2008 (12) TMI 456 - AT - Central Excise

Waste and scrap of old and used capital goods - Dutiability - manufacture - Held that - reliance placed in the decision in the case of KISSAN CO-OP. SUGAR FACTORY LTD. Versus COMMISSIONER OF C. EX., MEERUT-II 2008 (2) TMI 72 - CESTAT, NEW DELHI , where it was held that waste and scrap of old and used capital goods not arising out of mechanical working of metals in a factory are not dutiable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order of Commissioner (Appeals) regarding excise duty on waste and scrap of discarded capital goods.

Analysis:
The appellant, a cement manufacturer, used certain capital goods and later sold them as waste and scrap. The original authority and Commissioner (Appeals) considered the waste and scrap as goods manufactured, subject to excise duty. The appellant argued that during the relevant period, there were no provisions similar to the current rules. They relied on a Tribunal decision stating that waste and scrap of old capital goods not arising from mechanical working are not dutiable.

The original authority noted the absence of specific rules similar to current ones during the relevant period. The Commissioner (Appeals) upheld the duty demand based on the classification of waste and scrap under the Central Excise Tariff Act, considering them marketable and chargeable to duty. However, the Tribunal found the rationale behind considering discarding of used capital goods as manufacturing excisable goods unconvincing. Citing a previous case, the Tribunal emphasized that waste and scrap of old capital goods not arising from mechanical working of metals are not dutiable.

Ultimately, the Tribunal disagreed with the lower authorities' decisions, setting them aside and allowing the appeal with consequential relief. The judgment highlights the distinction between waste and scrap arising from mechanical working of metals and waste and scrap of old capital goods, emphasizing that the latter is not dutiable.