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of <h1>Tribunal rules Excise Duty not payable on certain scrap items. Show Cause Notice deemed void.</h1> <h3>Shreno Ltd Versus C.C.E. & S.T. -Vadodara-I</h3> Shreno Ltd Versus C.C.E. & S.T. -Vadodara-I - TMI Issues Involved:1. Whether the Excise Duty is payable on the general scrap which is neither manufacturing scrap nor cenvatable scrap.2. Validity of the Show Cause Notice issued without proper investigation.3. Applicability of previous judgments to the present case.Issue-wise Detailed Analysis:1. Excise Duty on General Scrap:The appellants are engaged in the manufacture of glass and glassware items. During an audit, it was observed that some value against the sale of scrap was appearing in the appellant's balance sheet. The appellant clarified that they had discharged the Excise Duty on manufacturing scrap and scrap generated from cenvatable input/capital goods but did not pay duty on general scrap, which is neither manufacturing scrap nor cenvatable scrap. The tribunal held that 'the duty is clearly not payable' on such general scrap. The identical issue was decided in the appellant's favor in previous cases, where it was consistently held that scrap, other than manufacturing and non-cenvatable, is not liable to duty.2. Validity of the Show Cause Notice:The Show Cause Notice demanded Excise Duty on all the scraps without any investigation to determine whether the appellant had availed Cenvat Credit for the scrap cleared without payment of duty. The tribunal noted that 'the Show Cause Notice was baldly issued without carrying out any investigation' and that the allegations were 'without any support of any evidence.' Therefore, the tribunal found the Show Cause Notice to be void and illegal.3. Applicability of Previous Judgments:The appellant relied on several judgments to support their case. The tribunal cited various precedents, including:- Alembic Glass Ltd. (2006): The tribunal noted that items such as old and used machinery, iron grills, etc., are not emerged from conversion or inputs from raw material and thus not liable to excise duty.- Alembic Ltd. (2007): It was held that scrap of packing material and old and used capital goods cleared by a manufacturer of pharmaceutical products is not liable to excise duty.- Alembic Industries Ltd. (2009): The tribunal concluded that there is no manufacturing activity involved in the generation of certain waste and scrap, and merely selling such items does not make them excisable.- Gujarat State Fertilizers & Chemicals Ltd. (2019): The tribunal emphasized that for Rule 3(5A) of Cenvat Credit Rules, 2004 to apply, it is necessary for the Revenue to establish that items of capital goods cleared as waste and scrap had availed Cenvat credit.The tribunal concluded that the demand raised in the Show Cause Notice was not sustainable, setting aside the impugned order and allowing the appeal.Conclusion:The tribunal found that the appellant had correctly not paid duty on general scrap, which is neither manufacturing scrap nor cenvatable scrap. The Show Cause Notice was issued without proper investigation and lacked supporting evidence. The tribunal relied on previous judgments that consistently held similar views, ultimately setting aside the impugned order and allowing the appeal.
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