TaxTMI 
TaxTMI 
2025 (11) TMI 1214
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....is holding Private bonded warehouse License issued by the Assistant Commissioner, under Section 58 of Customs Act, 1962 with permission to manufacture in-bond under Section 65 of the Act and he is also holding Central Excise Registration. The appellant is working as a '100% Export Oriented Unit' and have been issued a letter of permission by the Development Commissioner, Kandla, Special Economic Zone for the above purpose.The appellant have made application for fixation of Standard Input Output Norms to Director General of Foreign Trade, Ministry of Corporate Affairs, Department of Commerce, New Delhi vide application dated 06.10.2008 wherein, the appellant have submitted their whole quantitative performancelike raw material imported, raw material consumed, net brass scrap used, finished goods manufactured, wastage obtained etc. for financial years 2005-06, 2006-07 and 2007-08 certified by an independent Chartered Accountant as well as Chartered Engineer. 2.1 Thereafter, Development Commissioner, KASEZ, Kandla has fixed ad-hoc norms vide letter dated 12.06.2009 against their application/letter for Fixation of SION dated 06.10.2008. The ad-hoc norms fixed by above letter ....
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....ned Advocate for the appellant submitted that the issue to be decided in the present appeal is whether the appellant has properly availed the benefit of the input-output ratio, as statutorily prescribed under the Notification No. 52/2003-Cus dated 31.03.2003 read with the final 'wastage norms' as fixedby the Norms Committee, in respect of 'segregation' and 'manufacturing' of the final products, out of the 'mixed brass scrap with impurities', or not? He has also submitted that the issue mentioned above is no longer res-integra and has been settled by the Hon'ble Gujarat High Court in Commissioner, Customs (Preventive) Versus Monarch Overseas reported in 2019 (1) TMI 1513 (GUJ.) and followed by this Hon'ble Tribunal in the case of Deep Recycling Industries & Ors V CCE & ST. Rajkotreported in 2024 (3) TMI 970. 3.1 The learned Counsel for the appellant submitted that in Deep Recycling Industries & Ors, this Tribunal has held in para 10 of the order that once the raw material procured are used for the purpose of manufacture of finished goods, then even if waste and scrap arise in course of production and manufacture over the norm, then same is also....
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....brass scrap is 1.26 and is obviously inclusive of all kind of losses including slag. Thus, the calculation given by the appellant in their appeal cannot be adopted for the purpose of calculating unexplained consumption of scrap and the Tribunal dismissed the appeal filed by the appellants. 5. I have heard the learned Counsel for the appellant and the learned Authorised Representative for the department and perused the records. 5.1 As mentioned above, the issue to be decided by this Tribunal is whether the appellant has properly availed the benefit of the input-output ratio, as statutorily prescribed under the Notification No. 52/2003-Cus dated 31.03.2003 read with the final 'Wastage Norms' as fixed by the Norms Committee, in respect of 'segregation' and 'manufacturing' of the final products, out of the 'mixed brass scrap with impurities', or not? 5.2 The learned Commissioner has observed in the impugned order at page 6 (para 7) that, "Show Cause Notice was issued to the appellant on the ground that they have failed to account for the 'wastage of brass', as per Notification No. 52/2003-Cus read with the 'Norms', which were fixed ad-ho....
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....crap' from 'mixed brass scrap' is fixed as 1MT: 1.50 MT, the ratio for finished goods i.e. brass ingots from Segregated brass scrap is fixed as 1MT: 1.08 MT and in the case of brass components/articles/ bars etc. the same has been fixed as 1 MT: 1.26 MT. In accordance with the revised norms, since the annexure-B prepared & attached to the SCN was equipped with the figures of finished goods manufactured only and no figures of foundry scrap generated have been shown, therefore, the same has been called for from the ACCE, Jamnagar. The Assistant Commissioner, Central Excise, Jamnagar vide his letter dated 31.01.2013 submitted the revised Annexure B & B1 after taking into consideration final norms fixed by the DGFT and re-calculating the excess quantity of raw material consumed by the noticee on which duty has to be demanded. The same is calculated as below:- Annexure-B and Annexure B-1 (l) RAW MATERIAL IMPORTED MIXED BRASS SCRAP ZINC SCRAP COPPER SCRAP BIRCH 1 OPENING BALANCE 01.11.2008 2.141 1.342 0 2 IMPORTED COPPER SCRAP BIRCH CLIFF 01.11.2008 TO 31.03.2010 0 0 19.91 ....
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....onately on the said excess consumption of raw materials i.e.0.657 MTs valued at Rs.2,12,128/-, consequential with penalty and confiscation of goods in accordance with the violation of the provisions of Customs Act and FTP." 5.4 I am of the view that the conclusion arrived at by the learned Adjudicating Authority/ Additional Commissioner in para 24-25 mentioned above is against the law laid down by Hon'ble Gujarat High Court in Commissioner, Customs (Preventive) Versus Monarch Overseas reported in 2019 (1) TMI 1513 (GUJ.). In paragraphs 11 & 12 of the judgment, it has been observed and held as follows:- "11. That brings us to the second question, as to whether clearance of such scrap upon payment of excise duty would fall within the ambit of paragraph 3 of Notification No. 52/2003-Cus., dated 31-3-2003? On behalf of the appellant it has been contended that the clearance of foundry scrap beyond the ratio/norms of scrap laid down by the Norms Committee is in contravention of the provisions of Notification No. 52/2003-Cus., dated 31-3-2003. In this regard, reference may be made to the provisions of the said notification. Clause (3) of the said notification to the extent the....
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....pe of the non-obstante clause of Notification No. 52/2003-Cus (ibid). In the instant case for material consumed over and above the SION notification issued by the DGFT, Department has taken the view that duty or at least penalty is liable to be charged in case excess wastage comes into play. However, it is found that Hon'ble Gujarat High Court in the matter of Commissioner of Customs (Preventive) Vs. Monarch Overseas as reported in 2019 (1) TMI 1513 (Gujarat High Court), while dealing with scope of Notification No. 52/2003-Cus Dated 03.01.2003 particularly clause (3), construed the non-obstante clause by interpreting that once the material procured are used for the purpose of manufacture of finished goods or services then even if waste and scrap arises in course of production and manufacture over the norm then same is also exempt from the Duty of Custom leviable or the Additional Duty till the time the waste is cleared on payment of duty, and is not shown to have been removed without permission. The decision was based on and affirmed the decision of Meridian Impex Vs. CC & ST as reported in 2018 (7) TMI 865- CESTAT which has summarized findings as follows:- "We find th....