AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 1513
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....us dated 12.11.2001 is contrary to the principle of law laid down in relation to the meaning of "Manufacture" held by judiciary in a series of cases? [b] Whether the Hon'ble CESTAT is correct and justified while holding that the CBEC Circular No.1029/17/2016-CX dated 10.05.2016 is relevant though the same has been issued in respect to Cenvat Credit Rules, 2004, especially when the facts and circumstances of the present case are identical and properly clarified and covered under the Circular No.62/2001-Cus dated 12.11.2001, which has been issued in respect to EOU/SEZ Units? [c]Whether the Hon'ble CESTAT is correct in allowing the clearance of foundry scrap beyond the ratio/norms of scrap laid down by the Norms Committee and in contravention to the provisions of Notification No.52/2003-Cus dated 31.03.2003?" Since all the appeals arise of a common order and the facts are also similar, the same were taken up for hearing together and are disposed of by this common judgment. 2. The respondents-assessees are 100% Export Oriented Units engaged in the manufacture of brass articles. During the relevant period, the assessees had imported brass metal scrap containing other impurities....
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....nce the activity of segregation of imported scrap does not result into manufacture, in view of CBEC Circular No.62 of 2001 dated 12.11.2001, the customs duty foregone is required to be paid on that quantity of non-foundry scrap, cleared in DTA applying, CIF value of the scrap at the time of its import. 2.3 The assessee challenged the orders passed by the Commissioner (Appeals) contending that the input output ratio fixed by the Norms Committee cannot be made applicable in view of clause (3) of Notification No.50/2003-Cus dated 31.03.2003, since the scrap had been cleared on payment of appropriate excise duty in DTA after obtaining necessary permission from the Development Commissioner. 2.4 The Tribunal, by the impugned order, found that the question as to whether the activity of segregation of imported mixed brass scrap into foundry and non-foundry grade amounts to manufacture is more or less covered by the recent circular of the Board dated 10.05.2016 and accordingly, held that the non-foundry scrap cleared in DTA on payment of excise duty, cannot be construed as clearance of imported scrap "as such". 2.5 On the issue of payment of duty on the excess use/consumption of scrap ma....
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....can be said to be clearance "as such"? and (ii) Whether clearance of such scrap upon payment of excise duty would fall within the ambit of paragraph 3 of Notification No.52/2003-Cus dated 31.03.2003? 5. As can be seen from the impugned order, the Tribunal has held that after segregation of the mixed imported scrap, the segregated scrap, if cleared, cannot be considered as clearance of inputs "as such". The facts reveal that what was imported was brass scrap. The brass scrap was segregated into brass and foundry and non foundry scrap. The brass and foundry items came to be used for the manufacture of brass articles for which purpose the scrap had been imported. The non foundry scrap obtained as a result of such segregation came to be cleared in DTA. In the opinion of this court, such non foundry scrap can by no means be said to be articles imported "as such" inasmuch as it was brass scrap which was imported for the purpose of manufacture of brass articles. The non foundry waste derived as a result of segregation cannot be used for the purpose of manufacture of brass articles and hence, cannot be said to be articles imported "as such", since the essential character of the scrap,....
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....he plastic waste cleared into DTA is clearance of plastic waste "as such". Whereas in the facts of the present case, what is imported is brass scrap and what is cleared into DTA is waste other than brass and foundry items, the identity whereof is different from the goods imported. The said circular would, therefore, have no applicability to the facts of this case. 9. The appellant has also challenged the impugned order passed by the Tribunal on the ground that the Tribunal has wrongly placed reliance upon the Circular No.1029/2016-CX dated 10.05.2016. Insofar as the said Circular is concerned, it clarifies regarding segregation of impurities, viz., iron, steel, rubber, plastic, dust etc. from honey grade plastic scrap. The issue was when the category of waste, viz., foreign material segregated initially and not fed into the furnace is cleared by the brass manufacturers can be treated as inputs "as such" and accordingly were the manufacturers required to pay an amount equal to the credit availed in respect of such inputs in terms of rule 3(5) of the CENVAT Credit Rules, 2004. The Central Board of Excise and Customs has clarified thus: "3. The issue has been examined. Segregation ....
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.... the clearance of foundry scrap beyond the ratio/norms of scrap laid down by the Norms Committee is in contravention of the provisions of Notification No.52/2003-Cus dated 31.03.2003. In this regard, reference may be made to the provisions of the said notification. Clause (3) of the said notification to the extent the same is relevant for the present purpose provides that notwithstanding anything contained in that notification, the exemption therewith shall also apply to goods which on importation into India or procurement, are used for the purpose of manufacture of finished goods or services and such finished goods and services, (including byproducts, rejects, waste and scrap arising in the course of production, manufacture, processing or packaging of such goods) even if not exported, are allowed to be sold in Domestic Tariff Area in accordance with the Export and Import Policy and subject to such other limitations and conditions as may be specified in this behalf by Development Commissioner, or Board of Approval or the Inter Ministerial Standing Committee, as the case may be, on payment of appropriate duty of excise leviable thereon under section 3 of the Central Excise Act, 1944....