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2017 (7) TMI 481 - AT - Central ExciseWaste - The appellant had cleared iron and steel, stainless steel item in domestic tariff area without payment of duty as Wastes & Scrap - Department was of the view that the appellant is liable to pay duty on such waste and scrap as these are leviable to duty under Chapter Note 8 (a) of Section XV of Customs as well as CETA - Held that - the appellant has cleared only components of machinery due to wear and tear of the machineries. The iron metal scrap cleared by the appellants are not waste arising in the course of manufacture and therefore are not exigible to duty - the issue in dispute stands covered by the judgment in the case of Grasim Industries Ltd. 2011 (10) TMI 2 - SUPREME COURT OF INDIA , where it was held that the metal scrap and waste arising out of the repair and maintenance work of the machinery used in manufacturing of cement, by no stretch of imagination, can be treated as a subsidiary product to the cement which is the main product - demand set aside - appeal allowed - decided in favor of appellant.
Issues involved:
1. Liability to pay duty on iron and steel scrap cleared as waste and scrap without payment. 2. Interpretation of relevant legal provisions regarding the exigibility of duty on waste and scrap. 3. Applicability of the judgment in the case of Grasim Industries Ltd. on the present dispute. Analysis: Issue 1: Liability to pay duty on iron and steel scrap cleared as waste and scrap without payment. The appellants, being a 100% EOU engaged in manufacturing 'Garnet Powders,' cleared iron and steel scrap in the domestic tariff area without paying duty, categorizing them as 'Wastes & Scrap.' The Department contended that duty was leviable on such waste and scrap under Chapter Note 8 (a) of Section XV of Customs and the Central Excise Tariff Act. A show cause notice was issued, leading to the confirmation of duty demand, interest, and penalties by the adjudicating authority and the Commissioner (Appeals). The appellant challenged this decision through an appeal. Issue 2: Interpretation of relevant legal provisions regarding the exigibility of duty on waste and scrap. The appellant argued that the iron metal scrap cleared were components of machinery due to wear and tear, not waste arising during manufacture, hence not subject to duty. Citing the judgment in Grasim Industries Ltd. Vs. UOI, the appellant contended that excise duty is levied on goods manufactured in India, emphasizing that for goods to be excisable, they must satisfy the test of being produced or manufactured in India. The Tribunal examined the legal principles and precedent cases, emphasizing that excise duty is imposed on the manufacture of goods, requiring the goods to be produced or manufactured in India to be subject to duty. Issue 3: Applicability of the judgment in the case of Grasim Industries Ltd. on the present dispute. The Tribunal found that the issue in dispute was akin to the scenario in Grasim Industries Ltd., where the Supreme Court clarified the conditions for goods to be subject to excise duty, emphasizing that the manufacturing process must result in a new or distinct excisable product. Applying the principles laid down in the Grasim Industries Ltd. case, the Tribunal concluded that the iron and steel scrap arising from repair and maintenance activities did not contribute to the manufacturing process of the excisable end product. Therefore, the demand for duty on such scrap was deemed unsustainable, and the impugned order was set aside, allowing the appeal with consequential relief as per law. This comprehensive analysis of the judgment highlights the key legal issues, arguments presented, relevant legal provisions, and the application of precedent cases to arrive at the final decision.
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