MARUTI UDYOG LTD Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE issue involved in this appeal filed by M/s. Maruti Udyog Ltd. is whether the Waste and Scrap generated during the manufacture of body panels for fuel Efficient Motor Vehicles, is leviable to excise duty.

(2.) BRIEFLY stated the facts are that the Appellants manufacture, inter alia, fuel, efficient motor vehicles. For the manufacture of body panels, they imported cold -rolled (CR) steel sheets. They were availing exemption in respect of these C.R. sheets under Notification No. 522/86 -Cus., dated 31 -12 -1986 which granted partial exemption of basic customs duty and whole of the additional customs duty to the imported C.R. sheets and steel blanks when used in accordance with the provisions of Section 65 of the Customs Act for the manufacture of the body panels of the fuel efficient motor cars or vans of engine capacity not exceeding 1000 cc. The notification was subject to the condition that nothing contained in the notification shall apply to the Waste or refuse arising in the course of the manufacture of the body panels and the importer undertakes to pay the whole of the duty of customs on all such waste or refuse cleared for home consumption.

(3.) THE Commissioner, Central Excise, under the impugned Order dated 14 -1 -98, confirmed the demand of excise duty amounting to Rs. 35,48,354/ - and imposed a penalty of Rs. 1 lakh on the Appellants, holding that excise duty is leviable on waste and scrap and placed reliance on the decision of the Supreme Court delivered in May, 1963; that the waste and scrap was sold to private parties instead of to M/s. Metal Scrap Trade Corporation Ltd. as was required under the ad hoc Orders; that the assessee's plea that they had not availed of Modvat credit is not relevant to the demand of duty; that, however, they had not availed of the Modvat credit of the duty; that extended period of limitation was invocable as the documents on which they were clearing the impugned goods were never brought to the notice of the Department at any stage; that no duty was paid at the time of import as the conditions were not satisfied by the assessee. Shri A.R. Madhav Rao, learned Advocate, submitted that undis -putedly the C.R. Sheet imported by the Appellants were exempt from the levy of additional duty of customs under Notification No. 522/86 -Cus. and there is also no dispute that they have duly fulfilled the conditions of the notification and availed the exemption under the notification. He further submitted that Notifications No. 54/86 -C.E., No. 91/88 -C.E. and 171/88 prescribed nil rate of duty for waste and scrap if it has arisen from goods falling under sub -heading 72.01 to 72.13, 7301.00, 7302.10, 73.03, 73.04, etc., on which duty of excise or additional duty leviable under Section 3 of the Customs Tariff Act has already been paid and the credit of such duty has not been taken. He mentioned that the Supreme Court, in the case of C.C.E. v. Usha Martin Industries Ltd. - 1997 (94) E.L.T. 460 has held that when the item has been cleared by availing exemption under a particular notification, the same can be said to be an item on which the duty has already been paid; that the Tribunal, following the Supreme Court judgment, have taken the same view in following cases : -