2004 (4) TMI 382 - AT - Central Excise

Summary

Issues:
1. Whether waste and scrap of copper generated during the manufacture of appellants' own goods should be cleared at a concessional rate under Notification 1/93.
2. Whether waste and scraps generated out of modvat inputs received under Notification No. 214/86 and Rule 57F(3) should have duty demands directed at the supplier of the inputs and not the job worker.
3. Whether the duty demand made on the entire quantity of waste/scraps of copper cleared during a specific period can be upheld.

Analysis:
1. The appellants, who are job workers, receive paper covered stripes from suppliers following specific procedures. The waste generated during job work and their own production is cleared on payment of duty under a concessional rate of SSI under Notification No. 1/93. The demands were issued on the full quantity of waste/scraps of copper cleared during a particular period, denying them the benefit of the SSI rate of duty. The Tribunal found that waste and scrap of copper generated during the manufacture of the appellants' own goods should indeed be cleared at a concessional rate under the provisions of Notification 1/93.

2. The waste and scraps generated out of modvat inputs received under Notification No. 214/86 and Rule 57F(3) are not considered goods of the job worker. Therefore, duty demands on such waste/scrap inputs should be directed and made on the supplier of the inputs and not the job worker. The duty on such scrap/waste should be discharged by the supplier at rates applicable to the Modvat inputs. The Tribunal concluded that demands on the job worker in this scenario were misdirected.

3. The Tribunal further determined that the duty demand made on the entire quantity of waste/scraps of copper cleared during the specified period cannot be upheld. Consequently, the order was set aside, and the appeal was allowed in favor of the appellants. The judgment clarifies the proper allocation of duty responsibilities concerning waste and scraps in the context of job work processes and modvat inputs, providing guidance for similar cases in the future.