2007 (7) TMI 86 - AT - Central Excise

Manufacture - Department contended that appellant liable to pay duty on the clearance of manufactured scrape but appellant contended that they are basically manufacturer of pharmaceutical product and sold of scrape not attract excise duty - Allowed appellant appeal

Summary

Issues:
- Appeal against the order of the Commissioner (Appeals) regarding the demand of excise duty on clearance of scrap.
- Whether the clearance of waste and scrap of old and used capital goods attracts excise duty.
- Applicability of Central Excise duty on scrap of packing material and old machinery.
- Consideration of decisions in similar cases to support the argument against excise duty liability.
- Absence of credit taken on old machinery and lack of allegations in the show cause notice.

Analysis:
The case involved an appeal against the order of the Commissioner (Appeals) concerning the demand of excise duty on the clearance of scrap by a pharmaceutical products manufacturer. The appellant had sold old and used capital goods, along with waste and scrap of other items, including packing material, leading to a demand of Rs. 21,22,434. The appellant contended that the clearance of such scrap should not be treated as manufactured scrap, as they primarily focused on pharmaceutical production, and the waste materials were sold at scrap value, not attracting excise duty.

The advocate representing the appellant argued that the clearance of waste and scrap of old capital goods should not be subject to excise duty, citing previous decisions supporting this stance. It was highlighted that the appellant had not taken credit on the old machinery, and there were no allegations in the show cause notice or the findings of the authorities regarding this matter. The Tribunal carefully considered these submissions and agreed with the appellant's position, noting that the appellant's primary business was pharmaceutical manufacturing, not the production of scrap from old machinery.

Relying on the decisions referenced by the advocate, the Tribunal concluded that the scrap of packing material and old machinery cleared by the appellant did not arise from the manufacturing process of pharmaceutical products. Therefore, such clearance was not liable to excise duty. Consequently, the appeal was allowed, granting the appellant consequential relief, if applicable. The judgment emphasized the distinction between the manufacturing of pharmaceutical products and the clearance of scrap, ultimately absolving the appellant from excise duty liability on the cleared materials.