2011 (4) TMI 1183 - AT - Central Excise

Demand of duty under Rule 57CC on 217 MT of waste and CI moulds cleared for captive consumption - Modvat Credit Rule 57A/57Q - Held that - The duty liability in respect of manufactured goods and in respect of goods on which modvat credit had been taken are entirely different. D.R. was unable to convince us that the terms of the provisions of Rule 57CC of Central Excise Rules, 1944 are pari materia with Rule 57S(2) - As per the decision of Ranjive Steels 2002 (10) TMI 586 - CEGAT, NEW DELHI the impugned scrap was totally out of the excise net since it does not satisfy the definition of scrap given in the Section notes - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Rule 57S(2)(c) regarding payment of duty on waste and scrap.
2. Applicability of previous tribunal decisions on similar cases.
3. Comparison of Rule 57CC and Rule 57S(2) of Central Excise Rules, 1944.

Analysis:
The judgment involves the respondent, engaged in manufacturing M.S. Ingots, availing Modvat Credit under Rule 57A/57Q of Central Excise Rules, 1944. The duty liability shifted to compounded levy scheme from 1.8.1997. The respondent faced duty demand for not declaring actual stock of CI moulds and scrap, leading to an adjudication order demanding Rs. 1,95,300/- with interest and penalty. The ld. Commissioner (Appeals) allowed the appeal, setting aside the order, prompting the Revenue to appeal.

The main issue revolved around the interpretation of Rule 57S(2)(c) concerning the payment of duty on waste and scrap. The ld.D.R. argued that duty should be paid when capital goods are sold as waste and scrap, even if not sold but used captively. Previous tribunal decisions were cited, including Indian Aluminium Co.Ltd. and Sanjivani (Takli) SSK Ltd., to support the contention that duty must be discharged when waste and scrap of capital goods, on which Modvat credit had been taken, are cleared. However, the Tribunal found these decisions inapplicable to the case at hand, emphasizing the distinction between manufactured goods and goods with Modvat credit.

Further, the comparison between Rule 57CC and Rule 57S(2) of Central Excise Rules, 1944 was crucial. The Tribunal noted that the provisions of Rule 57CC and Rule 57S(2) differ significantly, making the cited decisions irrelevant to the current case. The Tribunal upheld the ld. Commissioner's interpretation of Rule 57S(2)(c) and rejected the Revenue's appeal based on this ground. Additionally, the Tribunal highlighted an unchallenged observation by the ld. Commissioner regarding the scrap not falling under the excise net as per the definition in Section notes.

Ultimately, the Tribunal concluded that the appeal by the Revenue was not sustainable based on the grounds discussed. As a result, the appeal was rejected, and the cross-objection filed was disposed of. The judgment exemplifies a detailed analysis of the interpretation of excise rules, the application of previous decisions, and the importance of distinct provisions in different circumstances.