2007 (2) TMI 374 - AT - Central Excise

Summary

Issues:
Levy of Excise Duty on condemned rolls of rolling mills under Central Excise Act, 1944.

Detailed Analysis:
The appellant contested the imposition of Excise Duty and penalty on condemned rolls of rolling mills, arguing that such rolls were once capital goods and not dutiable under the Central Excise Act, 1944. The appellant's counsel emphasized that goods cannot be made liable to duty without statutory mandate, citing relevant case law to support the contention. The appellant also highlighted that no Modvat Credit was taken on the manufactured goods or any waste and scrap generated during the manufacturing process of dutiable goods like iron and steel products.

The revenue, on the other hand, supported the imposition of levy on rejected steel rolls under a specific sub-heading of the Central Excise Tariff Act, 1985. It was argued that the rejected steel rolls were manufactured and arose within the manufacturing process, justifying the duty imposition. The revenue relied on various decisions and circulars to support their stance.

Upon review of the case, it was found that the condemned rolls were waste and scrap obtained from the conversion of rolls during the manufacturing process. The adjudicating officer noted that the appellant had availed Modvat facility on capital goods and that the widened definition of waste and scrap covered the goods in question. Consequently, the demand for duty and penalty was upheld.

The appellant appealed to the Commissioner (Appeal) who did not find sufficient reason to interfere with the adjudicating authority's decision. The focus was on whether the sold goods were manufactured and had enjoyed Modvat credit, which was deemed not relevant for a second appeal to the Tribunal.

The main issue before the Tribunal was whether capital goods, no longer usable due to loss of utility, should be liable to duty if not manufactured by the appellant. The Tribunal emphasized that goods not manufactured cannot be excisable, citing precedents regarding scrap and condemned machinery. The Tribunal held that the condemned rolls, being integral parts of the plant, did not become excisable goods as they were not manufactured.

The Tribunal concluded that the appellant succeeded in its appeal, setting aside the impugned order and allowing the appeal.

In summary, the judgment revolved around the interpretation of whether condemned rolls of rolling mills, once capital goods, were liable for Excise Duty under the Central Excise Act, 1944. The Tribunal ruled in favor of the appellant, emphasizing the necessity for goods to be manufactured to be considered excisable, which was not the case with the condemned rolls in question.