2022 (11) TMI 793

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....hrough job-workers for which they sent inputs/semi-finished inputs from their factory to various job-workers in terms of Rule 4(5)(a) of the Cenvat Credit Rules, 2004, after taking Cenvat Credit on inputs. The semi-processed/ semi-finished inputs after being processed by job-workers, were returned to the Appellant. It appears to Revenue that there were always shortages in quantity of processed inputs received back by the Appellant. The processed inputs were in lesser quantity than the quantity sent for job work. It appeared that the appellant was not reversing Cenvat credit attributable to inputs contained in the material not received back (waste and scraps). Accordingly, five (5) Show-Cause Notices were issued covering the period from April, 2011 to March, 2013. It was alleged that the assessee had never disclosed the exact quantum of goods, which were short received by them after job work as well as they did not reverse any such amount. Show-cause Notice further observed that a part of the goods sent for job work by the Assessee under Rule 4(5)(a) of Cenvat Credit Rules, 2004, were not returned even after expiry of 180 days. The five Show-cause Notices have been tabled as under :....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....stwhile Central Excise Rule 57F (4) and now under Rule 4(5)(a) of Cenvat Credit Rules, 2004. 3.4 During the course of cutting, machining, teeth-cutting, ring rutting, polishing, some scraps are generated in the job-workers' premises and not returned back to the factory of the Appellant, but retained by job-workers. It is the submission of the Appellant that proper records of such materials is maintained in Annexure IV (Account of removal of input or partially processed goods under Rule 4(5)(a) and / or Notification No.214/86-CE dated 25.03.1986) register party-wise and end of each month, the quantity of scrap not received back, is calculated and duty is paid on such scrap. It was further contended that as required under Rule 4 (5)(a) of Cenvat Credit Rules, 2004 read with Rule 57AC (v) of Central Excise Act, 1944, the Appellant has received back the processed inputs in its factory within 180 days and hence, there was no violation of the Act and the Rules as there is no obligation on the Appellant to bring back the waste and scrap. It was further contended that after enactment of new Central Excise Rules w.e.f. 01.04.2000, no such provision is made requiring principal manufacture....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... of the Central Excise Rules, 1944. Whereas there is no such stipulation in the new Rule w.e.f. 1-4-2000 read with Rule 4(5)(a) of the Cenvat Credit Rules. Further, non-incorporation of Rule 57F(5) of erstwhile Central Excise Rules, 1944 in the Cenvat Credit Rules, 2002/2004, clearly manifests that the Legislature had intentionally omitted the said provisions. 'Thus, the waste and scrap generated at the job-worker's place should be returned to the assessee and in case waste and scrap is not returned, duty should be paid as were in existence prior to 1-4-2000.' It is further urged that this position has been clarified by the Board vide Circular dated 3-4-2000 (supra), wherein paras 5 and 6 of the said Circular read as follows :- "5. Some doubts have been raised whether Cenvat credit would be admissible on the part of the input that is contained in any waste, refuse or bye product. In this context it is clarified that Cenvat credit shall be admissible in respect of the amount of inputs contained in any of the aforesaid waste, refuse or bye product. Similarly, Cenvat should not be denied if the inputs are used in any intermediate of the final product even if such intermediate....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e said decision being a short judgment, is reproduced below for sake of reference. "Heard rival parties. 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 worker end, which is not received back from the job worker 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 worker 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 original, it is not in dispute, that the assessee had paid duty on the scrap generated at the factory of the job worker for the period April 1999 to March 2000. There is no liability on the principal manufacturer-respondent after 31^s....