TaxTMI 
TaxTMI 
2026 (8) TMI 1749
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....by the learned Customs, Excise and Service Tax Appellate Tribunal(CESTAT), New Delhi in Excise Appeal No. 59090 of 2013, whereby excise duty was imposed on clearance of scrap generated from capital goods on which CENVAT credit was availed. 2. The brief facts giving rise to the present appeal are as follows. The appellant company is engaged in the manufacture of cement and clinker, classifiable under Tariff Item Nos. 25232910 and 25231000 of the Central Excise Tariff Act, 1985. 2.1 During the period from April 2009 to March 2010, the appellant cleared scrap generated from various capital goods on which CENVAT credit had been availed. Such scrap comprised, inter alia, refractory bricks, miscellaneous capital goods scrap, conveyor belt s....
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....Final dated 15.01.2018, dismissed the appeal and affirmed the concurrent findings of the authorities below. 2.4 Hence, the present appeal. 3. Having heard learned counsel for the rival parties and having perused the record, certain facts emerge which are not in dispute. Concededly, the appellant is not a manufacturer of refractory bricks, conveyor belts, ACCR and cables, filter bags, or the other plant and machinery items in question. These items were procured and deployed as capital goods in the course of manufacture of cement and clinker, and CENVAT credit was duly availed thereon. Over a period of use, these capital goods were either rendered unusable or deteriorated on account of wear, rust, and efflux of time, and were thereafter....
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.... to be paid shall be equal to the duty leviable on transaction value. (b) If the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value." 6. Having perused the aforesaid provision, in our view, the said Rule embodies a self contained statutory obligation. It stipulates, in unambiguous terms, that where capital goods on which CENVAT credit has been taken are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on the transaction value of such waste and scrap. The rationale underlying the provision is evident. The credit mechanism is a concession granted to the manufacturer on the premise that the capital goods are pu....
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..... 9. The Gujarat High Court repelled the assessee's contention that waste and scrap can be subjected to duty only when it is generated in the process of manufacture. Relevant of the Gujarat High Court decision dated 06.02.2006 in Tax Appeal No. 1691/2005 [2007 (214) ELT18 (Guj.)] titled as GNFC Limited versus Union of India is extracted as below:- "2. The appellant has proposed the following two questions stated to arise out of impugned order of Tribunal dated 12-7-2005. "(1) Whether duty of excise is leviable on sale of old and unusable modvated capital goods, sold as waste and scraps, under the provisions of Rule 57-S(2)(c) of the Central Excise Rules, 1944? (2) Whether scrap of machineries sold by the ap....
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....cceptance in light of the facts of the case, for the simple reason that the appellant is not a manufacturer of capital goods. In other words, the appellant does not manufacture and sell capital goods, but uses such capital goods for the purposes of process of manufacture. (6) In these circumstances, in absence of any infirmity in the impugned order of Tribunal, no substantial question of law arises and the appeal is dismissed." 10. We may like to observe here that, although GNFC Limited (supra) was rendered in the context of Rule 57-S(2)(C) of the Central Excise Rules, 1944, the said provision is the legislative precursor of Rule 3(5A) of the CENVAT Credit Rules, 2004. Both provisions are pari materia in substance and object. Th....