2012 (5) TMI 295 - AT - Central Excise

Duty on waste and scrap packing of intermediate/final goods - packing material has become waste - Held that - if assessee has availed cenvat credit on such packing material he is liable to pay duty on such waste. - From the facts of this case it is not coming out that how much waste has been arisen on account of packing materials of raw materials i.e. inputs and how much packing materials have been procured by the assessee on payment of duty. - matter remanded back for re quantification.

Summary

Issues:
1. Dispute over clearance of waste without payment of duty on packing materials.
2. Interpretation of Board Circular on duty payment for waste and scrap.
3. Requirement to pay Central Excise duty on waste arising from procured materials.

Analysis:
1. The case involved a manufacturer of yarn clearing waste, including corrugated boxes, plastic bags, paper tubes, and craft paper, without paying duty. The Revenue contended that duty should be paid on such waste. Two separate appeals were filed against adjudication orders.

2. In one appeal, the demand was dropped by the adjudicating authority but reinstated by the Commissioner (Appeals). The appellant argued that waste from packing materials of inputs is covered by a Board Circular and cited relevant legal precedents to support their case.

3. In the other appeal, the demand was confirmed by the adjudicating authority but set aside by the Commissioner (Appeals). The Revenue appealed this decision, arguing that duty should be paid on waste arising from procured packing materials.

4. The Advocate for the assessee argued that waste from packing materials of inputs is not dutiable based on the Board Circular and legal precedents. On the contrary, the Revenue contended that duty should be paid on waste from procured packing materials, citing relevant case law.

5. After considering both arguments, the judge found that duty is not payable on waste from packing materials of inputs. However, duty is applicable if packing materials purchased for goods become waste. The judge remanded the case to the adjudicating authority for a detailed examination and quantification of duty on waste from procured packing materials.

6. The matter was remanded for the adjudicating authority to reassess the demand on waste and scrap from packing materials procured by the assessee. The authority was instructed to provide a reasonable opportunity for the assessee to present their case before making a decision.

7. Both appeals were disposed of by remand, setting aside the impugned orders and requiring further examination by the adjudicating authority.