2007 (11) TMI 108 - AT - Central Excise

Tribunal rules in favor of supplier on duty demand for waste and scrap, citing Cenvat Credit Rules.

EMCO LTD. Versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III

The Tribunal allowed the appeal, setting aside the duty demand against the supplier of inputs for the period post 31-3-2000. The decision clarified that ... Duty demand confirmed against the appellant herein, who is supplier of inputs for the waste and scrap generated at the job workers’ end – supplier can not be held liable on the ground that the worker had not discharged duty liability on impugned waste and scrap - set aside the impugned order and allow the appeal. Issues:1. Whether the principal manufacturer/supplier of inputs is liable to discharge duty on waste and scrap generated at the job workers' end.2. Validity of the duty demand against the supplier of inputs post 31-3-2000.Analysis:1. The Tribunal considered the application for waiver of pre-deposit of duty amounting to Rs. 23,33,697, confirmed on waste and scrap generated at the job workers' end. The issue in dispute was whether the principal manufacturer/supplier of inputs is liable to discharge duty as per Rule 57AC/Rule 4(5)(a) of the Cenvat Credit Rules, 2002. The Tribunal referred to the decision of the Hon'ble Bombay High Court in Commissioner of Central Excise v. Rocket Engineering Corporation Ltd. and decided to take up the appeal itself for final disposal after granting the prayer for stay.2. The adjudicating authority initially dropped the demand against the supplier of inputs, a manufacturer of electric transformers, after verifying that duty had been paid on the scrap generated during job work. However, the Commissioner (Appeals) set aside this order in an appeal by the Revenue, stating that the duty liability cannot be fastened on the principal manufacturer/supplier of inputs. The Tribunal upheld the decision, citing the Hon'ble Bombay High Court's ruling and previous Tribunal orders. The Tribunal held that the duty demand against the appellant, the supplier of inputs, cannot be sustained for the period post 31-3-2000, based on the cited legal precedents. Consequently, the impugned order was set aside, and the appeal was allowed.This judgment clarifies the liability of the principal manufacturer/supplier of inputs regarding duty on waste and scrap generated at job workers' end and establishes the legal position post 31-3-2000 based on the Hon'ble Bombay High Court decision and relevant Tribunal rulings.