2016 (11) TMI 1580 - AT - Central Excise

100% EOU - Clandestine manufacture - recovery of copper element which in turn is being used in the manufacture of copper ingots - it was alleged that the appellant have shown recovery of less metal in the previous consignment inasmuch as out of receipt of identical consignments imported by them from the same supplier, the recovery of metal scrap is only to the extent of 18.41% - Held that - In the instant case no comparative study of like manufacturing units was considered by the department. Similarly, the appellant to support their contention has not brought on record any such studies pertaining to the yield from the consignments of the scrap. A comparative study of like factories on this subject matter is required to be considered for coming to the right decision. Matter remanded back to the adjudicating authority to have a comparative study from like factories and make estimation accordingly, but by providing a reasonable opportunity of personal hearing to the appellant - appeal allowed by way of remand.

Summary

Issues involved:
- Appeal against Order-in-Original No. 05/2008 dated 11.2.2008 passed by the Commissioner, Central Excise, Jaipur regarding duty demand on copper scrap importation.

Analysis:
- The appellant, a 100% EOU engaged in manufacturing copper ingots, imported copper scrap with a recovery rate of 31.8%, higher than previous consignments' 18.41% recovery rate, leading to doubts by the Revenue and further investigation.
- Statements of partners, Foreman, and Production Incharge were recorded, revealing discrepancies in metal recovery rates recorded by the appellant in their records.
- The appellant argued that recovery rates vary due to the nature and sources of the scrap, challenging the justification of the duty demand for the previous consignments.
- The department defended the duty demand, stating that the yield was determined in the presence of the appellant and Central Excise officials.
- The Tribunal noted the lack of comparative study of similar manufacturing units by the department and the absence of supporting studies by the appellant regarding scrap yield.
- In light of the above, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a comparative study from similar factories to make estimations, with a reasonable opportunity of personal hearing for the appellant and the admission of additional evidence if necessary.
- The appellant assured full cooperation with the lower authority, and the appeal was allowed by way of remand for further proceedings.