2023 (2) TMI 138

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....e assessee's appeal and set aside the order in original dated 22.5.2019 passed by the Additional Commissioner. 2. The respondent manufactures lead ingots/lead rods and is registered with the Central Excise department and has been paying central excise duty. One of the raw materials used by the respondent is the lead scrap which is not duty paid and no CENVAT credit was availed on it. This scrap needs cleaning to separate non-lead elements such as plastics before it can be molten to manufacture lead ingots/lead rods. The respondent sold the plastic scrap so removed. 3. During audit of the respondent by the department, it was felt that duty should be paid on the plastic scrap so separated and sold by the respondent because it had arisen....

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....Rs. 1,16,17,931 under section 11A(4) along with interest under section 11AA and proposing to impose penalty under section 11AC. 6. These proposals in the SCN were confirmed by the Additional Commissioner in his Order in Original. On appeal, the Commissioner (Appeals) passed the impugned order setting aside the order in original. He observed that the respondent was purchasing non-dutiable scarp lots from various auctions and was segregating them and extracting various types of scrap through a manual process and this process does not satisfy the definition of manufacture under section 2(f) of the Act and therefore, no duty is liable to be paid. He also found that the CBEC's circular dated 10.5.2016 does not apply to this case. 7. Revenu....

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....records. The facts are not in dispute. The respondent manufactures lead ingots/lead rods and for this purpose uses lead scrap obtained from the market on which no duty is paid and the appellant also does not avail any CENVAT credit on the scrap. However, to use the scrap, plastic and other material must be separated and this is done manually and only the lead scrap goes into manufacture and the other scrap (of plastic, etc.) is sold by the respondent. Revenue wants to charge excise duty on this other scrap on the ground that it arises during the process of segregation of the scrap which process is ancillary to the manufacture of goods and therefore, qualifies as manufacture itself. 11. On the other hand, according to the respondent, manu....