2017 (1) TMI 1233 - AT - Central Excise

Tribunal Upholds Commissioner's Decision on Central Excise Duty Appeal

Commissioner of Central Excise, Customs and Service Tax, Mysore Versus M/s. Automotive Axles Ltd

Commissioner of Central Excise, Customs and Service Tax, Mysore Versus M/s. Automotive Axles Ltd - TMI Issues:Revenue's appeal against setting aside of Order-in-Original by Commissioner (A) allowing appeal of assessee regarding central excise duty on scrap generated and cleared by job workers.Analysis:The appeal involved the Revenue challenging the Commissioner (A)'s decision to set aside the Order-in-Original and allow the appeal of the assessee concerning the central excise duty on scrap generated and cleared by job workers. The facts of the case revealed that the respondent-assessee was involved in manufacturing axel assemblies and components for motor vehicles. The issue arose when it was discovered that scrap generated during job work was not returned to the manufacturer but sold by the job workers without paying excise duty. The department issued a show-cause notice demanding duty on the unreturned scrap, leading to penalties imposed on the assessee and company officers. The Commissioner (A) overturned this decision, stating that the assessee was not liable to pay central excise duty on the scrap generated and sold by job workers, thereby prompting the Revenue's appeal.The Revenue argued that the impugned order was legally unsustainable as the Commissioner (A) allegedly misinterpreted the facts and relevant laws. They contended that as per CENVAT Credit Rules and departmental notifications, goods, including scrap and waste generated during job work, had to be returned to the manufacturer, with duty liability falling on such items. Contrarily, the assessee's counsel supported the impugned order, emphasizing that the provisions of CCR, 2004 only required the return of job work processed goods within a specified period, exempting duty on goods manufactured on job work basis. The counsel cited various tribunal decisions supporting the assessee's position, asserting that the duty demand on scrap generated by job workers was not sustainable.The Tribunal, following the cited decisions and legal precedents, concluded that the demand for duty on scrap generated and retained by job workers was not valid. They highlighted that CCR, 2004 did not create a liability to pay excise duty but focused on the reversal of credit in case of errors. The Tribunal's decision was in line with settled legal principles, emphasizing that the liability and payment of excise duty were governed by specific rules, and the demand on raw material suppliers for waste/scrap generated by job workers was unwarranted. Citing previous judgments and the dismissal of Revenue's appeals in similar cases, the Tribunal upheld the Commissioner (A)'s decision, dismissing the Revenue's appeal due to the settled legal position favoring the assessee.In conclusion, the Tribunal's detailed analysis and reliance on legal precedents established that the demand for central excise duty on scrap generated and cleared by job workers was unfounded, supporting the assessee's position and dismissing the Revenue's appeal.