1991 (7) TMI 224 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 16/83 regarding exemption of excise duty on scrap material.
2. Applicability of additional duty of customs on scrap cleared for home consumption.
3. Conflict between exemption notifications under central excise and customs laws.

Analysis:

The case involved an appeal against the Order dated 12-3-1990 passed by the Collector of Customs (Appeals), Bombay. The respondents were manufacturing Combs and Brushes from imported cellulose acetate sheets in the Kandla Free Trade Zone. The issue arose when the Department observed that the benefit of Notification No. 16/83 had been mistakenly extended to the respondents, resulting in a short levy of duty. The Assistant Collector of Customs demanded additional duty of customs (CVD) on the Cellulose Acetate Scrap cleared for home consumption, which was contested by the respondents. The Collector (Appeals) allowed the appeal, stating that Central Excise duty was exempted under Notification No. 16/83, and hence, the additional duty under the Customs Tariff Act was not applicable.

The Appellant Collector contended that the exemption under Notification 16/83 applies only when the goods discharge their duty liability by paying customs duties, including the additional duty equivalent to central excise duty. Since this additional duty was not paid on the scrap cleared for home consumption, the condition in Notification 16/83 was not met. On the other hand, the Respondents argued that the Collector (Appeals) correctly interpreted the provisions of Notification 16/83, emphasizing that charging central excise duty as additional customs duty would be incongruous given the existing exemption notifications.

Upon careful consideration, the Tribunal referred to Notification No. 16/83 exempting excise duty on scrap material arising in the Kandla Free Trade Zone. The Tribunal relied on precedents, including judgments from the Madras High Court and previous Tribunal decisions, to establish that an exemption under Central Excise rules extends to exempting like goods imported into India from additional duty of customs. Based on this legal principle, the Tribunal upheld the Collector (Appeals)'s decision, stating that the exemption under Notification 16/83 applied to the waste/scrap cleared for home consumption by the respondents. Consequently, the appeal against the Collector (Appeals)'s order was rejected, affirming the availability of the exemption.

In conclusion, the Tribunal's decision clarified the interplay between exemption notifications under central excise and customs laws, emphasizing that exemptions under Central Excise rules can extend to imported goods to exempt them from additional customs duties. The judgment provided a legal interpretation of Notification 16/83 and upheld the Collector (Appeals)'s decision, highlighting the consistent legal precedent supporting the exemption's applicability to the case at hand.