Court affirms remand order on scrap segregation vs. manufacturing, emphasizes circular applicability.

The High Court upheld the order of remand issued by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, directing the adjudicating authority to reconsider whether segregating scrap amounts to manufacturing. The Court emphasized the need for a fresh examination on the applicability of the Board Circular dated 10.05.2016, without interfering with the Tribunal's decision.

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Issues:
1. Appeal against the order of the Customs, Excise and Service Tax Appellate Tribunal.
2. Central excise duty demand, interest, and penalty imposition.
3. Interpretation of Circular No.1029/17/2016-X dated 10.05.2016.
4. Whether segregating scrap amounts to manufacturing.
5. Applicability of the Board Circular to the case.

Analysis:
1. The appellant filed an appeal against the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, which remanded the matter back to the adjudicating authority. The Tribunal set aside the order-in-original dated 30.11.2015 passed by the Commissioner, Central Excise, Alwar.

2. A show cause notice was issued to the respondent-assessee for demanding central excise duty, interest, and imposing a penalty. The adjudicating authority confirmed the demand, interest, and penalty. The Tribunal remanded the matter based on the clarification issued in Circular No.1029/17/2016-X dated 10.05.2016, which stated that segregating impurities in scrap before feeding into the furnace does not constitute removal of 'input as such.'

3. The contention raised was that the Tribunal allowed the appeal without proper reasoning or considering whether segregating scrap amounts to manufacturing. The Board Circular dated 10.05.2016 was argued to be inapplicable and not retrospective. The High Court noted these arguments but decided not to interfere with the order of remand.

4. The High Court directed the adjudicating authority to reconsider whether segregating scrap constitutes manufacturing and if the Board Circular dated 10.05.2016 is applicable in the case. The Court disposed of the appeal with this direction, maintaining the order of remand issued by the Tribunal on 20.09.2017.

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