Excise Duty Liability on Scrap generated at Job Worker Premises

[Rakesh K Paliwal]

Dear All,

Pl let me know the judgments on above subject, when Principle Manufacture sent goods[ under rule 4(5)a] for fuhrer processing to job worker /processor , and get back after processing , which is add in final product on which duty paid by principle manufacturer, what is the treatment of scrap generated at job worker premises regarding duty liabilty ????

Regards

Rakesh Paliwal

[Arun Kumar Singh]

The excise duty will paid on scrap also. Job worker should return the processed goods along with scrap to principal manufacturer.

[MUKUND THAKKAR]

Dear Rakesh,

in such situation you have two option.

1) you may cleared the scrap from your end by paying excise duty on realization value.

2) As suggested by Mr.Arun you may returned to your principal manufacturer along with processed goods.

[YAGAY andSUN]

Dear Rakesh,

Waste and Scrap not required to be returned – Waste and Scrap generated at job worker’s end is not required to be returned to manufacturer. Only finished product is required to be returned- Forbes Aquatech v CCE (2008) 230 ELT 629 (CESTAT SMB)= 2008 (1) TMI 770 - CESTAT, BANGALORE – relying on CCE v Shahumbari Sugar (2004) 176 ELT 819 (CESTAT) = 2003 (9) TMI 268 - CESTAT, NEW DELHI. In Windals Auto v CCE (2012) 279 ELT 298 (CESTAT SMB)= 2012 (11) TMI 479 - CESTAT, NEW DELHI, scrap was not brought back but was directly sold from place of job worker on payment of excise duty. It was held that there is no loss and demand is not sustainable.No penalty can be imposed if waste and scrap is not returned or permission not obtained for clearance as rules do not require obtaining any permission – Bata India v CCE (2009) 238 ELT 316 (CESTAT SMB).= 2009 (1) TMI 575 - CESTAT, KOLKATA

This is for your kind information.

Regards,

YAGAY and SUN

(Management, Business & Indirect Tax Consultants)

AI Summary

Excise duty on scrap may be payable; scrap can be returned or sold by job worker subject to duty. Excise duty on scrap generated at a job worker's premises may be payable; the scrap can be returned to the principal, cleared by the principal on realization value, or cleared/sold directly by the job worker on payment of excise. Appellate tribunal authorities indicate that waste and scrap need not be returned and that failure to return or obtain permission does not necessarily attract penalty where rules do not require such return or permission.