2015 (10) TMI 1781 - AT - Central Excise

Duty demand - Respondent-assessee submitted that the waste and scrap of HDPE bags has not arisen during the manufacturing process and, therefore, there cannot be any duty liability on removal of such waste and scrap. The learned counsel further submitted that the PP wrapper is not used for packing the final product and is an outer packing in which HDPE bags are received and that the cement is packed in HDPE bags. The learned counsel has also submitted that the demand of duty on grinding media balls is also not sustainable and that the grinding media is used in ball mill or grinding mills in the manufacture of cement and is eligible for credit as input. The learned counsel has relied upon the decision of the Hon ble Supreme Court in the case of CCE v. West Coast Industrial Gases Ltd. reported in 2003 (4) TMI 110 - SUPREME COURT OF INDIA . - Held that - issue is covered by the decision of the Hon ble Supreme Court in the case of West Coast Industrial Gases Ltd. (supra) read with Board s Circular No. 721/37/2003-CX., dated 6-6-2003 - Decided against Revenue.

Summary

Issues:
1. Duty liability on waste and scrap generated during manufacturing process.
2. Duty liability on waste and scrap arising from inputs/capital goods.
3. Applicability of Section 3(5A) of the Cenvat Credit Rules.
4. Interpretation of relevant legal provisions based on the decision of the Hon'ble Supreme Court.

Analysis:
1. The case involved a dispute regarding the duty liability on waste and scrap generated during the manufacturing process of cement by the respondent. The adjudicating authority confirmed demand on various types of waste, including PP wrapper, cable scrap, PVC scrap, and grinding scrap, cleared without payment of duty. The respondent argued that certain waste like HDPE bags did not arise during the manufacturing process, and therefore, should not incur any duty liability. The Commissioner (Appeals) allowed the appeal based on the decision of the Hon'ble Supreme Court in a similar case.

2. Another issue addressed was the duty liability on waste and scrap arising from inputs/capital goods, specifically related to cable scrap and PVC scrap cleared without payment of duty. The adjudicating authority relied on Section 3(5A) of the Cenvat Credit Rules to confirm the duty demand. The respondent contended that the grinding media balls were used in the manufacturing process and should be eligible for credit as input, citing the decision of the Hon'ble Supreme Court in a relevant case.

3. The learned AR for the Revenue reiterated the findings of the adjudicating authority, emphasizing that waste and scrap from inputs/capital goods, on which credit was availed, were cleared without payment of duty, violating the Central Excise Rules. On the other hand, the counsel for the respondent argued against the duty liability on various waste and scrap items, highlighting the specific usage and relevance of each material in the manufacturing process.

4. The Tribunal, after considering the arguments from both sides, concluded that the issue was settled by the decision of the Hon'ble Supreme Court in a previous case along with a relevant circular. Relying on the precedent and the circular, the Tribunal dismissed the appeal of the Revenue, thereby upholding the decision of the Commissioner (Appeals) in favor of the respondent.