2008 (10) TMI 443

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....ing the period from November, 1997 to March, 2002, the respondents cleared various scraps of capital goods of metal and rubber without payment of duty. It has further been alleged that the respondents were required to pay the duty under Rule 57 S of the erstwhile Central Excise Rules, 1944. The Adjudicating Authority confirmed the demand of duty prior to 1-4-2000. He has dropped the demand on scrap of capital goods cleared on or after 1-4-2000. The assessee and the Revenue both filed appeals before the Commissioner (Appeals). By the impugned order, the Commissioner (Appeals) allowed the appeal of the respondents. The appeal filed by the Revenue was rejected. Hence the revenue filed this appeal. 2. The learned DR on behalf of the Rev....

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....pondents are liable to pay duty on clearance of waste and scrap of capital goods as they availed credit on capital goods as provided under Rule 57-S of the erstwhile Central Excise Rules, 1944. Regarding the demand of duty after 1-4-2000, it is submitted that waste and scrap of capital goods were classifiable under Central Excise Tariff and it is covered within the definition of "manufacturer". We are unable to agree with the submission of the ld. DR. We find that the instant issues are settled by the decision of the Hon'ble High Court of Rajasthan in the case of J.K. Industries Ltd. (supra). The relevant portion, of the said decision are reproduced below :- "The show cause notice was clearly in respect of removing scrap from the site in....

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....the scrap material was sold by the assessee, Modvat credit was availed by the manufacturer. This is a finding of fact and that is also not under challenge before us. Keeping in view that the machinery items were installed in the factory much before Modvat credit scheme came into existence. Therefore, the first condition about levy of excise duty on the sale of waste and scrap of capital goods in terms of Rule 57AB(2)(b) or 57S(2)(c) did not exist and hence the Tribunal was justified in not sustaining the levy of excise duty on gun-metal scrap." 6. In view of the above decision, the demand of duty after 1-4-2000 on clearance of waste and scrap of capital goods was correctly dropped by the original authority and upheld by the Commissi....