Rule 3(5A) does not apply to used brass tubes sent for remaking when they are not waste and scrap.

Used brass tubes cleared to a job worker for remaking were identifiable goods, not waste and scrap, so Rule 3(5A) of the Cenvat Credit Rules, 2004 did not apply. Because the record did not support classification as waste and scrap, the duty demand raised on that basis was unsustainable. The related penalty also could not survive once the substantive demand failed. The appeal was accordingly allowed, and the impugned demand and penalties were set aside with consequential relief to the assessee.

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Issues: Whether the clearance of used brass tubes to a job worker for remaking amounted to removal of waste and scrap so as to attract Rule 3(5A) of the Cenvat Credit Rules, 2004, and the consequential demand and penalty.

Analysis: The clearance was of used brass tubes as brass tubes and not as waste and scrap. Rule 3(5A) applies where waste and scrap of capital goods is removed, and the record did not support such classification. Since the articles were sent for remaking and returned after payment of appropriate duty, the provision invoked for duty demand was not attracted.

Conclusion: The demand under Rule 3(5A) was not sustainable and the penalty also could not survive.

Final Conclusion: The appeal succeeded and the impugned demand and penalties were set aside, with consequential relief to the assessee.

Ratio Decidendi: Where used capital goods are cleared as identifiable goods for remaking and not as waste and scrap, Rule 3(5A) of the Cenvat Credit Rules, 2004 is not attracted.

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