2003 (8) TMI 429 - AT - Central Excise

Summary

Issues:
Dispute over clearance of waste and scrap under Rule 57F(2) to job workers for conversion into intermediate product, non-maintenance of RG 1 Register, demand of duty and penalty, documentary evidence of receipt of intermediate goods.

Analysis:
1. The dispute in the present appeal revolves around the clearance of waste and scrap by the appellants to their job workers for conversion into intermediate products under Rule 57F(2). The proceedings were initiated based on the allegation that the waste and scrap generated should have been cleared on payment of duty as per Rule 57F(4). The appellants argued that various Tribunal decisions supported their position that such clearance was permissible without duty payment under Rule 57F(2).

2. The original adjudicating authority upheld the duty demand and penalty, citing the appellants' failure to enter the waste and scrap in their RG 1 Register. On appeal, the Commissioner (Appeals) acknowledged the appellants' legal entitlement to clear waste and scrap under Rule 57F(2) based on precedent but denied the benefit due to lack of documentary evidence showing receipt of intermediate goods from job workers. The penalty was reduced to Rs. 3,000.

3. The appellants, represented by their advocate, highlighted the Annexure to the show cause notice, which detailed the challan numbers for waste and scrap clearance, quantities involved, and reception of intermediate goods. They argued that the department's own records confirmed the exchange of waste and scrap with job workers. The advocate clarified that maintaining an RG 1 Register was unnecessary for waste and scrap transactions, as it pertains to final products. The appellants' reply also affirmed the existence of records proving the exchange of materials.

4. The respondent's representative reiterated the authorities' grounds for upholding the duty demand and penalty.

5. Upon reviewing the submissions and records, the judge found merit in the appellants' arguments. The Annexure to the show cause notice substantiated the waste and scrap clearance and receipt of semi-manufactured goods by the appellants. The judge emphasized that the Revenue could not dispute the accuracy of the records or challenge the appellants' claim without evidence. Given the legal precedent supporting the appellants' position, the judge set aside the impugned order, allowing the appeal and granting consequential relief to the appellants. The stay petition was also disposed of in favor of the appellants.