Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs Super Springs (P) Ltd. on 7 April, 2003
Equivalent citations: 2003(162)ELT556(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. In these five appeals of the Revenue, we have to deal with a common issue.
2. The respondents are a SSI Unit which were working under Notification No. 1/93-C.E., dated 28-2-93 (as amended) during the material period. They were manufacturing excisable goods specified under the notification, in two different capacities. On the one hand, they manufactured specified goods and cleared the same to their customers, availing the benefit of full exemption up to the aggregate value of first clearances (in a financial year) of Rs. 30 lakhs. On the other hand, as job workers for other principal manufacturers, they manufactured specified goods and cleared the same to such principal manufacturers without payment of duty in terms of Notification No. 214/86-C.E., dated 25-3-86 (as amended), whereunder excisable goods manufactured by a job worker out of raw materials supplied by a principal manufacturer were exempted from payment of duty of excise but any waste and scrap that might arise in the process of such manufacture should either be cleared on payment of duty at normal rate or be returned to the principal manufacturer. As a matter of fact, waste and scrap were generated not only in the process of manufacture of the goods cleared under Notification No. 214/86-C.E. (as amended) but also in the process of manufacture of the goods cleared under Notification No. 1/93-C.E. (as amended). Both categories/streams of waste and scrap were also cleared on payment of duty by the respondents. The material fact in this case is that the value of first clearances of all waste and scrap of whatever category was excluded by the respondents from the computation of the aggregate value limit of Rs. 30 lakhs for the purpose of exemption under Notification No. 1/93-CE. (as amended). This was objected to by the department and show cause notices were issued. The original authority, in adjudication of the show cause notices, upheld the department's view. But the decision of that authority was reversed by the first appellate authority. Aggrieved by the order of the lower appellate authority, the Revenue preferred these appeals to the Tribunal.
3. Heard both sides. Ld. DR Shri C. Mani reiterates the grounds of these appeals and relies on the decision of the Tribunal's Larger Bench in Ramakrishna Engineering Works v. CCE -1996 (83) E.L.T. 346.
4. Ld. Consultant representing the respondents, on the other hand, submits that the waste and scrap generated in their factory, from whatever processes, were admittedly specified goods under Notification No. 1/93-CE. (as amended). It was immaterial that the goods were cleared on payment of duty. The value of the clearances of the waste and scrap was therefore liable to be excluded from computation of the aggregate value of clearances for the purpose of exemption under the notification. Ld. Consultant relies on the decision of the Tribunal in EL.P.EM. Industries v. CCE - 1989 (43) E.L.T. 599 wherein, dealing with similar Notification No. 175/86, this Tribunal had held that, if a manufacturer manufactured excisable goods falling under more than one Tariff Heading, he would be eligible to avail full exemption up to Rs. 30 lakhs subject to the condition that clearances with full exemption shall not exceed Rs. 15 lakhs in respect of any one Heading. This decision was followed by the Tribunal in the case of Khalsa Pulp & Paper Industries v. CCE (Final Order No. 313/90-C, dated 4-4-1990). The appeal preferred by the Revenue against the said final order dated 4-4-1990 of the Tribunal was dismissed by the Hon'ble Supreme Court as reported in 1997 (92) E.L.T. A76. Ld. Consultant also relies on the Tribunal's decision in Solar Packaging Pvt. Ltd. v. CCE - 1999 (30) RLT 867. In answer to a query from the Bench, ld. Consultant submits that it is possible to provide a break-up of the quantities of waste and scrap generated in the two different streams of manufacture in the respondents' factory. He also places reliance on the Tribunal's decision in CCE v. Neo Era Agro Engg. - 2000 (124) E.L.T. 665.
5. We have carefully considered the submissions and the case law cited. It is not disputed, in this case, that the waste and scrap, which were generated in the process of manufacture of specified goods cleared under Notification No. 1/93-CE. (as amended) or generated in the process of manufacture of specified goods cleared under Notification No. 214/86-C.E. (as amended), were themselves excisable goods specified in the Annexure to Notification No. 1/93-C.E.. There can be no quarrel with the position that the waste and scrap of the former category being specified goods for all purposes of Notification No. 1/93-C.E. were eligible for the exemption under the notification. The assessee was, therefore, entitled to the benefit of exemption (subject to aggregate value limit) in respect of such waste and scrap under Notification No. 1/93-C.E. To the extent such waste and scrap was exempt, the assessee had no liability to pay duty thereon. When they paid duty on their own volition, they did so without prejudice to the Revenue. Had they treated such waste and scrap as exempt from duty under Notification No. 1/93 (which they were entitled to) and cleared the same without payment of duty, they could not have excluded the goods from computation of aggregate value. Now they cannot turn around and say that the value of such waste and scrap cannot be included in the aggregate value of clearances (of Rs. 30 lakhs) for the purpose of full exemption under Notification No. 1/93-C.E. Had the assessee cleared such waste and scrap along with other specified goods without payment of duty under Notification No. 1/93-C.E., they would have included the value of the waste and scrap also in the computation of the aggregate value. Payment of duty on such waste and scrap was not sanctioned by the law. Hence the clearance of the waste and scrap on actual payment of duty would not ipso facto exempt the clearances from the computation of the aggregate value under Notification No. 1/93-C.E. Thus the value of clearance of waste and scrap generated in the process of manufacture of specified goods cleared under Notification No. 1/93-C.E. (as amended) is certainly includible in chronological order in the computation of the value limit of Rs. 30 lakhs.
6. However, the position is different in respect of the waste and scrap generated in the process of manufacture of the specified goods cleared under Notification No. 214/86-C.E. (as amended). In this case, the waste and scrap were expressly permitted to be cleared on payment of duty and such clearance of the goods on payment of duty had the sanction of law. The question now before us is how Notification No. 1/93-C.E. (as amended) affected this category of waste and scrap. The waste and scrap generated in the process of manufacture of the specified goods cleared under Notification No. 214/86-C.E. were to be cleared (where they were not returned to the principal manufacturer) on payment of duty at normal rate at any time during the financial year. There was no "explanation" or other provision in Notification No. 1/93-C.E. which attracted these waste and scrap for reckoning in the computation of the aggregate value. Hence the clearances of these goods stood excluded from the purview of the "first clearances of specified goods" under Notification No. 1/93-C.E., unlike the waste and scrap of the first category. In other words, the value of clearances of the waste and scrap of the second category was not to be included in the computation of the aggregate value limit of Rs. 30 lakhs under Notification No. 1/93-C.E. The impugned order will stand modified to this extent. The original authority is directed to differentiate the quantities of the waste and scrap generated in the aforesaid different streams of manufacture and requantify the duty liability after excluding the value of clearances, in chronological order, of the waste and scrap generated in the second category, from the computation of the aggregate value limit of Rs. 30 lakhs.
7. The decisions cited are all in relation to Notification No. 175/86-C.E. Under that notification, the aggregate value limit of Rs. 30 lakhs was subject to a further limitation that the aggregate value of clearances of specified goods under any particular tariff heading should not exceed Rs. 15 lakhs. Such provision of heading-wise separate maximum limit was not there in Notification No. 1/93-C.E. None of the cited decisions dealt with includi-bility, or otherwise, of any waste and scrap either. We are, therefore, of the view that the cited decisions cannot be applied to the facts of the instant case.
8. These appeals are disposed of in the aforesaid terms, with a direction to the original authority to re-determine the duty liability of the respondents after segregating the clearances of the waste and scrap generated in the process of manufacture of specified goods cleared under Notification No. 214/86-C.E. (as amended) and excluding the same from computation of the aggregate value limit of Rs. 30 lakhs for the purpose of exemption under Notification No. 1/93-CE (as amended) in respect of the specified goods cleared thereunder. Needless to say, the assessee shall be given a reasonable opportunity of being personally heard on the limited aspect of re-quantification.