2016 (3) TMI 261 - AT - Central Excise

Demand of duty for clearance of waste and scrap - case of the assesse that they had cleared the waste and scrap under the provisions of Notification 214/86-CE and received back the granules which are used for manufacturing process - Held that - Both the lower authorities have given concurrent findings as to the demand being unsustainable. Both the lower authorities have recorded a factual findings that the plastic waste and scrap generated during the manufacture is sent to manufacturer for converting the same in to granules and receiving the same back for further use in the manufacture of finished goods. Both the lower authorities have come to this conclusion after considering all the records of the case before them. Revenue s claim that benefit of Notification 214/86-CE cannot be made applicable to waste is incorrect as the said Notification applies for the goods manufactured by a job-worker on job-work basis and to be used in or in relation to the manufacture of final products on which duty of excise is leviable whether in whole or in part. In the case in hand, it is undisputed that the plastic waste and scrap which gets generated during the manufacture of final products are sent to job-worker and received back as granules which are further consumed in the manufacture of final products. On the face of such factual matrix, in our view, both the lower authorities were correct in holding that no liability arise on the respondent-assessee. Further, the benefit of Notification 214/86 should be applicable to the inputs on which cenvat credit is availed but at the same time the assessee kept the department informed by following the procedure to indicate that that they are clearing the waste and scrap to the job-worker and received the same back as granules. This transparency in the appellant s dispatch of waste and scrap and receiving the granules back cannot be questioned only on the ground that the Notification 214/86-CE is not applicable to waste and scrap. Factually also, it is not in dispute that the waste and scrap which is sent to job-worker is received back as granules, nothing survives in the appeal. - Decided in favour of assessee

Summary

Issues:
Demand of duty on clearance of waste and scrap under Notification 214/86-CE.

Analysis:
The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise. The respondent was availing cenvat credit of inputs consumed during manufacturing, including waste and scrap cleared for job-work under Notification 214/86 without duty payment. A show cause notice was issued, but the adjudicating authority dropped the proceedings. The Revenue contended that the adjudicating authority erred in applying the Notification and relied on a previous decision. The first appellate authority also rejected the appeal.

The Revenue contested the first appellate authority's findings on various grounds. They argued that the conditions of the Notification were not fulfilled as waste and scrap were neither raw material nor semi-finished goods. They also mentioned that previous judgments like Wyeth Laboratories Ltd. and Narmada Plastics (P) Ltd. were incorrectly applied. The Tribunal decided to proceed with the appeal despite the respondent's absence.

The main issue was the demand of duty on waste and scrap clearance under Notification 214/86-CE. Both lower authorities found the demand unsustainable as the waste was sent for conversion into granules and then used in manufacturing finished goods. The Tribunal upheld this decision, stating that the Notification applied to goods manufactured by job-workers for use in final products. The transparency in the waste and scrap clearance process was highlighted, and it was concluded that the appeal lacked merit. Therefore, the impugned order was upheld, and the Revenue's appeal was rejected.