2013 (6) TMI 830 - HC - Central Excise

Summary

Issues involved:
1. Whether scrap generated in the manufacture of finished products having negligible value are to be treated as excisable goods or not?
2. Applicability of the proviso to Section 3 of the Central Excise Act for clearances under dispute.
3. Applicability of the extended period of limitation under Section 11A to a 100% EOU and whether the demand is barred by limitation.

Summary:

The assessee, a 100% EOU manufacturing cable/cord for telephone instruments, generated scrap during the manufacturing process. The scrap, varying in size, was packed accordingly and sent to markets with proper invoices as it could not be sold to OEMs. Allegations were made that the assessee collected payments exceeding invoice value, leading to an assessment resulting in the levy of duty and penalty under Section 11AC of the Central Excise Act, 1944. The assessee appealed before the CESTAT, while the Revenue also filed an appeal against the relief granted under Section 4(4)(d)(ii) of the Central Excise Act.

Upon reviewing relevant invoices, the Tribunal observed that the assessee had paid duty on the value declared in the invoices and had collected additional amounts from buyers, paying duty on the excess collected. The Tribunal accepted the assessee's calculation of duty payable under Section 4(4)(d)(ii) of the Central Excise Act, directing the Commissioner to correct the error in demanding a higher duty amount. Regarding penalties, the Tribunal differentiated between penalties under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules, remanding the matter for re-quantification of duty demand and a fresh decision on penalty liability.

Following a remand order by the Tribunal, a fresh order was passed by the Commissioner, leading to another appeal before the CESTAT. The High Court, considering these developments, found no grounds for interference with the Tribunal's order, resulting in the dismissal of the Civil Miscellaneous Appeal without costs.