2023 (5) TMI 1076 - AT - Central Excise

Appellate tribunal rules in favor of cement manufacturer in waste and scrap duty liability case

The appellate tribunal allowed the appeals challenging duty liability on waste and scrap clearance, based on precedents and legal principles. The ... CENVAT/MODVAT Credit - waste and scrap of various items cleared - remanding duty on clearance of various types of waste and scrap under Rule 3 (5A) of Cenvat Credit Rules, 2004 - HELD THAT:- The issue is no longer res integra. In the Appellant’s own case COMMISSIONER OF C. EX. & S.T. (LTU) , MUMBAI VERSUS AMBUJA CEMENT LTD. [2015 (10) TMI 1781 - CESTAT MUMBAI] the issue has been settled and it was held that the issue is covered by the decision of the Hon'ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS WEST COAST INDUSTRIAL GASES LTD. [2003 (4) TMI 110 - SUPREME COURT] read with Board's Circular No. 721/37/2003- CX., dated 6-6-2003. Following the said decision of the Hon'ble Supreme Court and the circular, I dismiss the appeal of the Revenue. In case of PANASONIC CARBON INDIA CO. LTD. VERSUS COMMISSIONER OF C. EX., GUNTUR [2006 (7) TMI 88 - CESTAT,BANGALORE], it was held that all the items which were cleared are not dutiable. They were cleared from the workshop of the factory as Waste and Scrap on account of its wear and tear. There are no merits in the impugned order setting aside the same - Appeals are allowed. Issues involved:- Duty liability on clearance of waste and scrap under Cenvat Credit Rules, 2004- Contention that scrap in dispute is capital goods- Evidence of availment of Cenvat credit on goods generating waste and scrap- Commissioner (Appeals) upholding demand under Rule 3(5A) without observation on adjudicating authority's findingsAnalysis:1. Duty liability on waste and scrap clearance: The appeal challenged the duty liability on the clearance of various waste and scrap items during the disputed period. The appellant, a cement manufacturer, availed Cenvat credit of duty paid on inputs and capital goods. Show cause notices were issued remanding duty on the clearance of waste and scrap, which were confirmed by the adjudicating authority and dismissed by the Commissioner (Appeals).2. Contention regarding scrap as capital goods: The appellant argued that the waste and scrap in question should be considered as capital goods since they had not cleared any capital goods as waste and scrap. They highlighted that the show cause notice did not specify the waste and scrap as the scrap of which capital goods, and no evidence was provided regarding the availment of Cenvat credit on the goods generating the waste and scrap.3. Commissioner (Appeals) decision: The Commissioner (Appeals) upheld the demand under Rule 3(5A) without commenting on the adjudicating authority's findings. The appellant contended that this decision went beyond the scope of the court and cited various judgments to support their argument, including CC Vs. Toyo Engineering India Limited and CCE Vs. Ballarpur Industries Ltd.4. Judicial precedents and decisions: The judgment referred to several previous decisions to support the appellant's case, such as CCE Vs. Ambuja Cements Ltd., Larsen & Toubro Ltd Vs. CCE, and Panasonic Carbon India Co. Ltd. Vs. CCE. These decisions emphasized that waste and scrap not arising during the manufacturing process or being cleared as non-dutiable items should not incur duty liability.5. Supreme Court rulings: The judgment also cited Supreme Court rulings, like the case of Ahmedabad Electrical Co. Ltd., which clarified that waste or scrap obtained during the manufacturing process but not transformed into a new article should not be subject to excise duty. These rulings emphasized the necessity of a transformation process for goods to be considered excisable.In conclusion, the appellate tribunal found no merits in the impugned order and allowed the appeals based on the precedents and legal principles discussed, setting aside the demand on waste and scrap clearance.