2008 (8) TMI 145 - AT - Central Excise

Revenue s plea that dismantling of capital goods would be the process amounting to manufacture and that a distinct commodity namely waste and scrap came into existence, is not acceptable - there was no evidence about Cenvat credit having been taken on the capital goods - revenues claim that they would qualify for waste and scrap as manufactured was not correct. Commissioner s finding that the goods were not held as manufactured and no duty was leviable cannot be faulted

Summary

Issues:
- Duty demand on waste and scrap
- Imposition of penalties under Section 11AC and Rule 173Q

Analysis:
The case involved two appeals by the Department against a common order related to the demand of duty on waste and scrap cleared by the respondent, who manufactured cement. The original authority had confirmed a duty demand and imposed penalties on the respondent and an individual. The Commissioner (Appeals) later set aside part of the demand and reduced the penalties. The Department appealed against this decision. The dispute revolved around whether the waste and scrap generated from dismantling used capital goods were excisable and liable for duty. The original authority believed that the waste and scrap arose during repairing and maintenance, while the Commissioner (Appeals) found no evidence of Cenvat credit being taken on the dismantled capital goods. The Commissioner held that the goods did not qualify as manufactured and no duty was leviable. The Tribunal agreed with the Commissioner's findings, stating that the dismantling process did not amount to manufacture, and therefore, no duty was payable on the waste and scrap. The reduction in penalty was also deemed justified due to the reduced demand. Consequently, the appeals by the Department were rejected, upholding the Commissioner (Appeals) decision.