By TIOL News Service

CHENNAI, JULY 01, 2015: THIS is a revenue appeal against the order of Tribunal reported in 2007-TIOL-1709-CESTAT-MAD. The first respondent Integral Coach Factory (ICF) is engaged in the business of manufacturing passenger coaches both self-propelled and non-propelled, steel freight containers and parts of passenger coaches for railways under Chapter 86 of CET 1985. They are availing exemption under Notification No.62/95 CE dated 16.3.1995. Alleging that ICF had cleared ferrous and non-ferrous scrap without payment of Central Excise duty, show cause notice was issued proposing to demand duty along with interest and penalty. The first respondent/assessee replied to the said show cause notice stating that they are eligible for exemption under Notification No.89/95 CE dated 18.5.1995. The Adjudicating Authority, after due process of law, passed an order confirming the demand holding that the assessee was not eligible to claim the benefit of exemption under Notification No.89/95 CE dated 18.5.1995. Aggrieved by the said order of adjudication, the assessee filed an appeal before the Tribunal. The Tribunal after considering the Notification and the proviso and Explanation to the Notification allowed the claim of the assessee.

After hearing both sides, the High Court dismissed the appeal by holding that:

The Tribunal rightly held that proviso to the Notification ( which reads - provided that nothing contained in this Notification shall apply to waste, paring and scrap cleared from a factory in which any other excisable goods other than exempted goods are cleared) would not apply to the facts of the case and the erroneous payment of duty would not render the goods other than exempted goods. So long as the goods manufactured are exempted goods, waste parings, scrap arising in the course of the manufacture of exempted goods would be entitled for exemption as per Notification No.89 of 1995 CE dated 18.5.1995. This finding of the Tribunal is approved as correct.

(See 2015-TIOL-1526-HC-MAD-CX)