Customs, Excise and Gold Tribunal - Tamil Nadu
Supra Alloys And Allied Products Pvt. ... vs C.C.E. on 12 August, 1998
Equivalent citations: 1998(104)ELT807(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. All these four appeals arise from 4 independent Orders-in-Appeal as above. The issue pertaining to all these 4 appeals being common, they were clubbed together and taken-up for disposal. By consent of both sides, waiver of pre-deposit was granted and appeals themselves were taken-up for disposal as the issue lies in a short compass being covered by Tribunal judgment as rendered in the case of Castrol India Ltd., reported in 1998 (99) E.L.T. 234 (Tribunal).
2. The issue in all these appeals is as to whether duty can be demanded on empty drums, on which Modvat credit have already been utilised? The moot point which arises is as to whether empty drum is a scrap or a new product? In the show cause notice it was alleged that the appellants manufactured shell sand and shall moulds & cores falling under sub-heading 6807.00 and 8480.10 respectively of CET Act, 1985. They were availing Modvat credit in res- pect of an input viz. "resin" which are used in drums/barrels. These resins are used in the manufacture of final product. The empty drums /barrels are removed by the assessee for sale and the proportionate Modvat credit is neither reversed nor equivalent amount of duty paid at the time of removal. Therefore, the noticee was issued with notice for the relevant period demanding various amounts in the show cause notice which are ultimately confirmed and penalties imposed in terms of 4 Orders-in-Original and upheld in 4 OIAs as detailed below:
Appeal No. O-I-A No./dt Duty Demand Penalty 1437/98 177/98-25-3-1998 6,702/- 2,000/- 1438/98 160/98-23-3-1998 3,276/- 100/- 1439/98 176/98-25-3-1998 28,891/- 3,000/- 1440/98 159/98-23-3-1998 2,247/- 100/-
3. The learned Advocate submits that empty drums which are removed are not as a result of manufacture and not dutiable as scrap and therefore the question of reversing the Modvat credit or paying duty on such removals of empty drums does not arise. He points out that this identical issue was agitated before the Western Regional Bench in the case of Castrol India Ltd. v. CCE wherein the Tribunal upheld their similar contention and held that the empty drums which are removed after the inputs are taken out from the factory are not liable to pay duty and also Modvat credit is not required to be reversed.
4. Learned DR reiterates the Departments' views.
5. On careful consideration of the submissions, we notice that the issue in the present case is totally covered by the case law of Castrol India Ltd., wherein the WRB of Tribunal in paras 4 to 7 has held as follows :-
"4. Reference to Rule 57F(4) does not seen very relevant to us. This rule provides in Clause (2) for the nature of utilisation of credit. The departmental representative contends rightly, in our view that even when Modvat credit is not taken if product is held to be the result of manufacture, duty liable to be paid on such waste unless it is exempted. For this to take place, two conditions have to be satisfied. The first is that there has been a process of manufacture and the second is that what emerges is scrap.
5. There is no case when the appellant empties the barrels of their contents and then disposes them of because of the facts they cease to be barrels have been used once, would not fetch the same value as before. The Commissioner himself does not say that is manufacture. He says that the goods have been processed, it cannot be said that emplying the drums, a new commercially different product with a different name and number has emerged. The appellant therefore has not manufactured anything by emptying drums. The Tribunal in West Coast Industrial Gases Ltd. v. CCE has held that drums which were emptied of calcium carbide which they contained must be considered to be scrap which arises in the preparatory stage of manufacturing process. No reasoning has been given to justify this conclusion. Apart from this, the issue before the Tribunal was not one of manufacture. The issue was whether that portion of the credit which was contained in the drums (by reason of the value of drums being added to the value of the inputs) should be reversed for the reason that the drums were not used for the manufacturing process. The Tribunal's conclusion found for the appellant on this point. It is clear from paragraph 3 of the order that neither the appellant nor the department raised the issue and whether the requirement of manufacture was included. The point on which the issue was decided was one which occurred to the Tribunal. It is an alternative contention. This was a point which occurred to the Tribunal. In that case it was required for the Tribunal to place this point before both sides in order to hear the arguments and then give a reasoned conclusion. The order does not show that this was done.
6. However even if we assume that manufacture takes place it cannot be said that waste arises. In terms of the Note 6(a) to Section XVI of the Tariff the barrels would be considered to be waste if terms of wear and tear they were no longer usable as barrels. There is no finding that this is the case. It is difficult on the face of it to accept that a barrel or drum ceases to be barrel as such only because it has been so used once and this is to ensure that the barrels were not and or could not, be so used again.
7. On both grounds therefore the appeal succeeds is ordered and impugned order set aside. Consequential relief."
4. On a reading of the above ruling, we notice that the issue is totally covered and in terms of the said judgment duty on the empty drums removed from the factory is not required to be paid and hence appellants are entitled to succeed in these appeals and we allow the appeals by setting aside the impugned orders and following the ratio of the above judgment.