2016 (2) TMI 868 - AT - Central Excise

Demanding duty on scrap and waste generated during the course of fabrication of factory shed - Held that - The metal which has been used for fabrication of trolley line cannot be defined as waste and scrap as per section note 8 to section 15 of Central Excise Tariff Act, 1985 As by plain reading of the said section note, it is clear that the metal which becomes non-useable as such waste and scrap admittedly in this matter, the waste and scrap has been used for fabrication of trolley line cannot be the said unusable waste and scrap as such. Therefore, the appellant is not liable to pay duty thereon. Further, the trolley line cannot be classified under Chapter 72 of Central Excise Tariff Act, 1985. Therefore, the waste and scrap in question is not liable for payment of duty. Decided in favour of assessee

Summary

Issues:
- Duty on scrap and waste generated during fabrication of factory shed

Analysis:
The appellant appealed against the demand for duty on scrap and waste generated during the fabrication of a factory shed. The appellant procured materials for the shed, and during the fabrication process, some waste and scrap were produced, which was later used for making a trolley line in their factory. The revenue contended that duty should be paid on the waste and scrap generated during the shed fabrication. The appellant argued that the waste and scrap were further used for fabrication, making them not qualify as waste and scrap under the Central Excise Tariff Act. The appellant also highlighted that the trolley line made from the waste and scrap falls under a different category and should not be considered capital goods for duty payment purposes.

The appellant's counsel emphasized that the waste and scrap were not unusable as defined in the Central Excise Tariff Act, as they were used in the fabrication of the trolley line. The Commissioner had classified the trolley line under a specific chapter, indicating that duty was not required on the waste and scrap used for its production. On the contrary, the Revenue reiterated the Commissioner's findings in the impugned order.

After hearing both parties and reviewing the submissions, the Tribunal concluded that the metal used for the trolley line fabrication could not be considered waste and scrap as defined in the Central Excise Tariff Act. The Act specifies waste and scrap as metal goods that are definitely not usable due to various reasons. Since the waste and scrap in question were utilized in making the trolley line, they did not meet the criteria of unusability. Therefore, the appellant was not liable to pay duty on the waste and scrap. Additionally, the Tribunal determined that the trolley line did not fall under the relevant chapter for duty payment. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary consequential relief.