TaxTMI 
TaxTMI 
2014 (3) TMI 85
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....rein Commissioner has confirmed the demand of Rs.1,44,54,571/- on M/s Tharaj Casting and also imposed penalty of equal amount. 1.2 Issue involved in this case is that the appellant are engaged in the manufacture of Alloy, Non-Alloy, Steel Ingots, Castings and auto parts following under chapter 72, 73 & 84 under Tariff Act. They are having induction furnace and casting furnace for capacity of 3.5 MT and 350 Kg respectively. Major raw-material used are iron and steel scrap, ferro alloys and sponge iron. Raw materials were purchased against invoices and payment were made through cheques. During audit of the appellant, it was detected that they have availing Cenvat Credit on certain goods other than waste and scrap. These items included vari....
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....s, the appellants accepted that they have supplied Bars and Rounds of Non-Alloy Steel SLR, Bars & Rods of Non-Alloy Steel Rejected Cut pieces, Bars and Rods of Non-alloy Steel, Non-Alloy Steel Rounds(Rejected), Non-Alloy Steel Rounds (Rejected cut pieces), Round Bar S/L Rejected Round Bar Small Pieces, M.S. Round Cuttings and Non-Alloy Steel Round S/L rejected, at a higher price than the prevalent scrap price of iron and steel. In some cases, the difference was 2-3 Rupees and in other cases, the difference was as high as 2-3 times. It was also admitted by the appellant that classification of the purported scrap was same as it was in the case of prime quality goods. There was also availment of substantial Cenvat Credit purported on CR Sheets....
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....e in other industries like cycle parts manufacturers, auto parts manufacturers and forging industry etc., thus use of these items as scrap for furnace industry were not tenable. Normally materials capable of further use in the industry are not used in furnace. He referred to explanatory note to HSN in para 1.12 which is reproduced as under:- Waste and scrap is generally used for recovery of metal by re-melting or for the manufacture of chemicals. But the heading excludes which with or without repair or renovation, can be reused for their former purpose or can be adapted for other uses; it also excludes articles which can be refashioned into other goods without first being recovered as metal. Thus, it excludes for example, structural stee....
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....as concluded that the appellant failed to discharge this onus. 4. Another interesting issue which has come up was regarding the availment of Cenvat credit on old and used parts supplied by Ind-Swift Labs Ltd. on the average cost of Rs.65700/- per MT (ranging from Rs.31,000/- to Rs. 1,28,000/-). There has been manipulation in the price on the plea that scrap was of high price containing high nickel contents. It was noticed that the appellant were initially clearing these goods under description 'waste and scrap MS/SS' under Chapter Head 73061100 which was head for 'other tubes, pipes and Hollow Profiles'. However, to mislead the Department, they changed the Chapter head of similar goods to the head for scrap i.e. 72041000. 5. Heard bot....
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....d rods has a wide market for being sold as such and getting a price which is a higher than the Ingots price. In the Ludhiana Market whose specialty is Cycle industries, these pieces are used for further making out of small parts/components of the cycle industries. Further it does not make any economic sense in a competitive world to make the price of final product costlier by buying costly raw-materials as waste which is useable as such There are also large number of units situated on Mandigobindgarh which is a largest Rolling Industry Centre where there is capability of rolling even the smallest price of metal. In the normal trade parlance, no one will buy these types of products of rolling industry making it economically unviable and thus....