2017 (1) TMI 1355 - AT - Central Excise

Levy of duty - clearance of capital goods as waste prior to 16.5.2005 - N/N. 27/2005-CE dt. 16.5.2005 - Held that - When repeated SCN were issued and as many as seven numbers, beginning from the period July 1998 to May 2005, Revenue was aware what was the clearances. There is nothing to demonstrate that excisable goods were cleared other than scrap and waste - bringing the capital goods cleared as waste prior to 16.5.2005, no allegation shall sustain. Similarly scrap not being manufactured, appellant shall not liable to duty - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of goods as waste and scrap or capital goods.
2. Liability to duty on clearance of waste and scrap.
3. Interpretation of relevant case laws and notifications.
4. Benefit of settled legal position on clearance of goods.

Analysis:

Issue 1: Classification of goods as waste and scrap or capital goods
The appellant contended that the goods cleared under seven show cause notices were waste, scrap, and partly worn out capital goods. It was argued that since waste and scrap were not manufactured, they did not qualify as excisable goods. The Tribunal referred to previous judgments, including the case of R.G. Textiles Vs CCE Salem, and held that goods not classified as excisable goods or capital goods do not attract duty liability.

Issue 2: Liability to duty on clearance of waste and scrap
The Revenue argued that the appellant failed to provide specific details regarding the clearances made, with the only defense being that waste and scrap were cleared. However, the Tribunal noted that repeated show cause notices were issued over the years, indicating that Revenue was aware of the nature of clearances. It was established that only waste and scrap were cleared, absolving the appellant from duty liability.

Issue 3: Interpretation of relevant case laws and notifications
The Tribunal referenced judgments from the High Courts of Punjab and Haryana and Madras to support its decision. It highlighted that the clearance of capital goods as 'waste' prior to a specific notification date did not attract duty liability. Additionally, it was noted that scrap, not being manufactured, did not render the appellant liable to duty.

Issue 4: Benefit of settled legal position on clearance of goods
Considering the settled legal position and the precedents established by previous judgments, the Tribunal concluded that the appellant should benefit from the interpretations provided by the High Courts. The Tribunal ruled in favor of the appellant in both appeals, emphasizing that the clearance of goods as waste and scrap did not warrant duty liability.

In conclusion, the Tribunal allowed both appeals, citing the established legal principles and interpretations of relevant case laws and notifications. The judgments delivered by the Tribunal provided clarity on the classification of goods and the duty liability associated with the clearance of waste and scrap, ultimately favoring the appellant based on the prevailing legal position.