2007 (3) TMI 444 - AT - Central Excise

Summary

Issues involved: Challenge to orders regarding duty demand on waste arising from burning losses in the melting process and excess availment of Modvat credit.

Summary:
1. The Revenue challenged the orders regarding the duty demand on waste arising from burning losses in the melting process, contending that no duty should be demanded since the waste did not physically exist, leading to the proceedings being dropped against the respondent.

2. A show cause notice was issued proposing denial of Modvat credit and penalty under relevant rules due to excess availment of credit when inputs were received back with shortage after processing by a job worker, resulting in an excess credit claim.

3. The respondent argued that the quantity difference in inputs sent for processing and received back was due to burning losses, not deliberate evasion.

4. Authorities determined that the 4 to 5% loss in inputs was due to burning and melting process, deeming it inevitable and not resulting in physical waste, thus justifying the non-demand of duty.

5. The department's representative argued lack of evidence supporting the claimed shortage and cited a relevant case to support the contention that no acceptable evidence was presented.

6. Rule 57D of the Central Excise Rules was invoked, stating that credit cannot be denied if inputs become waste during manufacturing without yielding any marketable waste product, as in the case of burning losses where the input itself is wasted. The authorities were justified in dropping the proceedings against the respondent based on this rule, leading to the dismissal of the appeal.