2018 (10) TMI 1929 - HC - Central Excise

CENVAT Credit - removal of input as such - segregation of impurities like iron, steel, rubber, plastic, dust etc. in respect of brass scrap before feeding in the furnace - Contention of appellant is that the Tribunal without any cogent reason and without considering the question whether the activity of the respondent in segregating the scrap would amount to manufacturing and also without discussing how the Board Circular dated 10.05.2016 would be applicable, which is even otherwise not retrospective in nature, has mechanically allowed the appeal of the assessee. HELD THAT - The Tribunal has by the impugned order only remanded the matter to the adjudicating authority, we are not inclined to interfere. However, we direct the adjudicating authority that it should decide both the questions afresh whether the activity of the respondent in segregating the scrap would amount to manufacturing and also whether the Board Circular dated 10.05.2016 would at all be applicable to the present case. Appeal disposed off.

Summary

Issues:
1. Appeal against the order of the Customs, Excise and Service Tax Appellate Tribunal.
2. Central excise duty demand, interest, and penalty imposition.
3. Interpretation of Circular No.1029/17/2016-X dated 10.05.2016.
4. Whether segregating scrap amounts to manufacturing.
5. Applicability of the Board Circular to the case.

Analysis:
1. The appellant filed an appeal against the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, which remanded the matter back to the adjudicating authority. The Tribunal set aside the order-in-original dated 30.11.2015 passed by the Commissioner, Central Excise, Alwar.

2. A show cause notice was issued to the respondent-assessee for demanding central excise duty, interest, and imposing a penalty. The adjudicating authority confirmed the demand, interest, and penalty. The Tribunal remanded the matter based on the clarification issued in Circular No.1029/17/2016-X dated 10.05.2016, which stated that segregating impurities in scrap before feeding into the furnace does not constitute removal of 'input as such.'

3. The contention raised was that the Tribunal allowed the appeal without proper reasoning or considering whether segregating scrap amounts to manufacturing. The Board Circular dated 10.05.2016 was argued to be inapplicable and not retrospective. The High Court noted these arguments but decided not to interfere with the order of remand.

4. The High Court directed the adjudicating authority to reconsider whether segregating scrap constitutes manufacturing and if the Board Circular dated 10.05.2016 is applicable in the case. The Court disposed of the appeal with this direction, maintaining the order of remand issued by the Tribunal on 20.09.2017.