2017 (9) TMI 1309 - AT - Central Excise

Waste and scrap arising in the course of manufacture of exempted goods - N/N. 89/95-CE dated-18/5/1995 - manufacture of Wagons - Held that - the appellants are manufacturing dutiable as well as exempted railway wagons - It is clear from the wording of N/N. 89/95-CE that the exemption does not apply if the goods cleared from the factory are exempted goods and dutiable goods - Since in this case, the factory is producing both type of goods, the benefit of exemption is not available to the appellant. Penalty - Held that - appellant were repeatedly told by the Department, still they were not maintaining any record nor following any excise procedures. The appellant s plea that the issue involves interpretation of Notification is not correct as the wording of the notification is clear and unambiguous - penalty rightly imposed. Appeal dismissed - decided against appellant.

Summary

Issues:
- Interpretation of Notification No. 89/95-CE dated 18/5/1995 regarding exemption of waste and scrap arising during the manufacture of exempted goods.
- Imposition of penalty based on non-compliance with excise procedures and maintenance of records.

Analysis:

Issue 1: Interpretation of Notification No. 89/95-CE
The case involved the appellant, engaged in manufacturing Railway Wagons exempted from excise duty, facing demands for duty on waste and scrap arising during production. The appellant claimed exemption under Notification No. 89/95-CE, arguing that waste and scrap emerged during the manufacture of exempted goods. The appellant cited relevant case laws to support their interpretation. However, the respondent contended that since the factory produced both exempted and dutiable goods, the exemption did not apply as per the notification's clear wording. The Tribunal analyzed the notification and emphasized that exemptions must be construed based on the language used, without any additions or subtractions. It concluded that the benefit of exemption was unavailable to the appellant due to the production of both types of goods, rejecting the appellant's argument of eligibility based on specific manufacturing periods.

Issue 2: Imposition of Penalty
Regarding the penalty imposed, the appellant argued that it should not be applicable as the matter involved the interpretation of the notification. However, the Tribunal disagreed, noting the appellant's failure to maintain records and follow excise procedures despite prior warnings from the Department. The Tribunal upheld the penalty, stating that the notification's wording was clear and unambiguous, making the appellant's case laws irrelevant. It affirmed the reduction of the penalty to 50% by the Appellate Authority, considering the appellant's persistent non-compliance. Ultimately, the Tribunal found no flaws in the Commissioner (Appeals) order and dismissed both appeals, upholding the penalty and duty demands on waste and scrap generated during the production of exempted goods.

This detailed analysis of the judgment provides a comprehensive understanding of the issues addressed, the arguments presented by both parties, and the Tribunal's reasoning leading to the final decision.