NORTHERN RAILWAYS MECHANICAL WORKS Vs. C.C.E.

JUDGEMENT

(1.) IN this appeal, filed by M/s. Northern Railways Mechanical Works, the issue relates to the demand of duty on waste and scrap of iron & steels as during the period no exemption notification was in force.

(2.) MRS . Suvira Lal, learned Advocate, submitted that the mechanical workshop manufacture railway wagons for use of the Indian Railway; that wagons are exempt from payment of Central Excise duty; that during the course of manufacture of railway wagons, ferrous waste and scrap falling under Heading 72.04 of the Schedule to the Central Excise Tariff emerges which is being sent by them to the Controller of Stores, Northern Railways for sale through auction; that the duty has been demanded from them for the period from 1 -3 -1994 to 15 -3 -1995 under the impugned Order on the ground that the Notification No. 171/1988 -C.E., dated 30 -5 -1988 which has exempted ferrous waste and scrap was rescinded by the Central Government by Notification No. 64/94 -C.E., dated 1 -3 -1994. The learned Advocate, further, submitted that subsequently exemption from payment of duty was allowed to them by Notification No. 23/95 -C.E., dated 16 -3 -1995: that as the ferrous waste and scrap was exempted earlier to March, 1994 and also w.e.f. March, 1995 the department should not have demanded the duty from them; that in any case the materials out of which waste and scrap has been generated are duty paid, and therefore, duty cannot be demanded again on the scrap; that they were under the bonafide belief that scrap generated in a workshop of railway department is exempted from payment of duty, and therefore, the question of imposing any penalty does not arise. We also heard Shri O. P. Arora, learned SDR.