2005 (1) TMI 714

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....rned advocate appeared for the appellants and Shri L. Narasimha Murthy learned SDR appeared for the department. 3. Revenue proceeded against the appellants on the ground that they removed scrap without payment of duty for the period from 26-2-1994 to 6-2-1997, on the grounds that the scrap which has arisen in the course of construction of sheds, manufacturing of capital goods for captive use and manufacture of spare parts for maintenance of the machinery. The adjudicating authority held that scrap which has arisen as a result of mechanical working is liable to duty. After going through the details given in the Annexure to the show-cause notice he has identified certain items which have arisen due to mechanical working and has demanded du....

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....ib. - Bang.) (f) CCE v. Diamond Cement 2002 (52) RLT 659 (g) Ranjeev Steels Ltd. v. CCE 2002 (953) RLT 672. (iii)Even the scrap generated as a result of machines that are worn out due to prolonged use is not liable to central excise duty even though Modvat credit was taken on them. The following case law was relied on: Rashtriya Ispat Nigam Ltd. v. CCE 2002 (148) ELT 41 (Bang.) (iv)The scrap sold by the appellants had been gene-rated out of construction materials and on which the appellants had not taken Modvat credit. Most of the items were procured prior to 1-3-1994 when the capital goods Modvat scheme was not in existence. The scrap was not generated out of mechanical workings as alleged in the show-cause notice and it had....

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.... plant and it cannot be said that the appellants were indulging in clandestine removal right under the nose of the Central Excise Officers. The longer period can be invoked only in cases of fraud, collusion or any wilful misstatement or suppression of facts. The following case laws were relied: (a) CCE v. Chemphar Drugs & Linements 1989 (40) ELT 276 (SC) (b) Padmini Products v. CCE 1989 (43) ELT 195 (SC) 4. The learned SDR urged that the Commissioner has given a clear finding that the scrap has arisen out of manufacturing activity and hence the appeal should be rejected. 5. We have gone through the records of the case carefully. There is no dispute that the scrap arising on account of mechanical working of metal is liable to dut....