2017 (3) TMI 1071 - AT - Central Excise

Waste and scrap - Dutiability - whether on waste and scrap cleared by the appellant, they were liable to discharge duty on the transaction value? - Held that - the Tribunal in the case of Insurance & Electricals Co. Vs. CCE Bhopal 2008 (4) TMI 582 - CESTAT, NEW DELHI dealt with an identical situation in respect of waste arising out of used fire bricks and has held that in as much as there is no entry in the Central Excise Tariff in respect of waste of fire bricks, no demand can be raised in respect of the same - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of duty on waste and scrap cleared by the appellant under Rule 3(5A) of Cenvat Credit Rules 2004.

Analysis:
The appellant, engaged in cement manufacturing, availed Cenvat Credit on various items which became unserviceable and were cleared as waste scrap. The Revenue demanded duty payment on the waste and scrap cleared by the appellant under Rule 3(5A) of the Cenvat Credit Rules 2004, resulting in a demand of ?6,35,103 along with a penalty of the same amount. The appellant contended that waste and scrap arising from such items are not classifiable under the Central Excise Tariff, thus no duty can be demanded as they are not excisable.

The appellate authority upheld the demand, citing Rule 3(5A) which requires payment of duty equal to the duty leviable on the transaction value of scrap/waste. Referring to the judgment in Hindustan Zinc Ltd. Vs. CCE Jaipur, the authority held the appellant liable for duty payment on the waste and scrap of capital goods. The appellant argued that duty can only be paid on goods cleared that are excisable and classifiable under a specific heading in the Central Excise Tariff Act.

In considering the submissions, the Tribunal referred to past decisions. In the case of Insurance & Electricals Co. Vs. CCE Bhopal, it was held that if there is no entry in the Central Excise Tariff for waste of fire bricks, no duty can be imposed. Similarly, in other cases like Insulators & Electrical Co. vs. CCE Bhopal, waste not classifiable under the Tariff Act did not incur duty liability. The Tribunal emphasized that without classification, the rate of duty cannot be determined, as seen in various rulings like CCE Vs. Ashok Leyland Ltd. and Shriram Alkali & Chemicals Vs. CCE Surat. Based on these precedents, the impugned order was set aside, and the appeal was allowed in favor of the appellant.