2015 (12) TMI 1556 - AT - Central Excise

Duty liability - clearance of waste and scrap of various metals without payment of central excise duty - these metal scrap arose during upgradation, maintenance and replacement of various plant and machineries - Held that - the Hon ble Supreme Court in the case of Grasim Industries Ltd. 2011 (10) TMI 2 - SUPREME COURT OF INDIA held that metal scrap and waste arising out of repair and maintenance work of the machinery used in the manufacture of cement by no stretch of imagination can be treated as a subsidiary product to the cement, which is the main product. The repair & maintenance of capital goods result in the metal scrap and the same cannot be subjected to central excise duty. In the case of Shriram Alkali & Chemicals Vs. CCE, Surat 2010 (8) TMI 274 - CESTAT, AHMEDABAD , the Tribunal following the decision in the case of Indian Cement ltd. 2006 (7) TMI 675 - CESTAT, BANGALORE held that the scrap which is generated from capital goods is not covered by the scope of various heading waste and scrap of metals . In Birla Corporation Ltd. 2004 (12) TMI 154 - CESTAT, NEW DELHI , the Tribunal held that waste and scrap generated carrying out of repair and maintenance of capital goods cannot be said to be manufactured goods. Similar view has been taken by the Tribunal in Rajshree Sugar & Chemicals 2008 (5) TMI 494 - CESTAT, CHENNAI and many other cases. By considering the above decisions, the impugned order is not sustainable. - Decided in favour of appellant

Summary

Issues: Liability to central excise duty on metal waste and scrap cleared by the appellant.

Analysis:
The case involved an appeal against an order passed by the Commissioner, Raipur-I, regarding the appellant's alleged non-payment of central excise duty on waste and scrap of various metals cleared during a specific period. The Original Authority confirmed the duty demand with a penalty, which was upheld by the ld. Commissioner (Appeals), leading to the appellant's appeal before the Tribunal.

The appellant argued that the waste and scrap cleared by them were a result of activities like modification, expansion, and maintenance of plant and machinery, and not a product of manufacturing activity. They contended that such waste and scrap should not be subject to central excise duty. The appellant cited various case laws to support their argument, emphasizing that the processes involved did not amount to manufacturing activity.

On the other hand, the Revenue relied on the definition of excisable goods and waste and scrap of metals under the Central Excise Tariff Act, 1985. The Revenue's position was supported by the lower authorities.

After hearing both sides and examining the records, the Tribunal considered the core issue of the appellant's liability to central excise duty on the metal waste and scrap cleared by them. Citing precedents such as the case of Grasim Industries Ltd., the Tribunal concluded that waste and scrap arising from repair and maintenance activities of machinery used in manufacturing could not be considered as excisable goods. The Tribunal also referenced decisions like Shriram Alkali & Chemicals and Birla Corporation Ltd., which supported the view that waste and scrap generated from repair and maintenance of capital goods did not constitute manufactured goods subject to central excise duty.

In light of the legal principles established in the referenced cases and the specific circumstances of the appellant's case, the Tribunal found the impugned order unsustainable and allowed the appeal, thereby ruling in favor of the appellant.