Cce vs Madurantakam Co-Op. Sugar Mills Ltd. on 26 October, 2006
Yet another pertinent point is that the Superintendent's letter dated 17.7.98 had also demanded duty on the goods in question on the ground that the goods had arisen due to wear & tear of the metal goods like plant & machinery and hence duty was recoverable thereon as "waste and scrap". When it came to issue of show-cause notice later, the department avoided pleading the necessary facts and chose to demand duty on the goods on the strength of Section Note 8(a) without pleading the factual requirements. In the circumstances, beyond doubt, the demand of duty raised in the show-cause notice is not sustainable for the simple reason that the goods in question were not shown to be "waste and scrap" falling under SH 7204.90. The Tribunal's decision in KM. Sugar Mills (supra) is also in support of the assessee's case. It was held in that case that the burden was on the Revenue to prove that waste and scrap arose out of capital goods on which Modvat credit had been availed of so that duty could be demanded on such waste and scrap in terms of Rule 57S(2) of the Central Excise Rules, 1944. This burden was not discharged by the department in the present case.