TaxTMI 
TaxTMI 
2019 (9) TMI 669
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....,312/- was confirmed in respect of scrap items like used aluminum scraps, unused obsolete electric motors, used tanks, used railway sliding, used SS/AS scrap rings, used air blower, used gas bearings, MS/CS/GI scrap items etc. Demand of Rs. 30,71,630/- was confirmed on the scrap involved as used SS/AS scrap items, used/ broken pieces of carbon pipes, unused obsolete SS items, used pumps, used gear boxes, used MS/CS mixed filters, used copper coils, used brass gears etc. and the demand of Rs. 6,18,091/- was confirmed on account scrap items like empty MS oil paint drums, spent zinc based catalyst, used therminol, comox catalyst etc. 3. Ld. Counsel pointed out that earlier the demand was confirmed by the Adjudicating Authority, however, it was came to be set-aside on matter being remanded by the Tribunal vide order No. A/1701/WZB/AHD/2012 dated 11.12.2012. The remand was simply for re-examination and after examining the defense submissions made by the appellant. In the remand proceedings, a part of the demand has been confirmed. 4. Ld. Counsel argued that the demand has been confirmed on the ground that appellant has availed credit on these used, scrap and waste. He argued that thes....
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....ground that the disputed scrap items are used/ residue inputs which were marketable and were sold for some consideration. He pointed that the Commissioner has invoked Section 2(d). He relied on the decision Hon'ble Bombay High Court in the case of Hindalco Industries Limited vs. UOI - 2015 (315) ELT 10 (Bom.) and Tribunal decision in the case of Hariyana Steel and Power vs. CCE - 2015 (11) TMI 771 -CESTAT. 6. Ld. AR relies on the impugned order. 7. We have gone through the rival submissions. We find that demand has been raised on various items which were cleared by the appellant as scrap or as un-used items or partially used items. Revenue has invoked Rule 3(5A) of Cenvat Credit Rules, 2004 which reads as under:- "(5A) If the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value." It can be seen from the aforesaid Rule that it applies on capital goods on which credit has been taken and which are cleared as waste and scrap. The product has to be first been received as capital goods and on which the credit has been availed. 8. We find that before invoking Rule 3(5A) of the Cenvat Credit Rules, 200....
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....lved is governed by the past decisions of the Tribunal and also of the Supreme Court. Thus, it agrees with its earlier Judgments. Thereafter, the Hon'ble Supreme Court was required to consider this issue and as already referred by us in the case of Commissioner of Central Excise v. Indian Aluminium Co. Ltd. reported in 2006 (203) E.L.T. 3 (S.C.). Finally, in the case of Grasim Industries Ltd. (supra), the Hon'ble Supreme Court referred to all the amendments including the insertion of the Explanation and on noticing the issue before it, proceeded to hold as under : "7. We have heard the learned counsel for the parties. In the present case, the assessee had undertook repair and maintenance work of his worn out old machinery or parts of the cement manufacturing plant for the period between 1995 to 1999. The assessee repaired machinery or capital goods such as damaged roller, shafts and coupling by using welding electrodes, mild steel, cutting tools, M.S. Angles, M.S. Channels, M.S. Beams etc. In this process of repair and maintenance, M.S. Scrap and Iron Scrap were generated in the workshop. It is not in dispute that these M.S. Scrap and Iron Scrap were excisable goods under Section....
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.... excisable merely because a separate tariff item exists in respect of that commodity." 8. The goods have to satisfy the test of being produced or manufactured in India. It is settled law that excise duty is a duty levied on manufacture of goods. Unless goods are manufactured in India, they cannot be subjected to payment of excise duty. Simply because a particular item is mentioned in the First Schedule, it cannot become excisable to excise duty. [See Hyderabad Industries Ltd. v. Union of India, (1995) 5 SC 338 = 1995 (78) E.L.T. 641 (S.C.), Moti Laminates (P) Ltd. v. CCE (1995) 3 SCC 23 = 1995 (76) E.L.T. 241 (S.C.), CCE v. Wimco Ltd. (2007) 8 SCC 412 = 2007 (217) E.L.T. 3 (S.C.)]. Therefore, both on authority and on principle, for being excisable to excise duty, goods must satisfy the test of being produced or manufactured in India. In our opinion, he charging Section 3 of the Act comes into play only when the goods are excisable goods under Section 2(d) of the Act falling under any of the tariff entry in the Schedule to the Tariff Act and are manufactured goods in the terms of Section 2(f) of the Act. Therefore, the conditions contemplated under Section 2(d) and Section 2(f) ha....