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of <h1>CESTAT rules in favor of appellants in duty dispute over scrap, citing Rule 57AB(1)(b). Penalties unjustly imposed.</h1> The Appellate Tribunal CESTAT, Mumbai allowed the appeal in favor of the appellants in a dispute over duty demand on scrap arising during job work. The ... Cenvat/Modvat - Waste and scrap Issues:Demand of duty on scrap arising during job work, applicability of Rule 57F provisions, penalties imposed without reason.Analysis:The appeal before the Appellate Tribunal CESTAT, Mumbai involved a dispute regarding the demand of duty on scrap arising during job work at the appellant's premises. The appellants were engaged in the manufacture of 'Electric Stamping' using raw materials supplied by M/s. Crompton Greaves Ltd. Goa on a job work basis under Rule 57F(4) provisions. Duty demands were made and confirmed on the appellants due to improper duty payment on the scrap. Penalties were also imposed without providing any reason by the original authority.The Commissioner appeals upheld the orders on the grounds that clearance of scrap was deemed to be on behalf of M/s. Crompton Greaves Ltd., and Rule 57F(12) for payment of duty on waste was restricted to the waste/scrap of the appellants and not on job work scrap. It was also argued that Rule 57F(18) supported this interpretation and there was no evidence to prove suppression.Upon hearing both sides and reviewing the material on record, the Tribunal found that the rules relied upon by the original authority were not in vogue from 1-4-2000. Rule 57AB(1)(b), applicable from 1-4-2000, had specific provisions covering the utilization of credit on final products, including scrap. The Tribunal held that scrap is a final product and is excisable, supported by previous decisions.Furthermore, the Tribunal noted that the job worker, as a manufacturer of waste and final products, could not differentiate between waste arising from raw materials and final products due to the lack of a one-to-one correlation. The lower authority's attempt to establish a proposition regarding the correlation between inputs and final products was deemed invalid. As a result, the Tribunal concluded that there was no case for demand and penalty, ultimately allowing the appeal in favor of the appellants.
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