2008 (6) TMI 189 - AT - Central Excise

Utilization of credit of duty paid on inputs and capital goods used in clearance of waste and scrap generated during manufacture of job work materials namely Bearing Races/Components goods cleared by appellant without payment of duty under Notification No. 214/86-C.E to the principal manufacturer, who cleared the goods on payment of duty since waste and scrap generated during the manufacture of Bearing Races, is an excisable goods, there is no reason to deny the credit

Summary

Issues:
Whether Modvat/Cenvat credit facility can be availed on waste and scrap generated during the manufacture of job work materials cleared without payment of duty.

Analysis:
The issue in this case revolves around the eligibility of the Respondents to avail Modvat/Cenvat credit facility on waste and scrap generated during the manufacturing process of job work materials, specifically Bearing Races/Components cleared without duty payment under Notification No. 214/86-C.E. The Respondents argued that previous Tribunal decisions support their claim, citing cases like CCE v. Allwyn Auto Ltd. and Sterlite Industries Ltd. v. CCE, Pune. They emphasized that waste and scrap, being excisable goods, should not be denied credit when generated during the manufacturing process of job work materials. The Tribunal found merit in the Respondents' arguments and rejected the appeals of the Revenue. The decision was based on the understanding that waste and scrap generated during the production of excisable goods should not be excluded from credit utilization, especially when the final product is cleared with duty payment by the principal manufacturer.

In conclusion, the Tribunal's judgment upheld the Respondents' right to avail Modvat/Cenvat credit on waste and scrap generated during the manufacturing process of job work materials cleared without payment of duty. The decision was supported by previous Tribunal rulings and the understanding that waste and scrap, being excisable goods, should not be denied credit when utilized in the production process. The rejection of the Revenue's appeals was based on the principle that credit utilization on waste and scrap should not be restricted, especially when the final product is cleared with duty payment by the principal manufacturer.