2020 (1) TMI 1449

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....The brief facts of the case are: (a) The appellant, a manufacturer of bearings (ball & roller) at its factory at Kharagpur, West Bengal, produces, by machining, outer races and inner races (parts of bearings), from duty paid raw materials, i.e., steel tubes, steel bars and forged rolls. On availing credit of the duty paid, some raw material are also sent out for processing work to job workers. After processing, the races are brought back to the factory and bearings manufacture is completed. (b) The waste and scrap generated are not brought back but duty and cess were paid by the appellant on a monthly basis on such waste on quantity as per standard input output ratio and value of similar waste and scrap generated in the factory and sold from the appellant's factory. (c) By a show cause notice dated March 31, 2004 the Commissioner of Central Excise, Haldia alleged contravention of Rule 4(5)(a) of the Cenvat Credit Rules on the part of the appellant during the period 01.04.2002 to 31.07.2003 by non-reversal of equivalent amount of cenvat credit attributable to inputs in waste and scrap not returned and that payment of duty on waste and scrap did not satisfy the requirement of l....

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....s for payment of cenvat credit proportionately covering the said waste and scrap on their non-return from the job workers premises or on their clearance from the job workers premises. The appellant has, in support of this contention, relied upon the following decisions: (a) Rocket Engineering Corporation Ltd. Vs. CCE, 2006 (193) ELT 33 (T) - affirmed by Bombay High Court in Commissioner of C.Ex. Vs. Rocket Engineering Corporation Ltd., 2008 (223) 347 (Bom) (b) Mahindra Hinoday Industries Ltd. Vs. Commissioner of C.Ex., 2013 (292) ELT 456 (T) (c) National Engineering Ind. Ltd. Vs. Commissioner of C.Ex., 2015 (323) ELT 205 (T). (iv) Further and in any event, on waste and scrap duty has been undisputedly paid. Therefore demand, in any event, is unsustainable. Reliance is placed in support of this contention on: (a) Tulsyan NEC Ltd. Vs. CCE, 2008 (225) ELT 65 (T) (b) CCE Vs. Allwya Auto Ltd., 2004 (178) ELT 693 (T). (v) Demand barred by limitation in the undisputed facts on record, applying the principle laid down in : (a) ECE Industries Ltd. Vs. CCE, 2004 (164) ELT 236 (SC) (b) Nizam Sugar Factory Vs. CCE, 2006 (197) ELT 465 (SC). (vi) Further and in any event, t....

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....which had been accepted by the Department, and drop the proceedings in the instant case also, by following the principle of res judicata. 7. Further, the issue on merits also stands settled by various decisions of the Hon'ble High Courts and this Tribunal. In the case of CCE Vs. Rocket Engineering Corporation Ltd. (supra), the Hon'ble Bombay High Court held as under: "2. Learned Counsel appearing for the appellant contends that following substantial question of law arises for consideration of this Court:- A. Whether the assessee, i.e., the supplier of inputs to the job worker is liable to pay central excise duty on the scrap generated at the job workers end, which is not received back from the job workers within the specified time in terms of Notification No. 214/86-C.E., dated 25-3-1986 as amended r/w Rule 4(5)(a) of Cenvat Credit rules? B. Whether scrap generated at the job workers end out of the processing of the inputs is required to be returned to the supplier and, if it is not returned back whether the supplier of inputs is required to pay appropriate central excise thereon? 3. Having heard rival parties and having examined the findings recorded in the order in origi....

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....rder and allow the appeal with consequential relief to the appellant." 7.2 Both the above decisions fully apply to the instant case, the facts and issue involved being the same. 8. In view of the aforesaid, respectfully following the above stated  decisions of the Hon'ble Supreme Court and the Bombay High Court and the Tribunal, we find that the impugned order of the Commissioner is unsustainable. Further, we find that CBEC Circular F.No.B-4/7/2000-TRU dated 03.04.2000 provides certain clarifications in this regard. The relevant portion is reproduced below :- "Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : CENVAT Rules - Clarifications - Regarding. 1. As you are aware, CENVAT Rules were notified vide Notification No. 11/2000-C.E. (N.T.), dated 1st March, 2000 and they were to come into force from 1-4-2000. Since then, we have received references from the Commissioners as also from trade and industry, seeking clarification on certain aspects. 2. We have examined these references. Some modifications have now been carried out in the CENVAT rules and the CENVAT rules have now been notified vide Noti....