Provision related for retaining the Generated Scrap with assessee.

[Guest]

Respected Sir, We’re doing Machining job of Loco Blank Wheel, which is supplied by Durgapur Steel Plant (Manufacturer) on job work basis. The said wheels (Semi finished) come our workshop under Annexure II Challan We’ve an agreement with M/s. Durgapur Steel Plant in this regard that Turning/ Boring or Scrap which is generated during the process/ machining of said Wheels shall be retained by us as at free of cost with a condition of to pay excise duty on generated Scrap/ Boring and evidence of such payment should be deposited before Competent authorities of M/s. Durgapur Steel Plant. After receiving the above evidence they release our payment for machining charges of wheels, these are the main clause of MOU which has signed by DSP and our Company and I’m writing the exact word of clause :- “Turning/Boring arising out of machining operation will retained by M/s. MCC (P) LTD free of Cost but they will pay excise duty and cess on turning/ boring under rule 57F(4) under the Central Excise Rules,1944 evidence of such payment will be submitted to DSP on monthly basis and it will covered under above Bank Guarantee” Presently Central Excise Department pressurised upon DSP’s Authorities to take back of Scrap/ Turning/ Boring which is generated during the course of machining of wheels but DSP has not interested to take back the said Scrap due to their difficulties of additional burden of paper work, Inventories and other formalities . Further we want retained of scrap with us for sale purpose with payment of excise duty and cess as per Central Excise Act and Rules because DSP does not paid adequate amount for Machining of Wheels Is any provision in Law can support us for retaining the Generated Scrap with us and Excise Department not to pressurised to DSP Authorities for take back of Scrap

AI Summary

Machining Company Seeks to Retain Scrap Without Cost; Legal Advice Suggests Permission Needed Under Cenvat Credit Rules, 2004. A company performing machining work on loco blank wheels supplied by a steel plant seeks to retain scrap generated during the process. They have an agreement to keep the scrap without cost but must pay excise duty, providing evidence to the steel plant for payment processing. The Central Excise Department pressures the steel plant to reclaim the scrap, which they resist due to administrative burdens. Legal advice suggests that under Cenvat Credit Rules, 2004, the company may need permission to retain and sell scrap. Tribunal decisions indicate that duty may not be imposed on scrap generated at the job worker's site.