Appellant not liable for duty on scrap generated by job worker to avoid double taxation

The Tribunal held that the appellant, engaged in manufacturing automobile parts, was not liable to pay duty on scrap generated at the end of a job worker who had already paid duty on the same. Citing precedents and relevant rules, the Tribunal ruled that demanding duty from the appellant would result in impermissible double taxation. Therefore, the impugned order was set aside, and the appeal was allowed with any consequential relief.

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Issues:
Whether the appellant is liable to pay duty on scrap generated at the end of job worker who has already paid duty on the sameRs.

Analysis:
The appellant, engaged in manufacturing automobile parts, entered into an agreement with Honda Cars India Limited for supply. The appellant procured steel coils and sent semi-finished goods to another entity for job work. The Revenue contended that the scrap generated at the end of the job worker is dutiable in the hands of the appellant. The appellant argued that the job worker had already paid duty on the scrap, and demanding duty from the appellant would amount to double taxation, which is impermissible in law. The appellant also cited precedents to support their case, including Mahindra Hinoday Industries Limited v. CCE and National Engineering Industries Limited v. CCE.

The appellant further contended that they had obtained permission under Rule 4 (6) of Cenvat Credit Rules, 2004, and should not be liable to pay duty. They also raised the issue of the show cause notice being time-barred. The authorized representative reiterated the findings of the impugned order.

The Tribunal considered the submissions and held that since duty had already been paid on the scrap by the job worker, the appellant was not liable to pay duty again. Citing the case of National Engineering Industries Ltd., the Tribunal ruled that the principal manufacturer is not required to pay duty on waste and scrap generated by the job worker during processing. Referring to the decision in Rocket Engineering Corporation Ltd., the Tribunal further established that the appellant was not obligated to pay duty on the scrap that had already been subject to duty at the job worker's end.

Consequently, the Tribunal set aside the impugned order and allowed the appeal with any consequential relief.

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