2004 (7) TMI 483 - AT - Central Excise

Summary

Issues involved:
1. Applicability of duty demands on various scrap items under Central Excise
2. Interpretation of Supreme Court decisions and CBEC Circulars
3. Maintenance of evidence and accounts for scrap items
4. Determination of dutiability based on the manipulation of raw materials
5. Denial of benefit based on Boards instructions and Apex Court decisions
6. Duty demands on spent Catalyst
7. Setting aside of duty, interest demands, and penalties

Analysis:

1. The appellant, an assessee under Central Excise, contested demands made on various scrap items. The appellant argued that certain scrap items were not generated from Cenvat credit availed inputs but from materials like M.S. drums and empty packing material.

2. The Joint Commissioner upheld the demands on the basis that most scrap was generated from old replacement pipes/structures, citing the Supreme Court's decision in the case of West Coast Gas and a CBEC Circular. The Commissioner confirmed the demands and penalties due to lack of evidence and maintenance of accounts for the scrap items.

3. The duty liability on scrap arises only if it emerges from the skillful manipulation of raw materials, as per the Supreme Court's decision in the case of Ahemdabad Electricity Co. Ltd. The appellant, being a manufacturer of fertilizers and chemicals, argued that no metallic scrap would emerge from the manipulation of raw materials used in their production. Therefore, no duty demands should be upheld if no manufacturing of scrap took place.

4. The denial of benefit based on Boards instructions and the Supreme Court decision in the case of West Coast Gas was not upheld. It was argued that if no credit was availed, empty drums of inputs would not automatically become dutiable. The emptying of drums/carboys would not amount to their manufacture unless proven otherwise.

5. Regarding spent Catalyst, it was contended that no duty demand could be confirmed based on a Supreme Court decision.

6. The Tribunal relied on various precedents to set aside duty demands, interest demands, and penalties, concluding that the orders were to be set aside, and the appeals were to be allowed accordingly.