TaxTMI 
TaxTMI 
2024 (8) TMI 1547
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....acts of the case are that the appellant-company who is also engaged in job work and conversion of various grades and types of lead alloy, received lead alloy scrap, lead dross, lead sludge, etc., from the units of M/s. Exide Industries Limited EIL at Haldia and Shyamnagar. 2.1. The appellants were issued a Show Cause Notice dated 04.10.2013 alleging that as a job worker, they had undertaken job work / conversion of waste and scrap of lead generated in the course of manufacture of lead acid storage batteries at the above two units of EIL. The appellant manufactures and clears excisable goods, namely, Refined / Pure Lead Ingot containing lead 99.97% and various grades of lead alloy ingots containing lead percentages varying from 94% to 98%. On the basis of the records maintained by the appellant, the Department alleged that the appellant manufactured lead alloy ingots and removed the said finished goods to EIL in the guise of job work, without payment of duty, in terms of Rule 4(5)(a) of the CENVAT Credit Rules, 2004. The Department inter alia states that EIL were the manufacturer of lead acid storage batteries and their major raw materials were pure lead, lead alloys, polypropylene....
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....of lead alloy so produced as a result of the conversion process based on the said norms. In effect, the Department therefore alleges deliberate suppression of actual production with the intent to evade payment of Central Excise Duty. 2.5. With reference to Rule 4(5)(a) of the CENVAT Credit Rules, 2004, the Department is of the view that only 'inputs' or 'capital goods' were allowed to be sent for job work for further processing, etc., while, in the instant case, EIL sent the goods viz. various grades of antimonial lead scrap, calcium lead scrap, lead alloy scrap, lead dross, lead sludge, etc., generated during the manufacturing process undertaken in their factory by them, for conversion / manufacture to lead alloy ingots utilizing the provisions of Rule 4(5)(a). The Department contends that the said goods were neither inputs nor partially processed inputs and therefore, ineligible for availment of the benefit of provisions of Rule 4(5)(a) of the CENVAT Credit Rules, 2004 and thus the said benefit was not available to EIL and also to the appellant who could not return the said finished goods without payment of duties of excise. 2.6. In the process, the Department inter alia allege....
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....unal - L.B.) which decision has been subsequently followed by authorities below and to cite by way of ready reference, the following cases were adverted to: i. Hindustan Cables Ltd. v. CCE, Bolpur 2001 (138) E.L.T. 384 (Tri. - Kol.) ii. Shakti Wires Products v. C.C.E., Mumbai-V 2009 (241) E.L.T. 223 (Tri. - Mum.) iii. C.C.E., Belapur v. Plastika Industries 2016 (335) E.L.T. 574 5. It is not in dispute that the appellant were receiving waste and scrap from the said two units of EIL and processed them into ingots and sent back the finished goods to the principal manufacturer viz. EIL by adopting the process as envisaged in Rule 4(5)(a) of the CENVAT Credit Rules, 2004. We note that the waste and scrap was supplied by EIL and hence, its accountal was imperative on the part of EIL alone. In the challans annexed to the Appeal Paper Book, vide Part-II of the challans, the details of goods (as were received) and that returned to the principal manufacturer are indicated. Copy of one such challan is scanned and pasted hereunder as part of record (ref. page 152 of the Appeal Memorandum): - 5.1. Also scanned and pasted for records is one such actual purchase order issued by EIL in fa....
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....Department to prove the same with appropriate, tangible, valid and sustainable evidence. 7. As for the Department's assertion that the processes undertaken by the appellant as a job worker did amount 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 rules. 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. - ......... "(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....
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....IL 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: - "-Radio MIXED HARD/SOFT SCRAP LEAD Shall consist of clean lead solids, free of other materials, such as drosses. battery plates, lead covered cable, collapsible tubes, type metals, aluminum, 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. -Rakes BATTERY LUGS 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. -Relay LEAD COVERED COPPER CABLE Free of armored covered cable, and foreign material." 8.2. Moreover, the Foreign Trade Policy - SION Norms refers to scrap of specific grades like IPSI Radia, Rock Replay, Ropes and Rose. As the sc....
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....on; 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. (e) Once we give such a meaning to the word 'waste' occurring in Rule 57F(4), then inputs, semiprocessed, 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 desire of the manufacturer to extract as much final product out of the inputs under Rule 57F(2) as possible or desired. The procedures under Rule could be 'aborted' and recourse taken to Rule 57F(4) at a stage, but only at the option of the assessee. The option to exercise the routes available between 57F(2) an....