2004 (9) TMI 548 - AT - Central Excise

Summary

Issues:
1. Whether waste and scrap of iron and steel cleared by M/s. Apollo Tyres Ltd. is chargeable to Central Excise duty.
2. Whether the demand is time-barred.

Analysis:

Issue 1: Chargeability of Central Excise Duty on Waste and Scrap
The appeal raised the question of whether waste and scrap of iron and steel cleared by M/s. Apollo Tyres Ltd. should be subject to Central Excise duty. The Appellants argued that the waste and scrap in question were not excisable items according to Note 8 to Section XVI of the Schedule to the Central Excise Tariff Act. They contended that the burden of proving dutiability lies with the Revenue and specific reasons must be provided as to why the scrap should be considered excisable. The Appellants emphasized that the waste and scrap were not generated during the manufacturing process of tyres and tubes, and therefore, should not be considered excisable. Additionally, they argued that the demand of duty was time-barred as the show cause notice did not allege any suppression or misrepresentation of facts with intent to evade payment of duty. The Departmental Representative, however, invoked the extended period of limitation for demanding duty due to the absence of Central Excise invoices and statutory records for the cleared waste and scrap.

Analysis Continued:

The Tribunal considered the arguments presented by both sides. It was observed that the duty was imposed on the Appellants based on the removal of waste and scrap of iron and steel without clear evidence of its generation from modvatable inputs or capital goods. The Appellants' assertion that waste and scrap could not have been produced during the manufacture of tyres and tubes was taken into account. The Tribunal highlighted the lack of specific details in the show cause notice regarding the origin of the waste and scrap in relation to modvatable inputs or capital goods. It was noted that the waste arising from packing material for inputs was not chargeable to duty, as established in previous Supreme Court judgments. Moreover, the absence of information on capital goods sold as scrap further weakened the case for duty imposition under Rule 57S(2)(C) of the Central Excise Rules. Ultimately, the Tribunal ruled in favor of the Appellants, setting aside the impugned order and allowing the appeal.

This comprehensive analysis of the judgment highlights the key legal arguments, interpretations of relevant provisions, and the Tribunal's decision on the chargeability of Central Excise duty on waste and scrap of iron and steel, as well as the issue of time-barring the demand.