F.No TRU Government of India Ministry of Finance Department of Revenue (Tax Research Unit) *****

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1 F.No TRU Government of nda Mnstry of Fnance Department of Revenue (Tax Research Unt) ***** Room No. 46-G, North Block New Delh, the 3'~ February, 202 Shr Vkas Mehta, A S hvalk, Near Malvya Nagar, New Delh Subject: Request for nformaton under RT- Act Please refer to your applcaton dated whch was orgnally receved by RT(Cel) and subsequently forwarded to the undersgned( ). ' 2. The nformaton sought by you s as under:- (a) Please refer to the Notfcaton No CE dt (b) n connecton wth the above, you are requested to provde the followng nformaton and documents, vz:- () The purpose and ratonale behnd ssuance of the sad notfcaton () The meanng ascrbed to the tern "waste" n the sad notfcaton () All background papers, records, documents etc. and fle notng relatng to and concernng the sad notfcaton (c) You are further requested to allow the Applcant to nspect the fle as mantaned by the Excse Department n relaton to the sad notfcaton no. 89/95 - CE dt 8/05/995 and take notes, extracts or certfed copes of the docurnents. n ths regard, the requred nformaton s hshed as under:- For S. No.(b)(), (b)() &(b)() above, the relevant pages(-9) of the fle notng whch led to ssuance of the Notfcaton No. 89/95- CE dt 8/05/995 s enclosed whch s self-explanatory. For S. No.(c), ths ofce may be vsted on any of the followng dates 2nd or 9th or 6" of Aprl, Santosh Kurnar vdtsa' CPO Appellate authorty n the case s Ms Lmatula Yaden, Drector (TRU), Room No.46-J, North Block, Department Of Revenue, Mnstry of Fnance.

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3 7-3~~ "/c) Precedng notes may kndly be seen. F.No.B8/3/95-TRL ' 2' n ths fle, we are proposng some modf.catdn \ n the schem,e of exempton for waste and scrap. t may be recalled that n ths budget, waste an'd scrap have been exempted from excse duty, f they are generated j durng the process of manufacture of exempted goods. 4 j The -ratonale was that as the unts are exempted from ( excse control n relaton to the man products made by < them, t s not logcal to brng them under excse ' control only for the purpose of chargng duty on such.-- waste and scrp. p+? (7 G 3. Our ntenton thus, was to exempt waste and scrap V\..FM' 5 c :,\ t.>a- 5b-~ arsng n a unt whch s exempted from excse duty. L But, t s qute possble that n the process of Y,; *, 6,.":! manufacture of such fnal products, ntermedate t! products also come nto exstence, and waste and scrap - may arse at each ot the ntermedate ' stage. The ' notfcaton as t stands, allows ex~empton from excse 3 duty to waste and scrap generated durng the manufacture of exempted goods wthout makng any :.':,. dstncton, whether such goods are fnal products or ermedate pr-oducts. Consequently, a unt whch s ufacturng dutable goods, are also n a poston to m the beneft of ths exempton n respect of waste scrap, whch may arse n the man.ufacture of termedate goods whch are fnally used n' dutable ods. The reason s that n the case of dut.able ods, all ntermedate goods are exempted from excse duty. d Such unts are n.any way, under excse control t:here s no requrement of gvng them any..,:- l.<.fey: '.. -;.r> ><,.Z(

4 exempton n respect of waste and scrap whch arse n ther factory. 4. Besdes, even unts avalng of the small scale exempton scheme under a value or quantty based exempton notfcaton, would be elgble for the e:;empton from excse drty on was'te and scrap. n ther case, %he clearance value of Rs.30 lakhs should be adequate to take care of clearance of any waste and scrap. Allowng the exempton to waste and scrap under the general notfcaton, may enable the small scale _/_ A-' ) unts to clear the bulk of- the products as waste and 6! scrap, the vaue of whch wll not be ncluded n : determnng the clearance lmts, n vew of the ' provson of excludng the clearance of exempted goods f ~ r determnng the exempton lmts of a small scale unt.! < 5. n the budget speech of F.M, the ntenton was ; bascally n the conte:tt of a factory whch s outsde g -.% ;,--,;t.- e:xcse control.. t was not meant for a product based e:.:emp'l-on. To tl-rat extent, our notf cakon does not * fully reflect the ntenton but may be gvng some - unntended beweft. For nstance, n the case of / ntegrated textle unts, the manufacturers may get j away wth full exempton from extse duty on wastes because n -ther case,.the fnal product% namely \! j 4 t. t fabrcs, are exempted from basc excse duty. 6. t s thus proposed to provde that the exempton from waste and scrap wll apply only f the factory s f! not producng only exempted goads. :

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6 exempted goods. Ths should help a large number of unts n the small scale sector. l The above ntenton, however, has not been qute well reflected n Notfcaton No.23/95-CE. W e have gven more than what was ntended. The proposal now s to amend t to brng t at par wth the ntenton. The net effect wll be as follows: + f both fnal and.g.te.medate products are exempted, then' waste and scrap are also to be exempted. But f any of the above products pays duty,.then,waste and scrap also wll pay duty. The SS does not get ths exempton, but t gets Rs.30 lakhs e,xempton under the 'general SS exempton. For approval. (S. Mukhopadhyay) Member (Budget) Aprl 28, 995

7 Refer precedng notes. F.No.B8/3/95-THU 2.,n ths fle, we are proposng some modfcatons n the scheme of e:+empton from excse duty on,jaste and SCT-ap, whch arse durng any manuf acturny r>.rsocess. t may be recalled.that n ths budget, waste and scrap have been tempted from excse duty, f they are,generated durng the process of manufactu.re:of exempted goods. The ratonale was that a5 the unts are e:cemp$ed from excse control n relaton.to the man products made by them, t s not oq--ck to brng them under excse control only far. the purpose of chargng duty on such waste aqd scrdp. T A. Pn ths context, extracts of Full's Budget Speech (page 062 are reproduced below: "t daes not seem very logcal to brng these unts under the excse control only for the purpose of chargng duky on 5~~7 waste and scrap. am thus proposng to fully exempt waste and scrap whch a~se n the manufacture af exempted qonds. Ths should help a large number of unts n the smal scale sector". 4.. Our ntenton & thus t;a exempt the ~aste 9, scrap arsnq a_ unt rnrhch j.s otherwse- fully' exempt - excse r- 3. We had act2ordj.ngly ssued an esemptan nokfcatpn No. 23/95-CE.as part o the budye't chanyes. Ths nntf cakan exempts waste, parngs and scrap arsng n the course of man~tfa~ture of "e:ce-mpted" goods. Some Collectors have now ponted out that n several cases ntermedate goods used.far captve consump'tun are. "exempted" t'hough the fnal goods are dutable. They have reported that waste and 4 scrap s genr-.ra$ed.c n the course of manufacture of

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