2008 (7) TMI 787 - AT - Central Excise

Summary

Issues involved: Whether cutting and slitting of HR/CR coils amount to manufacture, classification of scrap under 72.04.90, applicability of Notification No. 89/95-C.E., imposition of penalty.

In the case before the Appellate Tribunal CESTAT, New Delhi, the applicant, a government/departmental undertaking engaged in manufacturing Railway passenger coaches, faced a demand for duty on cutting and slitting HR/CR coils and on the scrap arising from such activities. The appellant claimed the benefit of Notification No. 89/95-C.E., dated 18-5-95, arguing that the scrap arose during the manufacture of exempted goods. The original authority confirmed the duty demand on the scrap and imposed a penalty of Rs. 25 lakhs, despite accepting that cutting and slitting HR/CR coils did not amount to manufacture.

For a subsequent period, January 2005 to June 2005, the demand proposed was dropped, granting the appellant the benefit of Notification No. 89/95. The learned advocate for the appellant highlighted this inconsistency. The learned DR supported the Commissioner's findings.

After considering the submissions, the Tribunal held that since cutting and slitting of coils were not considered as manufacturing activities, the waste generated may not be excisable. Consequently, the Tribunal found that the appellant had established a prima facie case for waiver of dues. As a result, the Tribunal waived the pre-deposit of dues and stayed the recovery pending the appeal's disposal. The decision was dictated and pronounced in open court by Member (T) M. Veeraiyan.