2019 (9) TMI 1499

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....he foreign materials like Iron, steel, etc. are removed on payment of applicable rate of duty. Whether the demand raised by the Revenue by treating the said removal as removal of inputs as such and claiming applicability of Rule 3 (5) of CCR Rules, whether the same is correct. 2. This is second round of litigation. Show cause notice dated 25.3.2015 was issued as it appeared to Revenue that manual segregation of Aluminium scrap before charging the scrap to furnace and removal of unwanted items like iron, etc. which were removed on payment of duty as per their separate classification in the tariff, it appeared to Revenue that under the provisions of Rule 3 (5) of CCR 2004 read with Section 2 (f) of the Central Excise Act is attracted as su....

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.... duty determined on merits. The Tribunal directed the Adjudicating Authority to redetermine the issue in the light of the Board's Circular dated 10.05.2016, after giving opportunity of hearing. 5. Being aggrieved, the Revenue preferred appeal before the Hon'ble Rajasthan High Court being Central Excise Appeal No.93/2018 and vide Order dated 11.10.2018, the Hon'ble High Court without disturbing the directions of this Tribunal for re-determination, further directed the Adjudicating Authority to determine the classification whether such activity of segregating the scrap amounts to manufacture or not and whether the Board's Circular dated 10.05.2016 would be applicable to the facts of the present case. 6. By the impugned order-in-original....

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.... not confirm to the definition of manufacture or the process amounting to manufacture. 23.3. I find that the Board's Circular dated 10.05.2016 clearly delineats the intention of the Government that the clearance of segregated foreign materials namely iron, steel, rubber, plastic, dust, etc. from Honey grade brass scrap, before feeding in the furnace cannot be treated as removal of "inputs as such" as envisaged under Rule 3(5) of the CENVAT Credit Rules, 2004. The said Circular is however not applicable in the present case of Aluminium Scrap as discussed in preceding para. 7. The ld. Principal Commissioner was pleased to redetermine the demand with interest and penalty under Section 11AC (1) (c) read with Explanation 1 (iii) of t....