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2019 (3) TMI 1785 - AT - Central ExciseCENVAT Credit - job workers did not return the scrap generated during the process of job work to the appellant and the duty thereon was not paid by the appellant - period from September 2011 to March 2012 - Rule 4(5) of the CENVAT Credit Rules 2004 - HELD THAT - The appellant is not the manufacturer of the waste and scrap and therefore there is no liability on the appellant to pay the duty on the waste and scrap manufactured at the job worker s end. Further the provision of Rule 4(5)(a) of the CENVAT Credit Rules 2004 nowhere states that the waste and scrap generated at the job worker s end makes the principal manufacturer liable to payment of duty on such waste and scrap. The duty demand cannot sustain - Appeal allowed - decided in favor of appellant.
Issues:
1. Duty liability on scrap generated at job workers' premises. 2. Interpretation of Rule 6 and 8 of the Central Excise Rules, 2002. 3. Applicability of Rule 4(5)(a) of the CENVAT Credit Rules, 2004. 4. Precedent set by previous Tribunal judgments. 5. Principal manufacturer's liability for duty on waste and scrap. Analysis: Issue 1: Duty liability on scrap generated at job workers' premises The case involved the duty liability on scrap generated during job work and not returned to the principal manufacturer. The Department contended that the duty should be paid as per Notification No. 214/1986. However, the appellant argued that they were not the manufacturer of the waste and scrap, hence not liable to pay duty on it. Issue 2: Interpretation of Rule 6 and 8 of the Central Excise Rules, 2002 The Department alleged a contravention of Rule 6 and 8 of the Central Excise Rules, 2002 due to the scrap not being returned to the principal manufacturer. The appellant argued that there was no provision making them liable for duty on waste and scrap generated at the job worker's end. Issue 3: Applicability of Rule 4(5)(a) of the CENVAT Credit Rules, 2004 The appellant cited Rule 4(5)(a) of the CENVAT Credit Rules, 2004 to support their argument that the waste and scrap generated at the job worker's end did not make them liable for duty. They relied on their own previous cases to establish this point. Issue 4: Precedent set by previous Tribunal judgments The Tribunal referred to previous judgments in the appellant's own cases to settle the issue. They highlighted that the requirement to pay duty on waste and scrap in the hands of the principal manufacturer existed under erstwhile Central Excise Rule 57F (3), but not under subsequent CENVAT Credit Rules. Issue 5: Principal manufacturer's liability for duty on waste and scrap The Tribunal, based on previous decisions, held that the duty demand could not be sustained. They set aside the impugned Order, allowing the appeal with consequential reliefs as per law. The decision was based on the settled principle that the principal manufacturer was not liable for duty on waste and scrap not returned by job workers. In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the duty demand was not justified based on the established legal principles and precedents.
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