TaxTMI 
TaxTMI 
2024 (3) TMI 970
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....ng Industries and was therefore to be subjected to duty. 2. The wastage norm was applied by the department after segregation of scrap in which plastics and other non-usable material was included and was found still in excess in the instant case. Department was thus of the view that benefit of the Notification No. 52/2003-customs to input/raw material imported by EOU used, was deniable on the ground that appellant had consumed inputs and generated wastage beyond the norms fixed by norms committee. It was further noted that all the waste generated by the appellants in the manufacture of finished goods was cleared on payment of applicable Customs duty, with permission of Development Commissioner. 3. Department on the other hand was of the view that appellant not having regulated and conducted their operation in accordance with the norms and the condition of Notification No. 52/2003-Cus dated 31.03.2003, was to be visited with duty and other consequences. 4. Appellants during course of hearing made various submissions, inter alia, as follows: 4.1 It was submitted that the impugned order is unsustainable in law as it denies the benefit of exemption under Notification No. 52/2003-Cus....
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.... covered in favour of appellants by decision in case of Meridian Impex Vs. CCE & ST, 2018 (7) TMI 865-CESTAT as confirmed by Hon'ble High court of Gujarat in case of Commissioner of Customs (Preventive) Vs. Monarch Overseas, 2019 (1) TMI 1513- Gujarat High Court. 5. The present case it was submitted is also entirely covered by the case of Meridian Impex Vs. CCE & ST, 2018 (7) TMI 865-CESTAT, wherein it was held that after segregation of the mixed imported scrap, the segregated scrap, if cleared, cannot be considered as clearance of the 'inputs as such'. The relevant para of the judgment is produced below; "13. On the issue of payment of duty on the excess use/consumption scrap material, in the activity of segregation/manufacture of finished goods, then the norms fixed by the norms committee or mentioned in the Notification, as the case may be, we find that the Ld. Commissioner (Appeals), in his subsequent Orders, has rightly referred to and relied upon clause (3) of the said Notification. For better appreciation the said clause is reproduced as below: "3. Notwithstanding anything contained in this notification, the exemption herewith shall also apply to goods which on importat....
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....foregone on the excess quantity of imported scrap worked out on the basis of the Norms fixed by the Committee, in our view, is not sustainable in law. We summarize our findings as follows; (i) The activity of Segregation of imported mixed brass scrap into foundry and non-foundry grade, results into manufacture, hence, the Revenue's Appeals on this count fails, accordingly, rejected. (ii) The excess quantity of scrap generated during the activity of segregation/manufacture of the Brass articles clea+red on payment of applicable excise duty in DTA as per the permission of Development commissioner, is covered by clause(3) of the Exemption Notification 50/2003cus. Dt.31.3.2003, as amended, and the respective Orders of the ld. Commissioner (Appeals) which are passed on same line are upheld and the Orders contrary to above, are set aside and the Appeals filed by the respective, assesse-Appellants are allowed ." The same has been affirmed by the Gujarat High Court in the decision of Commissioner of Customs (Preventive) Vs. Monarch Overseas, 2019 (1) TMI 1513- Gujarat High Court. The relevant para of the judgment is extracted below: "11. That brings us to the second question, as to ....
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....he High Court must be given effect by the lower authorities until and unless the same is stayed by the Supreme Court. Further, mere filing of the Special Leave Petition does not amount to the stay of the order of the High Court. The reliance for the same is placed on the case of the TATA Steels Ltd. Vs. Union of India, 2023 (386) E.L.T. 729 (Jhar.). Where the generation of the waste is not otherwise doubted by the revenue, denial of the benefit of the Notification on the sole ground that such a wastage is more than laid down in the norms, is not justifiable. 5.2 It was submitted that in the present case, the generation of the waste is not otherwise doubted by the revenue. Thus once the imported inputs are used in manufacture of finished goods in EOU, the benefit of exemption under notification No. 52/2003-Cus would be available. Therefore, denial of the benefit of the Notification on the sole ground that such a wastage is more than what is laid down in the norms, is not justified. 6. In this regard reliance was also placed on the case of Kiran Syntex Ltd. Vs. Commissioner of Central Excise, Surat-I, 2009 (238) E.L.T. 481 (Tri. Ahmd.) affirmed by the Supreme Court in 2022 (361) E.....
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....aras Fab International versus CCE Kandla- 2010 (256) ELT 556 (Tri. - LB) and M/s Eurotex Industries & Exports Ltd. Vs. Commissioner of Customs, Nhava Sheva, 2016 (10) TMI 75- CESTAT Mumbai. The Tribunals have held that no duty demand is applicable where in the inputs are used by the EOU. The relevant para of Paras Fab International versus CCE Kandla- 2010 (256) ELT 556 (Tri. - LB) is extracted below for the ease of reference: "10. On a perusal of the provisions relating to warehousing in the Customs Act, 1962 and the provisions relating to EOU Scheme under the Customs Manual, we find that the entire premises of a 100% EOU is required to be licensed as a customs bonded warehouse and the imported goods are required to be imported directly to such premises. The manufacturing is also required to be done within the bonded premises. Hence, we find support for the contention of the appellants that the entire premises of 100% EOU is a bonded warehouse. Neither the Manual nor the Customs Act speaks of any requirement to pay any duty on the warehoused goods which are used for manufacture in bond nor it requires filing of any ex-bond bills of entry at that stage. Section 68 of the Act deals....
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....ovides that there should be no duty demand even in case where the waste or scrap is destroyed in EOU. Further, it was also stated that the by-products included in the LOP can be sold in DTA with the permission of the Deputy Commissioner on the payment of applicable duties. The relevant part of the FTP is produced for the ease of reference: "Para 6.8 (e), (f) and (g) of the FTP read as under; (e) Scrap / waste / remnants arising out of production process or in connection therewith may be sold in DTA, as per SION notified under Duty Exemption Scheme, on payment of concessional duties as applicable, within overall ceiling of 50% of FOB value of exports. Such sales of scrap / waste / remnants shall not be subject to achievement of positive NFE. In respect of items not covered by norms, DC may fix ad-hoc norms for a period of six months and within this period, norms should be fixed by Norms Committee. Ad-hoc norms will continue till such time norms are fixed by Norms Committee. Sale of waste / scrap / remnants by units not entitled to DTA sale, or sales beyond DTA sale entitlement, shall be on payment of full duties. Scrap / waste / remnants may also be exported. (f) There shall b....
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....ed that such a course of action becomes justified, as there are always some invisible losses, which becomes difficult to recover or to make available for clearance and the onus to show removal which is on the department cannot discharged by a mere presumption. 9. Department on the other hand, seeks to place reliance on the impugned order and the findings therein, particularly reliance on Final Order No. 10267-10272/2024 Amardeep Exports V/s. C.C. Jamnagar, which was particularly concerned with wastage norms fixed and in which it was inter alia, decided that the wastage norms fixed by DGFT was including all losses and wastages in manufacturing of brass items and therefore it also included as per the language of DGFT letter produced in that case, all kind of losses including slag. Further, the learned AR also relied upon the decision of Pelican Grani Morgo Pvt Ltd reported in (2003) 4 Centax 434 (Tri-Del.), in the case of GKB Ophthalmic Ltd reported in 2018 (364) ELT 266 (Tri-Mumbai) and in the case of Good luck Garments Pvt. Ltd. reported in 2006 (206) E.L.T. 911 (Tri.-Mumbai) to buttress the department's case with the proposition that when material in excess of SION norms issued b....