2005 (9) TMI 339 - AT - Central Excise

Summary

Issues Involved:
- Appeal against order of Commissioner (Appeals) setting aside duty demand and penalty imposition under Central Excise Act.
- Allegation of selling waste with private invoices instead of prescribed ones.
- Justification of extended period of demand.
- Interpretation of Rule 57F(18) regarding payment of duty on waste generated from inputs.
- Application of the decision in Modi Rubber Ltd. case to the present scenario.
- Commissioner (Appeals) overturning adjudicating authority's decision.
- Compliance with Modvat provisions and classification of waste under specific sub-headings.

Issue 1: Appeal against Commissioner (Appeals) Order:
The Revenue appealed against the Commissioner (Appeals) order setting aside a duty demand and penalty imposition under Rule 9(2) of the Central Excises Rules, 1944 read with Section 11A of the Central Excise Act, 1944. The duty demand of Rs. 1,86,713/- was confirmed, and a penalty of the same amount was imposed along with interest under Section 11AB of the Act.

Issue 2: Allegation of Selling Waste with Private Invoices:
The Revenue officials discovered that the respondent was selling waste from processing inputs using private invoices instead of those prescribed under Rule 52A of the rules. The respondent was alleged to pay excise duty on clearances of waste generated from inputs for which credit had been taken, as if the waste was manufactured in the factory under Rule 57F(18).

Issue 3: Justification of Extended Period of Demand:
The adjudicating authority found that the information regarding waste sales was wilfully suppressed as private invoices were not submitted, justifying the extended period of demand. The authority held that waste generated during manufacturing falls under Rule 57F(18), rejecting the respondent's argument citing a previous court decision.

Issue 4: Interpretation of Rule 57F(18) on Duty Payment for Waste:
Rule 57F(18) mandates payment of duty on waste generated from inputs for which credit was taken, treating it as if manufactured in the factory. The respondent availed Modvat on inputs and sold waste like poly scrap, bladder, tube valve, and bead wire, falling under Rule 57F(18)(a) for duty payment.

Issue 5: Application of Modi Rubber Ltd. Case:
The Commissioner (Appeals) referenced the Modi Rubber Ltd. case but failed to consider Rule 57F(18) provisions. The waste generated by the respondent was classified under specific sub-headings, indicating the duty liability, contrary to the decision in the Modi Rubber Ltd. case.

Issue 6: Compliance with Modvat Provisions and Classification:
The respondent's compliance with Modvat provisions for excisable goods and classification of waste under specific sub-headings supported the duty demand and penalty imposition. The Commissioner (Appeals) erred in overturning the adjudicating authority's decision, leading to the restoration of the original order.

This detailed analysis of the judgment highlights the legal intricacies and interpretations involved in the case, emphasizing the application of relevant rules and precedents to determine the duty liability on waste generated during manufacturing processes.