2013 (12) TMI 981 - AT - Central Excise

Scrap cleared form job worker s premises Waiver of Pre-deposit Held that - They issued invoice for value of goods and excise duty payable - The job worker has captively used it in further manufacture of dutiable products - The captive use also will amount to clearance - There was no contravention of Rules when BHEL pays excise duty after a period of time - the goods were duty paid and received in the factory of the applicant - after considering the proviso to Rule 9 (2) of Cenvat Credit rules, 2004 it is proper to waive the requirement of pre-deposit of dues Pre-deposits stayed till the disposal Stay granted.

Summary

Issues:
1. Whether the appellant is liable to pay excise duty on waste material not returned to the supplier?
2. Whether the appellant's use of waste material in manufacturing dutiable products constitutes 'clearance' under the Cenvat Credit Rules?
3. Whether the pre-deposit of dues arising in the impugned order should be waived for admission of appeal?

Analysis:
1. The primary issue in this appeal is the liability of the appellant to pay excise duty on waste material not returned to the supplier. The appellant receives iron and steel items from a supplier to manufacture machinery parts on a job work basis. After conversion, some waste material is left behind, which the supplier sells and raises an invoice on the appellant for the value of the material along with excise duty. The appellant pays both the value and duty, utilizing the excise duty credit in further manufacturing. The Revenue objects, stating that there was no invoice accompanying the material when received in the factory. However, considering the circumstances and the proviso to Rule 9(2) of the Cenvat Credit Rules, the Tribunal waives the requirement of pre-deposit of dues, allowing the appeal to proceed without payment.

2. The second issue revolves around whether the appellant's use of waste material in manufacturing dutiable products amounts to 'clearance' under the Cenvat Credit Rules. Rule 4(5a) allows clearance of inputs to the job worker without duty payment and receiving back manufactured goods, while Rule 4(6) permits clearance of manufactured goods from the job worker's premises on payment of duty. In this case, the supplier opted to pay duty on the scrap and clear the goods from the job worker's premises. The Tribunal determines that the appellant's captive use of the waste material in further manufacturing constitutes 'clearance.' Therefore, there is no contravention of the Rules, especially since the goods were duty paid and properly accounted for.

3. The final issue pertains to the pre-deposit of dues mentioned in the impugned order. The Tribunal, after analyzing the situation and the relevant rules, decides to waive the pre-deposit requirement for the admission of the appeal. Consequently, there is a stay on the collection of the dues during the pendency of the appeal. This decision ensures that the appellant can challenge the order without immediate financial burden, maintaining a fair process of legal recourse.

In conclusion, the Tribunal's judgment addresses the issues of excise duty liability on waste material, the definition of 'clearance' under the Cenvat Credit Rules concerning waste material use, and the waiver of pre-deposit of dues for appeal admission. The decision provides clarity on the application of rules in similar scenarios, ensuring a balanced approach to legal interpretation and financial obligations in excise matters.