TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1812
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....4 Akshar Exports vs CCE & ST Rajkot are that the appellant is holding a 100% EOU status and it was importing duty free Brass Scrap for manufacture of their final products in terms of Notification No. 52/2003-Cus dated 31st March, 2003 read with the Foreign Trade Policy 2004-2009 relating to the scheme for the EOUs. The imported Brass Scrap was first subjected to the process of segregation. After segregation, the non-foundry scrap (i.e. iron scrap, rubber / plastic scrap) and foundry scrap (i.e. nonferrous metals) were obtained. Non foundry scrap was cleared by the appellant as such on payment of appropriate duties and under respective tariff headings, based upon the 'Quantitative Clearance Permission' given by the Development Commissioner, whereas foundry scrap was utilized / consumed in the manufacturing of various goods / products for exports. As no Standard Input Output Norms (SION) were prescribed under the provisions of Foreign Trade Policy, relating to the manufacturing process adopted by the appellant, the Final Wastage Norms in respect of the appellant were fixed by the Norms Committee in terms of para 6.8 (e) of the FTP, and was communicated / intimated by the DGFT New Del....
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.... 19.01.2010 issued for the period from October-2004 to July-2009, the department observed that the appellant had cleared / generated the quantity of 51.909 MT of "Non- Foundry Scrap" during the segregation of the raw materials i.e. the Mixed Brass Scrap. In this regard, the department was of the view that as w.e.f. 01.04.2002, the activity of segregation was excluded from the activity of manufacturing, from the FTP 2004-2009 under the appendix 14-i-c 14- I.C, the generation / clearance of non-foundry scrap was considered to be the clearance of duty free raw materials as such and not used for the intended purpose. The said quantity of 51.909 MT of non-foundry scrap was considered for classification under the original CTH 74040022 of the Customs Tariff Act, 1975, declared at the time of import and Customs Duty was demanded accordingly. 1.3 It is pertinent to note here that Show Cause Notice No. VJMR./ AR./SSBY/ADS/2011/2010 dated 01.10.2010 was issued to the appellant M/s. Akshar Expxorts with the contents that during the period April-2008 to March-2010, they have consumed a total quantity of 816.197 MT of duty free raw material in the manufacture of final products as indicated in....
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....ated in view of the provisions of clause 3 of the said notification, wherein the generation of waste and scrap was allowed up to 2% of input quantity, in case where no Standard Input Output Norms (SION) were prescribed. The above two types of ratios were taken into consideration by the lower authority for arriving at the figure of excess consumption of raw materials as the "Final Wastage Norms' were fixed in respect of the Mixed Brass Scrap with impurities only and were not pertaining to the Normal Brass Scrap. The Mixed Brass Scrap or Brass Scrap Honey is considered to be normal brass scrap as per the Institute of Scrap Recycling Industries (ISRI) code. 1.6 The above mentioned Show Cause Notices dated 31st July, 2008, 19th February, 2010, 23rd May, 2012 and 3rd September, 2012 were jointly adjudicated by the lower authority and vide Order-in-Original demand of Customs Duty of Rs. 23,29,686/- and Rs.1,23,494/- was confirmed on excess utilization of raw materials than the norms fixed weighing49.123 MT and 3.742 MT under Section 28 read with Section 72 of the Customs Act, 1962 and also confirmed Central Excise Duty of Rs. 96,646/- on the excess utilization of raw materials indigen....
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....learned Commissioner (Appeals), these appeals have been preferred by the appellants before this Tribunal. 2 The learned Consultant for the appellant submitted that the learned Commissioner (Appeals) has erred in law as well as on facts while arriving at the excess consumption of raw material of 49.123 for Section A SCN dated 31st July, 2008. 2.1 The learned Consultant for the appellant also submitted that the learned Additional Commissioner and the learned Commissioner (Appeals) have erred in law as well as on facts by ignoring the norms fixed by DGFT, Department of Commerce, Ministry of Commerce and Industry, Government of India for the Mixed Brass Scrap i.e. ratio of 1:1.50 of quantity of segregated brass scrap out of Mixed Brass Scrap and restricting the wastage at 2% of "Raw Material Consumed" and thereby working out excess quantity of alleged consumption of 49.123 MT and 3.742 MT of raw materials consumed. 2.2 The learned Consultant for the appellant also submitted that the Standard Input Output Norms application, appellant have submitted total imported quantity details for the year 2005-06, 2006-07 and 2007-08 and the Standard Input Output Norms are fixed based on th....
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.... by the decision of the Hon'ble Tribunal in the case of Deep Recycling Industries and others vs Commissioner of Central Excise and Service Tax, Rajkot reported in (2024) 17 Centax 225 (Tri.Ahmd.) in which it was held as follows:- "10. Considered. We find the case low relied upon by the department were per incuriam as they did not consider scope 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 views 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) v. Monarch Overseas as reported in 2019 (1) TMI 1513 (Gujarat High Court), While dealing with scope of Notification No. 52/2003-Cux. Dated 03.01.2003 31.03.2003 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....
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.... 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 same is relevant for the present purpose provides that notwithstanding anything contained in that notification, the exemption therewith shall also apply to goods which on importation into India or procurement, are used for the purpose of manufacture of finished goods or services and such finished goods and services, (including by-products, rejects, waste and scrap arising in the course of production, manufacture, processing or packaging of such goods) even if not exported, are allowed to be sold in Domestic Tariff Area in accordance with the Export and Import Policy and subject to such other limitations and conditions as may be specified in this behalf by Development Commissioner, or Board of Approval or the Inter Ministerial Standing Committee, as the case may be, on payment of appropriate duty of excise leviable thereon under Section 3 of the Central Excise Act, ....