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TMI Blog1999 (11) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... nts manufacture Motor vehicles and avail of the Modvat credit of the duty paid on inputs under Rule 57A of the Central Excise Rules. As they did not pay excise duty while clearing the waste and scrap of both aluminium and iron and steel obtained during the process of manufacture, a show cause notice dated 1-5-92 was issued to them for demanding duty for the period from April, 1987 to May, 1990. The Collector confirmed the demand of duty amounting to Rs. 25,54,714/- and imposed a penalty of Rs. 1,00,000/- holding that the waste and scrap of iron arose from the goods falling under Headings 72.08, 73.25 and 73.07 as mentioned in notification and since they had availed of Modvat credit on these goods, no exemption from duty was available in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to be machined and during this process, waste and scrap is bound to arise; that this was not exclusive to the knowledge of the appellants. He relied upon the decision in Dhampur Sugar Mills Ltd. v. C.C.E., Meerut, 1990 (29) ECR 31 in which it was held that as it is a well known fact that Bagasse is produced by Sugar Mill in course of manufacture of sugar, it cannot be said that Departmental officers were not aware of the fact that bagasse was being produced by the appellants. He also relied upon the decision in the case of Business Combines Ltd. v. C.C.E., 1998 (100) E.L.T. 355 (T) and Khodiar Pottery Works Ltd. v. C.C.E., Rajkot, 1999 (106) E.L.T. 60 (T). He also contended that there was no mala fide intention as they had furnished the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was also raised in respect of waste and scrap of aluminium. He, therefore, contended that benefit of exemption notification was available to the appellants. Finally, he submitted that abatement of duty under Section 4(4)(d)(ii) of the Act is also to be allowed in view of decision in the case of Sri Chakra Tyres v. C.C.E., Madras, 1998 (101) E.L.T. 603. 5. Countering the arguments, Shri R.K Sharma, ld. SDR submitted that it is not in dispute that the appellants were availing Modvat credit of the duty paid on inputs under Rule 57A of the Central Excise Rules and as such waste and scrap, generated during the manufacturing process, has to suffer duty as per provisions of Rule 57F(4) of the Central Excise Rules. He, relied upon the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory. It is not in dispute that waste and scrap of both aluminium and iron and steel has arisen in the present matter from the processing of inputs in respect of which Modvat credit has been availed of. It is therefore clear that duty is payable on waste and scrap subject to the availability of exemption under any notification. It has been claimed by the appellants that waste and scrap of aluminium was exempted under Notification No. 182/84, dated 1-8-84 without the condition of not availing of credit of the duty paid on inputs. It is observed that Notification No. 182/84 was amended by Notification No. 246/87, dated 2-11-87 by which second proviso was inserted in the notification. According to this proviso, the exemption to aluminium wast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-87. 7. In respect of waste and scrap of iron and steel the appellants have claimed exemption from payment of duty under Notification Nos. 54/86, dated 10-2-86, 91/88, dated 1-3-88, 171/88, dated 13-5-88. The ld. Counsel contended that the waste and scrap of iron and steel has been generated from the goods which do not fall under Chapter 72 or 73 of the Central Excise Tariff Act and in respect of such waste and scrap no condition was specified in the notification that the credit of the duty paid on inputs should not have been availed of. 8. From the perusal of the notifications it is observed that clause (i) in column (5) of the Table appended to Notification No. 54/86 read as under :- (1) (2) (3) (4) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the condition that the credit of duty has not been taken. Similar was the condition specified in Clause (i) of the Notification Nos. 91/88 and 171/88. Accordingly, the appellants were not eligible to the benefit of any of the notifications. 9. As the Appellants had not filed any classification list in respect of the waste and scrap of both aluminium and iron and steel and removed the same without payment of duty and without entering into statutory records they have suppressed the facts of manufacture and clearance of the waste and scrap from the Department. The theory of universal knowledge is not applicable to the facts of the present case. The Department cannot be attributed the knowledge of generation of waste in the factory in the abs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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