2002 (9) TMI 345 - AT - Central Excise

Summary

Issues:
1. Classification of waste and scrap of fire bricks under Central Excise Rules.
2. Duty liability on waste and scrap of fire bricks.
3. Scope of show cause notices and demand for duty under Rule 57-S(2)(c).

Issue 1: Classification of waste and scrap of fire bricks under Central Excise Rules:
The appellants, manufacturers of cement, removed used fire bricks as waste and scrap from their plant without duty payment. The dispute arose when the department issued show cause notices proposing duty recovery under Rule 57-S(2)(b) of the Central Excise Rules, 1944. The Commissioner held that waste and scrap of fire bricks were classifiable under sub-heading 6901.90 of the Central Excise Tariff Act and demanded duty on the material under Rule 57-S(2)(c). The appellants contested this classification, arguing that waste and scrap are not goods specified under any heading of the Tariff, thus not attracting excise duty. The Commissioner imposed a penalty under Section 11AC of the Central Excise Act. The issue revolved around the correct classification and duty liability of the waste and scrap of fire bricks.

Issue 2: Duty liability on waste and scrap of fire bricks:
In another instance, the appellants sold used fire bricks as waste and scrap from a different plant, paying duty under protest. The department proposed duty recovery on these bricks as used fire bricks under Rule 57-S(2)(b). The Commissioner confirmed the duty demand, adjusting the amount already paid by the appellants. The appellants challenged this decision, questioning the scope of the show cause notices and the demand for excise duty on the waste and scrap of fire bricks. This issue centered on the duty liability of the appellants for selling the used fire bricks as waste and scrap.

Issue 3: Scope of show cause notices and demand for duty under Rule 57-S(2)(c):
The appellants argued that the demand for duty confirmed by the Commissioner was beyond the scope of the show cause notices, as there was no proposal to demand duty under Rule 57-S(2)(c). They contended that the fire bricks were removed as waste and scrap, not attracting duty under the specified rules. The Commissioner's order demanding duty on the material as waste and scrap under Rule 57-S(2)(c) was challenged for exceeding the show cause notice's scope. The Tribunal examined the provisions of Rule 57-S(2) and concluded that the demand for duty on waste and scrap under Clause (c) was beyond the show cause notices, rendering the impugned order unsustainable in law. Thus, the appeals were allowed on this ground.

This judgment from the Appellate Tribunal CEGAT, New Delhi addressed the classification and duty liability of waste and scrap of fire bricks under the Central Excise Rules. The Tribunal emphasized the importance of aligning duty demands with the scope of show cause notices and ruled in favor of the appellants, setting aside the Commissioner's order for demanding duty on the material as waste and scrap under Rule 57-S(2)(c). The decision provided clarity on the duty liability of manufacturers in such cases and highlighted the necessity for precision in duty demands based on the relevant legal provisions.