2007 (6) TMI 391 - AT - Central Excise

Demand, interest and penalty - Waste and scrap - Clandestine removal alleged - Scraping of over-aged tyres

Summary

Issues:
1. Allegation of clandestine removal of tyres.
2. Sufficiency of time granted to the department for considering the application for scraping tyres.
3. Duty payment on over-aged tyres cleared as scrap.

Analysis:
1. The appellant informed the department about scraping 531.60 kg of tyres after giving a 20-day notice. They cleared the tyres as over-aged and paid duty on the scrap. The department alleged clandestine removal of 8 tyres, but the appellant had informed the department about these clearances as scrap and paid duty accordingly. Clandestine removal involves surreptitious removal without duty payment and without informing the department. The impugned order confirming the demand was set aside as the appellant had followed the required procedures and paid duty on the scrap, making the allegation of clandestine removal unsustainable.

2. The appellant argued that they had given the department 20 days notice as required by the Central Excise Manual before clearing the tyres as scrap. The department contended that they were not given sufficient time to consider the application for scraping the tyres. However, the tribunal found that the appellant had indeed given the necessary time for the department to inspect the items and consider the application. The plea of insufficient time granted to the department was deemed unsustainable, as the appellant had followed the prescribed procedures.

3. The appellant had communicated with the department about scraping tyres that were over-aged and technically unfit for marketing. They waited for 20 days and then cleared the tyres as scrap after paying the duty. The authorities had confirmed a demand on the tyres and did not accept the duty payment made towards the scrap. The tribunal held that the department should have inspected the items and considered the appellant's application seeking permission to scrap the over-aged tyres. The impugned order confirming the demand on the tyres was set aside, and the appeal was allowed with consequential relief, if any.

This judgment clarifies the importance of following prescribed procedures, giving sufficient notice to the department, and paying duty on scrap items to avoid allegations of clandestine removal and ensure compliance with excise regulations.