Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise vs Bhilwara Spinners Ltd. on 15 December, 2004
Equivalent citations: 2005(182)ELT371(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this Appeal filed by Revenue is whether duty liability is to be dispatched by M/s. Bhilwara Spinners Ltd. while clearing the waste and scrap of capital goods and inputs.
2. We heard Shri H.C. Verma, learned Departmental Representative for Revenue and Shri K.K. Anand, learned Advocate for the respondents. Learned Departmental Representative submitted that the Commissioner (Appeals) has set aside the demand on waste and scrap of capital goods i.e. MS scraps, plastic HDPE waste and paper scrap; that provisions of Rule 57F(18) and Rule 57S(2)(c) of the Central Excise Rules, 1944 provide for payment of Central Excise duty on waste arising from the processing of inputs in respect of which credit has been taken and payment of duty where capital goods are sold as waste and scrap; that the process of wear and tear and dismantling of inputs/capital goods amounts to manufacture because, as a result of this process a new and distinct commodity namely, waste and scrap which is distinct from various inputs/capital goods comes into existence.
3. On the other hand, learned Advocate submitted that waste and scrap of capital goods is not liable to duty as these capital goods were very old and in respect of which the respondents had not taken any Modvat credit under Rule 57Q of the Central Excise Rules, that no duty is payable on paper scrap and HDPE scrap as these were received as packaging material; that the duty liability on such waste has been finally decided by the Supreme Court in the case of CCE v. West Coast Industrial Gases, 2003 (155) E.L.T. 11 (S.C.). He also relied upon the decision in the case of CCE, Jaipur v. Birla Corpn. Ltd., Final Order Nos. 760-61/04-C, dated 25-10-2004. In reply learned Departmental Representative has relied upon the decision in the case of Parle Biscuit Ltd. v. CCE, Delhi [2003 (155) E.L.T. 527 (Tri.)] wherein it has been held that duty is payable on the waste arising during the manufacture of goods on which Modvat credit was claimed; that, it has been also held in Parle Biscuits case that duty is payable on capital goods sold as scrap under Rule 57S(2)(c) of the Central Excise Rules, 1944.
4. We have considered the submissions of both the sides. No material has been brought on record by the Revenue to counter the claim of the respondents that paper scrap and HDPE scrap has arisen out of packaging material. It has been held by the Supreme Court in the case of West Coast Industrial Gases Ltd. [2003 (155) E.L.T. 11 (S.C.)] that drum/barrel in which calcium carbide has been received by manufacturer cannot be treated to be a waste arising out of processing of inputs for which credit has been taken. As under Rule 57F(18), the duty is to be discharged only on such waste which arises from the process of inputs in respect of which credit has been taken, no duly is liable to be paid in respect of packing material in terms of the Supreme Court decision. It has been contended by the respondents from the beginning that the MS scrap has arisen out of the capital goods which were acquired prior to 1994, the year in which Modvat credit scheme was made applicable to the capital goods. The Revenue has not brought any material on record to counter the submissions of the Appellants. If the Modvat credit has not been availed of by the appellants in respect of the capital goods in question which have now been scrapped and sold, the question of applicability of Rule 57S(2)(c) does not arise. This was the view held by the Tribunal in the case of M/s. Birla Corpn. Ltd. (supra). The decision in the case of Park Biscuits relied upon by the Departmental Representative is not applicable to the facts of the present matter as it was not in dispute in that matter that waste had arisen during the manufacture of the goods on which Modvat has been claimed. Similarly there was no dispute that in respect of capital goods which were sold as a scrap, Modvat credit had not been availed of. Accordingly, the Revenue's Appeal is rejected.