TaxTMI 
TaxTMI 
2025 (1) TMI 63
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.... Since the party has already deposited an amount of Rs.4,96,580/-, I order for appropriation of the same against the demand being confirmed. 2. I also demand interest at applicable rates on the amount confirmed above (1) under the provisions of Section 11AB (now Section 11AA] of the Central Excise Act. 1944. 3. I also impose a penalty of Rs. 1,43,47,121.75 (Rs One Crore Forty Three Lakhs Forty Seven Thousand One Hundred Twenty One & Seventy Five Paisa) on the party, under the provisions of Section 11AC of Central Excise Act, 1944, read with Rule 15 of the Cenvat Credit Rules, 2002. 4. I also impose a penalty of Rs. 5,000/- (Rupees Five thousand only) on the party under the provisions of Rule 27 of the Central Excise Rules, 2002." 2.1 Appellant is engaged in manufacture and sale of different types of Chemicals namely Caustic Soda, SBP, Liquid Chlorine etc. falling under Chapter hearing No.28, 29 and 31 of the First Schedule to the Central Excise Tariff Act, 1985, as amended, and are also availing facility of CENVAT credit on various inputs and capital goods under the Cenvat Credit Rules, 2004. 2.2 Appellant had sold scrap of capital goods without....
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.... Commissioner Of Customs vs Auto Ignition Ltd 2008 (226) E.L.T. 14 (S.C.) MANGALAM CEMENT LTD. vs. COMMISSIONER OF C. EX., JAIPUR 2016 (338) E.L.T. 145 (Tri. - Del.) Hindustan Coca Cola Beverages Pvt. Ltd vs. C.C.E. & S.T., Patna 2016 (343) E.L.T. 1016 (Tri. - Kolkata) Karnal Co-Operative Sugar Mills Ltd vs Commr. Of C. Ex., Panchkula 2011 (265) E.L.T. 236 (Tri. - Del.) CCE, Chandigarh v. Winsome Textile Industries Ltd. reported at 2017 (358) ELT 387 (Tri-Chan) Shree Bhageswari Papers Ltd. v. CCE, Meerut reported at 2016 (338) ELT 132 (Tri-All) Chemplast Sanmar Ltd. v. CCE, Chennai reported at 2010 (262) ELT 1124 (Tri-Mad), The perverse impugned order based on factually wrong and illogical verification report. The waste and scrap cleared were not manufactured items by the appellant, therefore duty was determinable and thus nil amount was payable. Reliance is placed on the following decisions:- CCE, Jaipur-II Vs Birla Corporation Ltd. 2005 (181) ELT 263 (Tri.-Del.); Grasim Industries Ltd. Vs UOI 2011 (273) ELT 10 (SC); CCE, Jaipur-II Vs Grasim Industries 2009 (233) ELT 412 (Tri....
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....s indulged in suppression of material facts from the department? (b) Whether the demand of interest is justified? (c) Whether penalty under Rule 25 and Rule 27 of the Central Excise Rules, 2002 read with Section 11AC of Central Excise Act, 1944 is liable to be imposed on the party? (d) Whether penalty under Rule 15 of the Cenvat Credit Rules, 2004 is liable to be imposed on the party? 14a. Now, I proceed to take up the above issues, one by one, the first being whether the duty was payable on waste & scrap of capital goods cleared by the party. I observe that in the present case, it is alleged that the waste & scrap of capital goods have been sold by the party during the period from 01.04.2008 to 31.03.2013, without paying the due Central Excise duty. The department was of the view that duty was payable on these clearances in view of the provisions of sub Section 5A of Rule 3 of the Cenvat Credit Rules, 2002. On the other hand, the contention of the party is that they were not liable to pay any duty on clearances of such waste & scrap arising from various materials on which Cenvat Credit was not taken, as they were purchased well before the introd....
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.... the subject matter. 14e. The jurisdictional Range Officer reported that the scrutiny of RG 23 Part-1 register of the party for the period April, 2002 to March, 2008, revealed that there were numerous Invoices on which Cenvat Credit on capital goods had been availed by the party, the scrap of which has been cleared by them without payment of duty. The report also contained illustrations of the sample Cenvat Credit entries of such items, which were later-on cleared as scrap, the details of which are as under:- a) Purchase Invoice No. 2657 dt 31.08.2005 of M/s Thermax Ltd, Pune for the item "Beam/Joist' 1650 Kgs with CSH 72165000 & Cenvat Credit Entry in RG23 Pt-I Register No 2306 dt 27.09.2005 [Central Excise Tariff Act, 1985 description of the said CSH is 'Angles, Shapes & Sections of Iron or Non- Alloy Steel'] b) Purchase Invoice No. 2657 dt 31.08.2005 of M/s Thermax Ltd, Pune for the item 'MS Angle 50 x 50 x 6mm 3240 Kgs with CSH 72165000 & Cenvat Credit Entry in RG23 Pt-1 Register No 2307 dt 27.09.2005 [Central Excise Tariff Act, 1985 description of the said CSH is 'Angles, Shapes & Sections of Iron or Non-Alloy Steel'] ....
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....ous items of Iron & Steel availed by them, are erroneous, as they should have been mentioned during verification. 14g. Having gone through the entire facts on record, I find that no credence whatsoever can be given to the claim of the party that there were just five entries. because the report dt. 06.02.2014 clearly states that there were numerous Invoices on which Cenvat Credit on capital goods had been availed by the party during the said period. The Range Officer had been entrusted to verify the claim of non-availment of Cenvat Credit by the party on items of Iron & Steel such as Angles, Channels. Plates, Pipes, Joist etc. The verification was done by the R.O. by scrutinizing the RG 23 Part-1 register of the party for the period April, 2002 to March, 2008, just to detect if Cenvat Credit had actually been availed by the party on any such item, or not. The five specific entries illustrated by the R.O. were just to show/prove that the Cenvat Credit was actually availed on items such as MS Angles, Beams, Joist, Pipes etc., which is contrary to the claim of the party. It was not incumbent upon the verifying officer to enlist each of the entries on which Cenvat Credit had be....
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....pporting their contention that the waste and scrap had actually arisen out of non-cenvated capital goods only, and prove their point. I have gone through the copy of the Audit Memo submitted by the party as enclosure to its defence submissions, and I observe that the Auditing officers has remarked : "The assessee did not provide any details of the Excise commercial Invoices alongwith fixed assets register to establish that the capital goods were cenvated/non-cenvated, so as to arrive at the dutiability of the same Further, if the same related to the period prior to 1994, the value addition and capital goods used in the plant & machinery after the introduction of the Modval scheme was also not provided to Audit for correct quantification of the same issue. They were also requested to provide the summary/ RG23 Pt-I & II details to enable the audit to scrutinize the availment of Cenvat Credit on MS Scrap/Channels etc shown in the list attached. They have nothing on record to substantiate their claim that no Central Excise duty is payable on such sale." I observe that once a doubt had been raised in this regard by the department, the onus automatically shifted to the ....
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.... taken. The impugned order also in these proceedings presumed that there is a dispute that the scrap which has been cleared would have arisen out of cenvated as well as non-cenvated items of iron and steel. It does not identify and make categorical statement to the effect that the scrap has arisen out of cenvated capital goods. It is based on a presumption which arises in view of the said verification report. Such presumption cannot take place of proof and cannot be basis for confirmation of demand. Appellant has taken a categorical stand before the Adjudicating Authority that these scraps have arisen out of non-cenvated capital goods, some of them even prior to the insertion of Modvat/Cenvat credit scheme in respect of capital goods, this stand of the appellant was to be rebutted by the Adjudicating Authority in the impugned order by relying upon the suitable and concrete evidences. Presumption made against the appellant cannot be the ground for confirming the demand. In case of M/s Saraya Sugar Mills Ltd. Vs CCE, Allahabad 2024 (5) TMI 1329 this Tribunal has held as follows:- "4.5 It is clear from the above para of the show cause notice that it was the contention of the ....
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....the appellants were not able to produce documents on the ground that they relate to very old period. However, the submissions of the learned Advocate that prior to the amendment dated 16-5-05 to Rule 3 of Cenvat Credit Rules introducing sub-rule 5A no amount is payable on waste and scrap arising out of capital goods even if the credit had been taken requires to be accepted. In this regard, sub-rule 5A of Rule 3 of the Cenvat Credit Rules which was introduced on 16-5-05 reads as under: "5A ......" 7. The above provision does not treat the waste and scrap as manufactured goods. It stipulates that the manufacturer who has availed capital goods credit, when clearing the capital goods as scrap, an amount equal to the duty leviable on the transaction value of waste and scrap shall be payable." 4.7 In case of Grasim Industries [2009 (233) E.L.T. 412 (Tri. - Del.)] Delhi bench has held as follows:- "6. We have carefully considered the submissions from both sides. We have also gone through the grounds of appeal. In the show cause notice, it was alleged that the assessee had taken Modvat credit on capital goods in respect of a number of items and after use....