Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs Tanfac Industries Ltd on 2 May, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/77/2004
[Arising out of Order-in-Appeal No.504/2003 (Pondicherry) dt. 9.10.2003 passed by the Commissioner of Central Excise (Appeals), Chennai]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
Honble Dr. Chittaranjan Satapathy, Technical Member
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 the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Commissioner of Central Excise,
Pondicherry
Appellant/s
Versus
Tanfac Industries Ltd.
Respondent/s
Appearance :
Ms. Indira Sisupal, JDR Shri Hari Radhakrishnan, Advocate For the Appellant/s For the Respondent/s CORAM:
Ms. Archana Wadhwa, Honble Judicial Member Dr. Chittaranjan Satapathy, Honble Technical Member Date of hearing : 2.5.2012 Date of decision : 2.5.2012 Final Order No.____________ Per Archana Wadhwa Being aggrieved with the order passed by Commissioner (Appeals), Revenue has filed the present appeal.
2. We have heard Ms. Indira Sisupal, JDR appearing for the Revenue and Shri Hari Radhakrishnan, Advocate appearing for the respondent.
3. The issue relates to demand of duty on scrap which has arisen in the respondents factory while repairing the pipes, tubes, vessels etc. The respondents unit being a chemical plant requiring replacement of corroded/rusted parts of the vessels, pipes etc., periodically, they procured duty paid plates, pipe fittings etc. of base metal ferrous and non-ferrous. The worn out portion of the vessel, plant, pipes etc., are cut away and replaced by new plates and pipes cut to the required size. The worn out portion thus removed as well as the remnants of the new plate, pipe etc., form the waste and scrap of metal which, the respondent, has been selling to scrap dealers. In this process, two categories of metal scrap arises
(a) portion of plate and pipe cut away from the plant, pipe, vessel etc.,
(b) scrap arising in the course of cutting the new plates, pipes etc. for being replaced in the place of corroded portion of the plant, pipe, vessel etc.
4. The Assistant Commissioner has accepted that no duty was chargeable for the scrap mentioned in category (a) above holding that it did not arise as a result of manufacture. He, however, held that scrap accrued from new metal, vessel and pipes arising in the course of cutting the same for replacement of worn out plate, pipes etc. were dutiable since according to the Asst. Commissioner, the scrap was arising from mechanical working of metals. It is submitted that there was no mechanical working as presumed by the Asst. Commissioner. Cutting of sheet, pipes etc., is not mechanical working.
5. On appeal filed before Commissioner (Appeals), the appellate authority set aside the impugned order of the Asst. Commissioner by taking into consideration the definition of mechanical working as defined in Chambers of Science & Technology Dictionary, which is as follows :-
Rolling, spinning, pressing, hammering etc. a metal to change its shape He, accordingly, held as under :-
The only work undertaken with respect to the new metal plates and pipes is process of cutting them to the required size. In the process of cutting, the remnants are treated as scrap. Therefore, the Asst. Commissioner has erred in assuming that the scrap has arisen due to mechanical working of metals. The Asst. commissioner has not given any reason as to why he considered such scrap as arising from mechanical working. Obviously, there can be no mechanical working when the new plates and pipes are cut and used as a replacement for the worn out and corroded portion of the vessels, pipes etc. The decision of the Tribunal in the case of Hindalco Industries Ltd. [ 2002 (144) ELT 339 (Tri.-Del.) fully covers the issue. But the Asst. commissioner distinguished the case law by stating that the scrap generated by Hindalco Industires were reo-rollable scrap whereas the scrap generated by the appellant was melting scrap. It is submitted that what is to be considered for the purpose of levy is whether the scrap has been generated as a result of manufacturing process. Admittedly, there was no manufacturing process. Therefore, whether it is re-rollable scrap or melting scrap, it is not leviable to duty as the scrap was not generated as a result of manufacturing process.
It is an admitted fact that the scrap which has been arisen are remnants of duty paid steel sheets, plates, pipes etc., derived while cutting the new steel sheets, plates, pipes etc., for replacing the worn out/corroded part of the plant viz., vessel, pipes tubes etc. The Tribunal set aside the duty demand in respect of all goods figuring under Sl.No.2. It is immaterial whether the scrap represents remnants of new steel sheets, plates pipes etc., or old steel sheets, plates, pipes etc., cut away from the vessel, pipe, tube of the plant. Hence there can be no demand for duty for an amount of Rs.54,029/- on the scrap which are only remnants arising in the course of cutting the new plates, sheets, pipes etc., for replacing the worn out/corroded parts of the plant, vessel etc.
6. Revenue in their memo of appeal have reiterated the very same grounds which were adopted by the Asst. Commissioner for confirmation of demand. It is also their contention that the scrap arisen in the case of Hindalco Industries was in the course of dismantling of the building. However, as rightly held by ld. Commissioner (Appeals) whether this scrap is from dismantling of the buildings or from dismantling of old and worn out pipes, the same cannot be differentiated on the said ground. Inasmuch as the scrap, admittedly, has arisen on account of cutting of new sheets, plates, pipes for the purpose of replacing worn out pipes, it cannot be said that the respondents have manufactured the scrap so as to pay duty on the same. Accordingly, the Revenues appeal lacks merit. The same is, accordingly, rejected.
(Operative part of the order was pronounced
in open court on 2.5.2012)
(DR. CHITTARANJAN SATAPATHY) (ARCHANA WADHWA)
TECHNICAL MEMBER JUDICIAL MEMBER
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