Duty reversed on scrap destroyed

[Asked by Guest]

Dear Sir,

We are a manufacture of Electrical Goods for produce the Electrical Goods we use the fiber strip.

There is some scrap generated from this fiber strip and sheets and these fiber scraps are not salable because no one want to purchase these fiber scrap . In these above case we need to reverse the excise duty on these scrap or not ?

Regards

Swapneswar Muduli

[Ganeshan Kalyani]

In my view no excise duty is payable on scrap.

[KASTURI SETHI]

I agree with the views of Sh.Ganeshan Kalyani, Sir. As per Section 2 (f)(iii) of Central Excise Act one the conditions is that goods i.e. whether waste scrap or bye-product must be marketable. In your case, your waste scrap is not marketable, hence no Central Excise duty is payable. A judgement of Supreme Court and Board's Circular are appended below:-

2015 (322) E.L.T. 769 (S.C.) = 2015 (10) TMI 566 - SUPREME COURT

IN THE SUPREME COURT OF INDIA

A.K. Sikri and Rohinton Fali Nariman, JJ.

UNION OF INDIA

Versus

DSCL SUGAR LTD.

Press-mud arising during manufacture of Sugar, not excisable

Circular No. 730/46/2003-CX., dated 31-7-2003

F.No. 387/S/108/02-JC

Subject : Excisability of Press-mud arising during manufacture of sugar -Adjudication of cases regarding………

Cenvat Credit is also not to be reversed contained in the waste scrap arisen during the manufacture of final product. Relevant extract of Board's circular is appended below:-

F. No. B-4/7/2000-TRU, dated 3-4-2000

[Mahir S]

Yes Sir, the replies furnished above are correct.

However, you need to raise excise invoice showing NIL value and duty at the time of clearance from the factory premises, for the purpose of quantification of the said non saleable scrap.

[KASTURI SETHI]

Sh.Mahir S.

Sir, You have rightly advised and thus completed my reply.

[Mahir S]

AI Summary

Marketability of scrap: non marketable manufacturing waste is not subject to excise duty; invoice nil value for records.
Non marketable manufacturing waste and scrap are not exigible to excise duty; Cenvat credit relating to such non salable scrap need not be reversed. For quantification and records the manufacturer should raise an excise invoice at clearance showing nil value and nil duty for the scrap.