2005 (8) TMI 160 - AT - Central Excise

Tribunal upholds duty liability on waste clearance, directs re-quantification, emphasizes input-duty credit

The Tribunal upheld the duty liability on the clearance of waste and scrap of paper and paper boards without payment during a specific period. The ... Waste and scrap - Demand Issues:1. Duty liability on clearance of waste and scrap of paper and paper boards without payment during a specific period.2. Demand of duty and penalty imposed by the original authority.3. Allowance of Modvat credit on inputs and benefit of Section 4(4)(d)(ii) of the Central Excise Act.4. Re-quantification of duty demand by the original authority.Analysis:1. The case involved the duty liability on the clearance of waste and scrap of paper and paper boards without payment of duty during a particular period. The appellants cleared such goods without duty payment between 29-11-95 to 30-9-96, leading to a demand of duty amounting to Rs. 1,09,728/- by the original authority, along with a penalty of Rs. 5,000. The first appellate authority upheld the duty demand but set aside the penalty, prompting the assessee to file an appeal challenging the duty liability.2. Upon examination of the records and hearing both sides, the Tribunal noted that the waste and scrap were cleared from a factory where dutiable goods were also manufactured. Consequently, the assessee was found liable to pay duty on the waste and scrap from 18-5-95 as per Notification No. 89/95-C.E. The Tribunal acknowledged the challenge raised by the appellants but observed that the grievance regarding the quantification of duty was genuine. The Tribunal emphasized that the assessee should be allowed to avail input-duty credit and deduct duty from the sale price of the goods to determine the assessable value for duty demand under Section 4(4)(d)(ii) of the Central Excise Act.3. In light of the findings, the Tribunal upheld the dutiability of the goods in question but set aside the demand of duty for re-quantification by the original authority. The matter was remanded for this specific purpose, with a directive for the original authority to provide the assessee with a reasonable opportunity to be heard before re-quantifying the duty. The Tribunal disposed of the appeal accordingly, emphasizing the need for adherence to the specified procedures.4. The operative part of the order was pronounced in open court on 12-8-2005, marking the conclusion of the Tribunal's decision on the duty liability issue concerning the clearance of waste and scrap of paper and paper boards without payment during the mentioned period.