INTEGRAL COACH FACTORY Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THIS appeal is by the Integral Coach Factory (ICF for short) belonging to the Central Government. The appellant has produced the requisite clearance from the Committee on Disputes for pursuing this appeal.

(2.) THE challenge is against demand of duty of over Rs. 4 crores on ferrous and non -ferrous waste and scrap cleared by ICF during the period from 18.05.1995 to 31.07.1998. The demand is consequential to denial of the benefit of Notification No. 89/95 -CE dated 18.05.1995 to the assessee. This Notification exempted waste, parings and scrap arising in the course of manufacture of exempted goods and falling within the Schedule to the Central Excise Tariff Act, 1985, from the whole of the duty of excise leviable thereon. The proviso to the Notification reads thus: "provided that nothing contained in this Notification shall apply to waste, parings and scrap cleared from a factory in which any other excisable goods other than exempted goods are also manufactured". The expression "exempted goods" was also explained in the Notification. The Explanation reads as follows: For the purpose of this notification, the expression "exempted goods" means excisable goods which are chargeable to "'Nil" rate of duty or, are exempted from the whole of the duty of excise leviable thereon by any other notification (not being a notification where exemption from the whole of duty of excise is granted based upon the value or quantity of clearances made in a financial year) issued under Sub -rule (1) of Rule 8 of the Central Excise Rules, 1944 or Sub -section (1) of Section 5A of the said Act.

(3.) SUSTAINING the case of the Revenue, learned Commissioner found that ICF had cleared coaches, coach components and containers to M/s. San Engineering Corporation and some other agencies on payment of duty during 1995 -96 to 1998 -99. On this basis, learned Commissioner invoked the proviso to the above Notification against the assessee and held that the benefit of the Notification was not available to them inasmuch as they had cleared coaches etc. on payment of duty during the period of dispute. The case of the appellants is that such duty happened to be made by mistake as coaches, coach components and containers (all falling under Chapter 86 of the Schedule to the Central Excise Tariff Act) manufactured by a factory belonging to the Central Government were exempted from payment of duty in terms of S.No. 16 (i) of the Table annexed to Notification No. 62/95 -CE dated 16.03.1995 (as amended).