AI Drafter 
TaxTMI 
TaxTMI 
2022 (11) TMI 691
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....g scrap and scrap generated out of cenvatable input/capital goods. They have also clarified that other than these two types of scrap, since they are not liable to pay the duty, they have not paid the duty. However, Show Cause Notice came to be issued, wherein the demand of Excise Duty on all the scraps was raised. The Adjudicating Authority confirmed the demand and Learned Commissioner(Appeals) upheld the same by order in appeal, which is impugned herein, Therefore, the present appeal filed by the appellant. 2. Shri Saurabh Dixit, Learned Counsel appearing on behalf of the appellant at the outset submits that the Show Cause Notice has demanded the Excise Duty despite the appellant clarified that they have not paid duty on the scrap which is other than manufacturing scrap and cenvateable scrap. He submits that the scrap which is not generated during manufacture but general scrap on which no Cenvat Credit was taken excise duty is not payable. Accordingly, the Show Cause Notices are void and illegal. He submits that on the identical issue in the appellant's own case, this tribunal has decided the issue in their favour. He placed reliance on the following judgments: • A....
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.... is not liable to duty. The judgments are reproduced below: • Alembic Class Industries Ltd- 2006 (198) ELT.141(Tri.-Mumbai) "2. The appellants have produced invoices to show that miscellaneous income was for sale of diverse entities e.g. old and used machinery, iron grill etc. and other structured waste of GI Wires etc. Since these items prima facie are not emerged from conversion or inputs from raw material or resulting as scrap in the processing of conversion of raw material. The appellant being an assessee engaged in manufacture of medicaments, therefore following the decision in the case of UOI v. Ahmedabad Electricity Co. Ltd. - 2003 (158) E.L.T. 3 (S.C.) and which reads as follows. "From the above discussion it is clear that to be subjected to levy of excise duty 'excisable goods' must be produced or manufactured in India. For being produced and manufactured in India the raw material should have gone through the process of transformation into a new product by skilful manipulation. Excise duty is an incidence of manufacture and, therefore, it is essential that the product sought to be subjected to excise duty should have gone though the process o....
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....val 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, 2004, it is necessary for the Revenue to establish that items of capital goods are cleared as waste and scrap and on which the appellant has availed Cenvat credit. The defense of the appellant throughout is that they have not availed Cenvat credit in respect of capital goods. We find merit in the submissions made by the appellant. Unless Revenue establishes that they availed Cenvat credit on the capital goods which are being removed as waste 5 Excise Appeal No. 1....
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....) 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 2(d) of the Act falling under the Chapter Heading 72.04 in the Schedule to the Tariff Act read with Note 8(a) to Section XV of the Tariff Act as 'metal scrap and waste'. We are of the opinion that Section Note has very limited purpose of extending coverage to the particular items to the relevant tariff entry in the Schedu....
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....ured 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) has to be satisfied conjunctively in order to entail imposition of excise duty under Section 3 of the Act. The manufacture in terms of Section 2(f) includes any process incidental or ancillary to the completion of the manufactured product. This 'any process' can be a process....