2012 (7) TMI 907 - AT - Central Excise

Summary

Issues involved:
The issue involved in this case is whether the appellant, a manufacturer of Polyester Filament Yarn, was required to pay duty u/s Rule 57 S(2)(c) of Central Excise Rules, 1944 for clearing scrap of Iron, Steel, and Cable without payment of duty during the period from September 1994 to September 1998.

Details of the Judgment:

Issue 1: Duty payment on clearance of scrap
The Department contended that duty was required to be paid on the clearance of scrap under Rule 57 S(2)(c) as it was old and used capital goods for which modvat credit had been taken. A show cause notice was issued for demand of duty, interest, and penalty. The Addl. Commissioner confirmed the demand and imposed a penalty. The Commissioner (Appeals) upheld this decision, leading to the appeal.

Issue 2: Arguments of the Appellant
The appellant argued that the scrap cleared was not used in respect of any cenvatable item. They claimed that the scrap, including steel, iron, M.S. Scrap, Aluminium Scrap, and cable scrap, did not relate to capital goods for which modvat credit was taken. They asserted that Rule 57S(2)(c) did not apply as they had not availed modvat credit on the capital goods sold as scrap.

Issue 3: Arguments of the Revenue
The Revenue argued in support of the impugned order, stating that the appellant's plea was an afterthought without substantiating evidence. They claimed that the appellant did not provide evidence to show that they had not availed modvat credit on the goods resulting in the cleared scrap.

Judgment
The Commissioner (Appeals) found the scrap marketable and liable to duty, invoking the extended period of limitation due to non-compliance with Central Excise Rules. However, the Commissioner did not address the appellant's argument regarding Rule 57 S(2)(c) applicability or the origin of the scrap. As neither the original nor appellate authority determined if modvat credit was taken on the original items sold as scrap, the Tribunal could not accept the Department's contention. Despite the usual remand for fresh adjudication, the lengthy period since the show cause notice made evidence availability unlikely. Consequently, the Tribunal set aside the impugned order, accepting the appeal.