TaxTMI 
TaxTMI 
2025 (3) TMI 826
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....nt, alleging suppression of material facts concerning job work undertaken and realization of conversion charges. The department also invoked larger period of limitation in the matter. 4. It is the case of the department that the appellant never disclosed the facts of manufacture of 2067787.20 kgs of finished goods under job work/conversion work in their ER-1 returns. The department alleges that the appellant brought scrap from Haldia and Shyamnagar units of M/s Exide India Limited(EIL) and stored them separately, but at times it would get mixed up with their own inputs on account of shortage of space. Moreover, the assessee was not paying service tax on job work done for conversion of material brought from EIL. The Show Cause Notice alleged that EIL, a manufacturer of Lead Acid Storage Battery, sent waste and scrap to the appellant- their job worker for conversion to finish lead alloy under Cenvat Credit Rule 4(5)(a) challans. Based on the scrutiny of job work records and challans, it is the case of the department that the appellant removed finished goods without payment of duty in the guise of job work. Further, as per the revenue as the said goods were neither inputs nor partial....
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....t to manufacture and therefore the appellant did not fall within the ambit of Rule 4(5)(a) of the CENVAT Credit Rules, 2004, we are of the view that the understanding rendered by the Ld. Commissioner does not flow from the provision of the rules and the law as settled by judicial bodies. For the sake of ready reference, Rule 4(5)(a) of the CENVAT Credit Rules, 2004 is reproduced hereunder: - "RULE 4. Conditions for allowing cenvat credit. - (1) ......... (2) ......... (5)(a) The cenvat credit shall be allowed even if any input or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning, or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the input or the capital goods are not received back within one hundred and eighty days, the manufacturer or provid....
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....nd certified by the R&D wing of EIL at the time of supply. We further note that the kind of scrap indicated in the norms is well-defined and clearly states of its constitution, etc. For instance, in respect of "Radio Mixed Hard/Soft Scrap Lead", "Rakes Battery Lugs" and "Relay Lead Covered Copper Cable", it states: - i. "-Radio MIXED HARD/SOFT SCRAP LEAD ii. Shall consist of clean lead solids, free of other materials, such as drosses. battery plates, lead covered cable, collapsible tubes, type metals, aluminium, zinc, iron and brass fittings, dirty chemical lead and radio- active materials. Review packaging specifications and regulatory status pertaining to shipping with buyer prior to sale. iii. -Rakes BATTERY LUGS iv. To be free of scrap lead, wheel weights, battery plates, rubber and or plastic case material and other foreign material. A minimum of 97% metallic content is required. Review packaging specifications and regulatory status pertaining to shipping with buyer prior to sale. v. -Relay LEAD COVERED COPPER CABLE vi. Free of armored covered cable, and foreign material." 10. Moreover, the Foreign Trade Policy - SION refers to scrap of specific grades like IPSI R....
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....note, that while Rule 57D talks of three stages i.e. waste, Refuse or by- product, Rule 57F(4) only talks of waste. Therefore, it appears, that the framers of the rules have used the word 'waste' in Rule 57F(4) to be understood in a limited fashion; this has to be restricted to such converted inputs which are not desired to be used any further, for use, in or in relation to the manufacture of the final product. 13. The Larger Bench, in its order, further held as under: 3(e) Once we give such a meaning to the word 'waste' occurring in Rule 57F(4), then inputs, semi-processed, fully processed or converted into any other stage or further form, called by any name, would be covered by the provisions of the Rule 57F(2) used, inside or outside the Modvat credit availers facilities i.e. on job work, provided job work procedures are followed, such movements would be permissible as long as the manufacturer availing the Modvat desires. Rule 57F(2) proviso itself provides that whatever cannot be processed any further on job work, under Rule 57F(2) would be 'waste'. Such waste would thereafter be dealt with as provided by Rule 57F(4). The rules do not impede the desi....