1993 (6) TMI 69 - HC - Central Excise

Summary

Issues:
- Interpretation of exemption Notification No. 80/80-C.E.
- Classification of scrap arising during the manufacture of nuts
- Inclusion of value of steel bars in computing aggregate clearances for excise duty

Interpretation of Exemption Notification:
The petitioners, a partnership firm engaged in manufacturing nuts from steel bars, sought exemption from excise duty under Notification No. 80/80-C.E. The Assistant Collector denied the exemption, citing the aggregate value of clearances exceeding Rs. Twenty Lakhs. The court rejected the Department's objection on maintainability due to a statutory appeal, emphasizing the incorrectness of the Assistant Collector's order. The court held that the petitioners were entitled to relief as the statutory appeal remedy would not serve a valid purpose, given the merit of the case.

Classification of Scrap:
The Assistant Collector classified the scrap arising during nut manufacture under Tariff Item No. 68, requiring a separate classification list. However, the court disagreed, stating that the scrap from the manufacturing process of related goods cannot be treated as a separate item. Relying on established legal precedents, the court held that the scrap arising from the steel nuts' manufacture should not be separately classified, overturning the Assistant Collector's decision.

Inclusion of Steel Bars' Value:
The Department argued that the value of steel bars used for grinding work should be included in computing the aggregate clearances for excise duty. However, the court rejected this argument, stating that the grinding work was not liable for excise duty as it aimed to produce bright steel bars. The court emphasized that the exemption Notification required computing clearances only for goods subject to excise duty. Therefore, the court set aside the Assistant Collector's order, declaring the petitioners' entitlement to the exemption for the relevant period.

In conclusion, the court ruled in favor of the petitioners, setting aside the Assistant Collector's order and confirming their eligibility for the exemption under Notification No. 80/80-C.E. for the specified period. The petitioners were advised to pursue appropriate remedies for any consequential relief without costs imposed in this case.