamrup Industrial Gases Ltd. v. C.C.E., Allahabad. The Revenue, represented by the SDR, maintained that once an assessee opts for duty payment, they are debarred from availing the Notification's benefit for subsequent clearances.

Upon careful consideration, the Tribunal found merit in the appellants' submissions. Referring to the Kamrup Industrial Gases Ltd. case, the Tribunal observed that an assessee could claim exemption for some products and not for others within the same financial year. It clarified that para 4 of the Notification applied when an option was exercised during the financial year for specific products, and it did not prevent exemption for some products while denying it for others. In this case, the appellants consistently availed the small scale exemption for machinery parts and never opted for duty payment for those parts. Therefore, the Tribunal concluded that by paying duty on waste and scrap, the appellants did not disentitle themselves from the small scale exemption for machinery parts. The impugned order demanding duty and penalty was set aside, and the appeal was allowed in favor of the appellants, granting them consequential relief.