Custom, Excise & Service Tax Tribunal
M/S.Manglam Cement Ltd vs C.C.E., Jaipur on 2 March, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-DB
COURT III
Excise Appeal No.E/2103/2007-EX [DB]
[Arising out of Order-in-AppealNo.64 (GRM) CE/JPR-I/2007 dated 08.03.2007 passed by the Commissioner (Appeals), Customs & Central Excise, Jaipur]
For approval and signature:
HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HONBLE MR. R.K. SINGH, MEMBER (TECHNICAL)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
M/s.Manglam Cement Ltd. Appellant
Vs.
C.C.E., Jaipur Respondent
Present for the Appellant : Ms. Neha Meena, Advocate
Present for the Respondent: Mr. R.K. Gover, D.R.
Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)
HONBLE MR. R.K. SINGH, MEMBER (TECHNICAL)
Date of Hearing/Decision: 02/03/2016
FINAL ORDER NO. 51678/2016
PER: R.K. SINGH
This appeal is filed against order in Appeal dated 08.03.2007 which set aside the Order in Original dated 29.12.2005 and confirmed the duty demand of Rs.72,344/- alongwith equal mandatory penalty. In the show cause notice dated 22.09.2000 the appellant was required to show cause as to why the said amount of duty should not be demanded alongwith interest and penalties on the ground that during the period March, 1997 to March, 1998 the appellant cleared various items of scrap generated during the course of manufacture of excisable goods without payment of duty. In contravention Rules 91, 52 A, 57 S (2) C, 173 F, 173G and 226 of Central Excise Rules,1944. The Show-Cause-Notice also stated that as per Rule 57 S (2) (c) of Central Excise Rules, where capital goods are sold as waste and scrap the manufacturers shall pay the duty leviable on such waste and scrap but in the instant case the appellant neither indicated any sale in the RT-12 returns nor informed the Department about the sale of such scrap.
2. The appellant has contended that there is no evidence that the said scrap was generated out of the capital goods on which cenvat credit was taken. Further the scrap was generated during repair of the capital goods and therefore, was not liable to excise duty. The ld. Advocate for the appellant cited several judgments like Commissioner of Central Excise, Jaipur vs. Birla Corporation Ltd. - 2005 (181) ELT 263 (Tri-Del.), Grasim Industries Ltd. vs. Commissioner of Central Excise, Jaipur- 2006 (203) ELT 603 (Tri.-Del.) and several others to the effect that waste and scrap arising during wear and tear of capital goods cannot be said to be manufactured and therefore was not liable to duty.
3. Ld. D.R. for the Revenue reiterated the impugned order.
4. We have considered the contentions of both sides and perused the records including the show cause notice. The grounds on which the demand was raised in the show cause notice are contained in the following 2 pargraphs which are reproduced below:-
On examination of the private gate passes (other than those issued under Rule 52A & 173G of the Central Excise Rules, 1944), of the assessee upto the month of March,1998, it was found that during March, 97 to March, 98 the assessee had cleared various items of scrap generated during the course of manufacture of excisable goods through their private gate passes without payment of Central Excise duty, (details of which are enclosed in Annexure A), in contravention of Rules, 9 (1), 52A, 57S(2) C, 173F, 173G & 226 of Central Excise Rules, 1944. The value of these goods was Rs.4820295/- on which the amount of duty involved @ 15% adv. Comes Rs.7,23,044/-.
As per Rule 57S (2) C of Central Excise Rules, 1944 where capital goods are sold as waste & scrap, the manufacturer shall pay the duty leviable on such waste and scrap, but in the instant case, the assessee neither indicated any sale in the R.T. 12 returns nor infomed the department about the sale of scrap of various items. It appears that the assessee had sold the capital goods as waste/ scrap without payment of Central Excise duty in contravention of the provisions of Rule 57S (2) C of Central Excise Rules, 1944. It is evident from the above-quoted 2 paragraphs that there is no allegation that waste and scrap on which duty has been demanded arose out of the capital goods on which the appellant had taken cenvat credit. Further, the Commissioner (Appeals) in the impugned order has confirmed the impugned demand essentially on the basis of the following paragraphs:-
7. I have carefully gone through the case records and written submissions made by the Respondent. The point for my determination is whether the waste and scraps valued at Rs.48,20,295/- involving Central Excise duty Rs.7,23,044/- generated in year 1997-98 is chargeable to Central Excise duty in term of Rule 57 S (2) (c) of erstwhile Central Excise Rules, 1944 or otherwise. I find that the appellant has contended that from the Order-in-Original, it is not clear that this is scrap of modvatable. The respondent has failed to prove that the above referred scrap was generated from non-modvatable capital goods since the respondent stated availing modvat on capital goods from the year 1994 and the said scrap was cleared from the respondent unit during 1997-98. Therefore, there are full chances that the scrap mentioned as above is generated from the capital goods on which the respondent had availed modavt and in that situation they are liable to pay duty in view of the contemporary Rule 57 S (2) (c) of the erstwhile Central Excise Rules, 1944. The contention of the respondent that scrap was of non modavtable capital goods is not acceptable because the respondent has failed to produce evidence in their support. On the contrary, the respondent has contended that the waste and scrap has generated during the course of manufacture or during the mechanical working of metals. Then only it will be excisable. Further, contended that Rule 57(F) 18 and Rule 57S (2) (c) of Central Excise Rules, 1944 provided that the duty is leviable on the waste and scrap of inputs and capital goods by treating as if these goods are manufactured in the factory. The necessary test for levy of duty was that such waste and scrap must find entry in the tariff. If the waste and scrap of any particular tariff is not appearing in the particular chapter such waste and scrap will not be chargeable to any duty. Careful perusal of the above-quoted para of the order in appeal betrays the untenability of the reasoning contained therein. The Commissioner (Appeals) inter alia states that (i) the respondent has failed to prove that the above referred scrap was generated from non-modvatable capital goods, (ii) since respondent started availing modvat on capital goods from the year 1994 and the said scrap was cleared by the respondent during 1997-98 and therefore, there are full chances that scrap mentioned was generated from the capital goods on which Modvat credit was taken. We do not agree with this reasoning of the Commissioner (Appeals) to confirm the impugned demand inasmuch as, it is for Revenue to prove that the scrap was generated out of capital goods on which credit was taken or it was generated during manufacture and the onus was not on the appellant to do so. The appellant had asserted that the scrap cleared without payment of duty arose during repairs of the capital goods. There is no evidence in the Show-Cause-Notice to the contrary. As the appellant has stated that the scrap was generated during the repair of the capital goods, it cannot be said that the capital goods were cleared as waste and scrap. In the case of Commissioner vs. Birla Corporation Ltd. (supra) CESTAT held that scrap arising during wear and tear of capital goods cannot be said to be manufactured and therefore, was not liable to duty. Similarly, in the case of Grasim Industries Ltd. Vs. Commissioner of Central Excise (supra) CESTAT held that scrap arising during repair of machinery was not out of manufacturing activity and the demand of duty on such scrap was not sustainable.
7. In the light of the forgoing analysis, we are of the view that the demand confirmed against the appellant is not sustainable and accordingly, we set aside the impugned order and allow the appeal.
[Dictated and Pronounced in the Open Court] (R.K. SINGH) (S.K. MOHANTY) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Anita ??
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