AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 183
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.... erstwhile Section 11AB & Section 11AA respectively and Existing Section 11AA of the Central Excise Act, 1944, on the amount as confirmed above. iv) I impose penalty equal to the duty involved, for the period upto 7.4.2011 as per two SCNs, both dated 2.5.2013 on M/s. Aurangabad Electicals Ltd. and M/s. Shridhar Metal Works under Section 11AC of the Central Excise Act, 1944. However, such penalty shall be reduced to 25% in terms of Section 11AC(5) of Central Excise Act, 1944 provided the notices pay the amount of duty confirmed with interest and also 25% penalty within 30 days of the receipt of this order. (v) I impose penalty of 50% of the duty involved for the period from 8.4.2011 onwards on M/s. Aurangabad Electricals Ltd. and M/s. Shridhar Metal Works under Section 11AC(1)(b) of the Central Excise Act, 1944. (vi) I also impose penalty of Rs. 6,00,000/- and Rs. 8,00,000/- on M/s. Aurangabad Electricals Ltd. and M/s. Shridhar Metal Works respectively under Rule 25 of the Central Excise Rules, 2002. In terms of above order, the demand of duty was confirmed against two assessees i.e. present appellant M/s. Aurangabad Electricals Ltd. and other assessee i.e. M/s. Shridhar Metal W....
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....al Works has processed remnant material and converted into aluminium ingots and return the aluminium ingots to appellant. In such transaction there is no clearance of the goods out side factory premises of appellant. Since remnant material were used within factory for captive use in the manufacture of other final product i.e. motor vehicle parts which are cleared on payment of duty therefore even if these remnant material are considered as excisable goods the same remains exempted under Notification No. 67/95-CE dated 16/3/1995 hence demand of duty was wrongly confirmed. Without prejudice, he submits that even if the removal of remnant material for job work is considered as removal out side the factory the movement of this remnant material for job work is covered by Rule 4(5) of Cenvat Credit Rules, 2004. It his submission that on receipt of initial input they have availed Cenvat Credit and after processing the said inputs this remnant material emerged therefore this remnant material is partial processed inputs. Moreover when remnant material is undisputedly meant for use as inputs for further manufacture of ingots and thereafter motor vehicle part, nature of remnant material is no....
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.... taking part of premises on leave and licence agreement it become manufacturing premises of M/s. Shridhar Metal Works therefore removal of remnant mater to M/s. Shridhar Metal Works is clearly out side the factory premises of the appellant. The process which is carried out by M/s. Shridhar Metal Works is not carried out by the appellant, M/s. Aurangabad but it is carried out by some different entity i.e. M/s. Shridhar Metal Works. With this fact, he submits that removal of remnant material and processing thereof is not under captive consumption therefore removal of remnant material shall attract excise duty. The adjudicating authority has correctly charged excise duty on such remnant material cleared by the appellant to M/s. Shridhar Metal Works. 4. We have carefully considered the submissions made by both sides. 5. As regard issue whether the remnant material cleared by the appellant to M/s. Shridhar Metal Works is clearance for the home consumption and leviable to excise duty or it is captive consumption and exempted under Notification No. 67/95-CE dated 16/3/1995, we observed that a part of the premises of the appellant was given on leave and licence agreement to different ent....
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....bove clauses of the contract, it cannot be inferred that the job workers were merely hired labourers of the appellant. Moreover, it is not disputed by the department, that in respcct of the identical contracts of the appellant's Visakhapattanam unit with its job workers for identical work, the Chennai Bench of the Tribunal vide judgement reported in 2005 (188) E.L.T. 331 has held that the job workers' role was much more than mere receiving wages for labour involved in manufacture of Lead and Aluminium Electrodes and, therefore, the job workers cannot be said to be mere hired labourers. Applying the ratio of the Chennai Bench judgement to the facts of this case, we hold that it is the job workers who have to be treated as the manufacturers and, therefore, the duty on Aluminium and lead electrodes got manufactured by them on job work basis cannot be demanded from the appellant by treating them as manufacturers. The impugned orders are set aside. The appeals are allowed. In view of the above judgment of coordinate bench of this Tribunal it is settled that if job worker is doing job work within the factory premises of the principal with his own capital goods, it is job work an....
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....uts or the capital goods are not received back within one hundred eighty days, the manufacturer or provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENVAT credit or otherwise, but the manufacturer or provider of output service can take the CENVAT credit again when the inputs or capital goods are received back in his factory or in the premises of the provider of output service. From the above provision, assessee is permitted to remove the inputs for job work. We further note that similar provision is also made under Rule 16(a) of Central Excise Rules, 2002 which is reproduced below: Removal of goods for job work, etc. RULE [16A. - Any inputs received in a factory may be removed as such or after being partially processed to a job worker for further processing, testing, repair, re-conditioning or any other purpose subject to the fulfillment of conditions specified in this behalf by the Commissioner of Central Excise having jurisdiction.] From the above rule also it is permitted that input can be removed for job work. Even in the job work if the resultant product is returned and used in the ma....
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....is also returned to the said factory; (b) for the purpose of manufacture of intermediate products necessary for the manufacture of final products and return the said intermediate products to his factory for further use in the manufacture of the final product or remove the same without payment of duty under bond for export, provided that the waste, if any, arising in the course of manufacture of such intermediate products is also returned to the said factory." and Rule 57(4) reads as follows :- "(4) Any waste, arising from the processing of inputs, in respect of which credit has been taken may...." Rule 57D of the Modvat Rules specifies that credit allowed in respect of inputs shall not be denied or allowed on the part of the inputs contained in any waste or refuse or by-product arising during the manufacture. (b) Words used in these Modvat Rules, like repairing, rejoining, reconditioning, waste, refuse, by-product, are not defined in the Rules. (c) Reading of these Rules 57D, 57F(2), 57F(4) in the light of common understanding of the words would indicate, that inputs in their course of conversion, or when used in or in relation to the manufacture of the final products, may re....
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....al product out of the inputs under Rule 57F(2) as possible or desired. The procedures under Rule could be 'aborted' and recourse taken to Rule 57F(4) at a stage, but only at the option of the assessee. The option to exercise the routes available between 57F(2) and 57F(4) procedures remains with the manufacturer and is not lost by a change in form of the input, due to processing. (f) We, therefore, cannot find any reason to deny the facility of Rule 57F(2) for 'spent catalyst' which are recharged by re-processing/re-conditioning them further. The following grounds as found by the Commissioner (Appeals) in his order in the case of M/s. Wyeth Laboratories Ltd . "......The catalyst was used in the process but was not itself subjected to any such process. It was a result of process of raw materials that the catalyst became spent and could not be used further. Therefore, in the manufacturing activity under consideration, catalyst was not subject to any process and could not be said to have been processed in the catalyst was the subject of the manufacturing process." are not correct. As we find that a catalyst is entitled for input credit under Rule 57A, as no distincti....
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.... in the light of the above, we find that the inputs on which Modvat credit has been taken is ingots, therefore, the waste is not input as such, therefore, the second issue arises whether it is partially processed input. Now, whether the waste can be called partially processed input or not is the pertinent question which needs to be examined and replied. A partially processed input will be that input which is subjected to further processing for obtaining the final product and not the input. Waste cannot be termed as partially processed input as it cannot be subjected to obtaining intermediate product or final product. It can be used only for re-melting to obtain ingots and thus cannot be termed as partially processed inputs. 2009(241) E.L.T. 223 (Tri.-Mumbai) SHAKTI WIRE PRODUCTS Versus COMMISSIOINER OF C. EX., MUMBAI-V 7. We have examined the position. It has been alleged in the show cause notice that since the scrap is a finished goods, it is not permitted to be cleared in terms of Rule 4(5)(a) to a job worker. However, it is seen that the scrap so sent to the job worker is returned back to the Appellants in the form of ingots, which is then further processed in the Appellant....
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...., scrap, refuse, waste, etc. to obtain maximum targeted production of the final product by utilizing the facilities available in his premises or by sending them out on job work to other places. Only when final product is no longer profitable or technologically possible, a manufacturer would treat such resultant stage of by-product, refuse, scrap to be no longer useful and therefore, a waste." 10. In view of the above findings of the Tribunal, there is no question of holding scrap as final product and disallowing the benefit of clearance of scrap for converting into ingots, under Rule 4(5)(a). The demand of duty can only be confirmed, if there is diversion of generated scrap for any other purpose other than reconversion. It is not in dispute that in the present case, the scrap cleared by the appellants under job work challan has been returned in the form of ingots and properly accounted for. 11. The Tribunal in the case of Narmada Plastics (P) Ltd. v. Commissioner of Central Excise, Bhopal reported in 2004 (178) E.L.T. 806 (Tri-Del.) held : Cenvat/Modvat - Waste and scrap, removal of, for reprocessing and return - Rule 57F of erstwhile Central Excise Rules, 1944 - Benefit of Rule....
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....ble to the present issue. The appellants in the present case, have not contested that when the scrap is cleared on sale, no duty is payable. 14. In the light of the foregoing discussions, we hold that the impugned order passed by the Commissioner (Appeals) is not sustainable. The same is set aside. The appeal filed by the appellants is allowed. 2006 (206) E.L.T. 842 (Tri. - Del.) JAIN METAL COMPONENTS PVT. LTD. Verus COMMR. OF C. EX., JAIPUR-II 2. Brief facts of the case are that the appellants are engaged in the manufacture of Brass Components from Brass Rods. During the manufacture of brass components, brass boring emerged as waste. The appellants were clearing the brass waste and scrap without payment of duty for job work under the cover of challans for getting the waste remelted and reconverted into brass rods and were receiving back the brass rods which were used as inputs for the manufacture of their final product i.e. brass components. 3. The case of the Revenue is that the appellant wrongly followed the procedure under Rule 57AC of Central Excise Rules as this Rule provides that manufacturer can remove any inputs or capital goods as such to the job worker for further....