2005 (2) TMI 426 - AT - Central Excise

Tribunal clarifies waste as inputs, allows duty-free clearance for job work under Rule 57AC.

The Tribunal allowed the appeal, setting aside the impugned order. It clarified that waste and scrap should be considered as inputs under Rule 57AC, ... Cenvat/Modvat - Waste Issues:Interpretation of Rule 57AC of Central Excise Rules regarding clearance of waste and scrap without payment of duty for job work.Analysis:The appellant, engaged in manufacturing Brass Components, cleared brass waste and scrap without paying duty for job work under the cover of challans to get the waste remelted and reconverted into brass rods, which were used as inputs for their final product. The Revenue contended that the appellant incorrectly followed Rule 57AC, arguing that the brass waste and scrap did not qualify as inputs, thus duty should be paid on them. However, referencing the decision of the Larger Bench in Wyeth Laboratories Ltd. v. CCE, the Tribunal clarified that waste should be understood as a form of inputs that could not be feasibly converted into a final product. The Tribunal emphasized that waste, as per Rule 57F(4), should be restricted to inputs not intended for further use in manufacturing the final product. Consequently, based on the Tribunal's precedent, the impugned order was set aside, and the appeal was allowed.