2011 (8) TMI 827 - AT - Central Excise

Duty liability on the scrap generated at the end of job workers during the course of machining of the inputs/castings - Held That - As per amended Rule 57AC no duty liability - assessees are not liable to pay duty on the scrap generated at the job workers end. - see Rocket Engineering (2006 - TMI - 3721 - HIGH COURT BOMBAY).

Summary

Issues: Liability to pay duty on scrap generated at the end of job workers during manufacturing process.

Analysis:
The appeals were filed by the assessees and the Revenue against the impugned order regarding the liability to pay duty on scrap generated during the manufacturing process. The assessees are manufacturers of I.C.Engine, P.D.Pumps, and Spray Pump sets, who send inputs for machining to job workers as per Central Excise Rules. The Revenue contended that duty is payable on the scrap generated, while the assessees argued otherwise. The main issue was whether the assessees are liable to pay duty on the scrap generated at the end of job workers during the processing of inputs. The assessees relied on a previous decision by the Hon'ble High Court in their favor, stating no duty liability exists post an amendment to Rule 57AC. The department also accepted this decision. After hearing both sides, the Tribunal found that the issue had already been settled by the High Court in favor of the assessees, stating no duty liability exists for the principal manufacturer post the specified date. Therefore, the Tribunal held that the assessees are not liable to pay duty on the scrap generated during the manufacturing process.

In conclusion, the Tribunal dismissed the Revenue's appeal and allowed the assessees' appeal based on the settled legal position established by the High Court's previous decision.