2001 (11) TMI 122 - AT - Central Excise

Summary

Issues:
- Denial of benefit under Notification No. 89/95-C.E. to the appellants for scrap arising out of the manufacture of cycle parts exempted from excise duty.

Analysis:
The appellants filed an appeal against the order-in-appeal denying them the benefit of Notification No. 89/95-C.E., which exempts waste, parings, and scrap arising during the manufacture of exempted goods from excise duty. The appellants, engaged in manufacturing both cycle parts (exempted from duty) and gas cylinder parts (liable for duty), claimed the benefit for scrap from exempted goods. However, the benefit was denied as the notification excludes waste and scrap cleared from a factory where excisable goods other than exempted ones are also manufactured.

The appellants argued that they store scrap from dutiable and exempted final products separately, paying duty only on scrap from dutiable products. They contended that since the scrap is distinguishable and stored separately, the benefit of the notification should not be denied. However, the notification clearly states that it does not apply to waste and scrap cleared from a factory where excisable goods other than exempted ones are manufactured. The Tribunal noted that the appellants indeed manufacture both excisable and exempted goods in the same factory, as per the admitted facts of the case.

Referring to a Supreme Court judgment in Mihir Textiles Ltd. v. C.C., Bombay, the Tribunal emphasized that the benefit of an exemption notification is subject to specific conditions that must be met for eligibility. Even if these conditions are considered directory, the benefit cannot be granted without compliance. Therefore, the Tribunal upheld the order denying the benefit of the exemption notification to the appellants. However, considering the circumstances, the penalty imposed on the appellants was set aside. The appeal was disposed of accordingly.