2007 (5) TMI 420 - AT - Central Excise

Summary

Issues:
1. Appeal against demand and penalty for clearing waste and scrap without duty payment.
2. Interpretation of duty liability for waste and scrap of old and used capital goods.
3. Applicability of Cenvat Credit Rules in the case.

Analysis:
1. The appellant filed an appeal against an order confirming a demand of Rs. 64,647/- and imposing a penalty of Rs. 25,000 for clearing waste and scrap of old and used capital goods without paying duty. The appellant argued that during the period of clearance (April to November 2003), there was no provision requiring duty payment for such waste and scrap. They cited a Tribunal decision stating that dismantling of capital goods is not considered manufacturing, and the scrap is not excisable.

2. The revenue contended that since credit was taken for the capital goods, they are liable for excise duty when cleared. However, the Tribunal found that the appellants were not clearing capital goods themselves but rather old and used parts like MS sheets, MS rolled channels, and old electronic goods. Notably, during the relevant period, there was no provision under the Cenvat Credit Rules making waste and scrap of capital goods dutiable. It was only in 2005 that a new rule was introduced imposing duty on such waste and scrap. As waste and scrap are not considered manufactured goods, following the Tribunal's decision referenced by the appellants, the impugned order was set aside, and the appeal was allowed.

3. The judgment highlights the importance of the specific provisions in force during the relevant period and the distinction between capital goods and their waste and scrap. It clarifies that liability for duty on waste and scrap arises only when there is a specific provision to that effect, emphasizing the need for legal clarity and adherence to established rules in excise matters.