1991 (12) TMI 182 - AT - Central Excise

Summary

Issues:
Whether the appellants are entitled to exemption from payment of duty on waste and scrap of brass and aluminium under Notification Nos. 172/84 and 182/84 respectively, when they have availed Modvat credit on raw materials.

Analysis:
The appeals revolve around the entitlement of the appellants to exemption from duty payment on waste and scrap of brass and aluminium under specific notifications, despite availing Modvat credit on raw materials. The appellants manufacture goods falling under specific chapters of the Central Excise Tariff Act, and waste and scrap of brass and aluminium arise during their manufacturing process. The Assistant Collector rejected their exemption claim, stating that since the appellants availed Modvat credit on raw materials, the waste and scrap derived from these materials are non-duty paid, necessitating duty payment upon clearance. The Collector (Appeals) upheld this decision, leading to the current appeals.

The appellants argue that the notifications in question do not contain any restrictions on availing Modvat credit, unlike other notifications, and thus, they should be allowed to clear the waste and scrap without duty payment. They rely on legal precedents and clarifications from the Board, emphasizing that the duty paid character of inputs is not lost upon availing credit. They assert that the absence of specific restrictions in the notifications supports their claim for exemption.

On the contrary, the revenue contends that under the Modvat Scheme, credit is not permissible for finished products fully exempt from duty. They argue that the decisions cited by the appellants are inapplicable to the present case, as they dealt with different circumstances involving partial exemptions. The revenue relies on a Tribunal decision favoring their stance.

The Tribunal carefully analyzes the contentions of both parties and emphasizes the absence of any prohibition or restriction in the notifications under consideration. It interprets the law strictly, noting that any attempt to import restrictions not explicitly stated is impermissible. The Tribunal asserts that the absence of restrictions in the notifications precludes the imposition of such restrictions through interpretation. It clarifies that the duty paid character of inputs is retained even after availing credit, especially when notifications provide full exemption without any explicit limitations.

The Tribunal concurs with the appellants' arguments, highlighting that the waste and scrap in question are not finished products but arise during the manufacturing process. It underscores that the Modvat rules do not clearly address this scenario, leading to a clarification by the Board supporting exemption for waste and scrap despite availing Modvat credit. The Tribunal cites the advice of the Attorney General, accepted by the Ministry, reinforcing the view that duty paid inputs do not lose their character upon availing credit. Consequently, the Tribunal sets aside the impugned order, allowing the appeals with consequential relief.