Tribunal allows appeal citing alignment with precedent, absence of specific rule on waste, scrap classification

The appeal was allowed by the Tribunal as the appellant's argument aligned with previous decisions and the absence of a specific provision in the Cenvat Credit Rules. The Tribunal ruled that waste arising from processing of inputs should be removed on payment of duty unless specified by the Central Government. The appellant's contention that waste and scrap from broken bottles during certain processes are not considered manufactured products was upheld. The decision was pronounced on 27/10/17.

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Issues:
Demand of duty and imposition of penalty for clearance of scrap of glass bottle without payment of duty.

Analysis:
The appeal was filed against the demand of duty and penalty for clearing scrap glass bottles without paying duty. The appellant argued that the scrap generated from broken glass bottles during the manufacturing process should not be chargeable to tax, citing previous decisions where similar demands were dropped. The revenue, however, relied on a decision by the Hon'ble High Court regarding the removal of waste and scrap generated during the processing of inputs. The High Court concluded that waste arising from processing of inputs, in respect of which credit has been taken, should be removed on payment of duty. The Court clarified that waste cannot be removed without payment of duty unless specified by the Central Government. The appellant also referred to a Supreme Court decision supporting the view that waste and scrap from broken bottles during filling and handling processes are not considered manufactured products.

The Tribunal noted that there is no provision similar to the one cited in the Cenvat Credit Rules. As the appellant's argument aligned with the findings of the Division Bench of the Tribunal and the apex court in a previous case, the appeal was allowed. The decision was pronounced in court on 27/10/17.

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