2009 (4) TMI 762 - AT - Central Excise

Summary

Issues:
1. Whether the respondents cleared inputs as such and failed to reverse the credit availed on these items.
2. Whether the demand of differential duty and penalty imposed on the appellants is justified.
3. Whether the cut pieces of MS and HR sheets removed by the respondents should be considered as clearances of waste and scrap or as clearances of inputs as such.

Analysis:

Issue 1:
The case involved the clearance of cut pieces of HR and MS sheets by the respondents, which were initially cleared on payment of duty applicable to waste and scrap. The original authority held that the respondents had cleared inputs as such without reversing the credit availed on these items. The Commissioner reduced the demand and penalty imposed. The Revenue argued that as per Rule 57F(4) of Central Excise Rules, the respondents were required to reverse the credit on removed imports found to be inputs. However, the consultant for the respondents contended that the cut sheets were left over bits of MS and HR sheets, which were inputs used in manufacturing. The Tribunal's decision in a similar case supported the respondents' position. Ultimately, the Tribunal rejected the appeal of the Revenue, stating that the impugned clearances were not clearances of inputs as such.

Issue 2:
After careful consideration, the Tribunal found that the respondents had indeed removed cut pieces of MS and HR sheets that were leftover after being used as inputs in manufacturing final products. The Revenue's request to treat these clearances as clearances of inputs as such was not supported by legal provisions. Referring to a previous Tribunal decision, the Tribunal concluded that duty could not be demanded on clearances of cut pieces of sheets as removal of inputs as such. Therefore, the appeal of the Revenue was rejected, and the demand and penalty imposed on the respondents were vacated.

Conclusion:
The Tribunal's decision in this case clarified that the removal of cut pieces of MS and HR sheets by the respondents should not be considered as clearances of inputs as such. The legal provisions and precedents supported the respondents' position, leading to the rejection of the Revenue's appeal and the vacation of the demand and penalty imposed on the respondents.