2012 (11) TMI 479 - AT - Central Excise

Tribunal Rules in Favor of Appellants, Deems Duty Demand Unjustified

The Tribunal set aside the order and allowed the appeal, ruling in favor of the Appellants. The demand for duty was deemed unjustified due to the absence ... Return of inputs/scrap under Rule 5(9) of Rule 4 of the Cenvat Credit Rules, 2004 - liability where duty already paid by principal - no revenue loss principle - job work exemptionReturn of inputs/scrap under Rule 5(9) of Rule 4 of the Cenvat Credit Rules, 2004 - liability where duty already paid by principal - no revenue loss principle - Validity of demand of excise duty from the job-worker for not returning scrap purportedly covered by Rule 5(9) of Rule 4 of the Cenvat Credit Rules, 2004 - HELD THAT: - Revenue issued a demand on the ground that the appellant had not returned scrap as required by the referenced rule. The Revenue's representative accepted that there was no revenue loss. The material fact is that the principal (M/s. Larsen & Toubro Ltd.) had sold the scrap to the appellant and had paid the excise duty. In these circumstances the Tribunal found no merit in sustaining the demand against the job-worker because the duty applicable to the scrap had already been discharged by the principal and there was no consequent revenue loss to the exchequer. The Tribunal therefore set aside the impugned order confirming the demand. [Paras 5, 6]Impugned demand set aside and appeal allowed.Final Conclusion: The Tribunal held that where the principal has sold the scrap to the job-worker and has discharged excise duty, and there is no revenue loss, a demand against the job-worker for failure to return scrap under the cited rule cannot be sustained; the impugned order was set aside and the appeal allowed. Issues:1. Applicability of Rule 5(9) of Rule 4 of Cenvat Credit Rules, 2004.2. Demand of duty due to failure to send back scrap.3. Revenue loss and procedural mistake.4. Interpretation of exemption under Notification No. 214/86.5. Sale of waste generated during job work.6. Justification for not sending back goods.Analysis:The case involved the Appellants engaged in job work for M/s. Larsen & Toubro Ltd under an exemption notification. The issue arose when waste generated during job work was sold by M/s. Larsen & Toubro to the Appellants themselves, leading to a notice from Revenue for not sending back the scrap as required by Rule 5(9) of Rule 4 of Cenvat Credit Rules, 2004, and demanding duty. The Revenue acknowledged that there was no revenue loss, attributing the issue to a procedural mistake.During the proceedings, the advocate for the Appellants argued that since the goods were in their factory and M/s. Larsen & Toubro sold the waste to them, there was no obligation to return the goods. The Tribunal considered the arguments and concluded that there was no evidence of revenue loss, noting that the appropriate duty had been paid by M/s. Larsen & Toubro. The Tribunal found no merit in the lower authority's reasoning to support the demand for duty.As a result, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that the demand was unjustified due to the absence of revenue loss and the payment of appropriate duty by M/s. Larsen & Toubro. The judgment highlighted the importance of considering the specific circumstances and the legal provisions in determining the liability for duty, ultimately ruling in favor of the Appellants based on the lack of merit in the Revenue's arguments.