2017 (9) TMI 1112 - AT - Central Excise

Sale of scrap - waste material - wooden scrap/ plastic scrap - oily cotton canvas scrap - SS Steel - MS aluminium scrap - Held that - the matter is covered by the Tribunal s decision in the appellant s own case M/s JB Mangharam Foods Pvt. Ltd. Versus C.C.E. Indore 2017 (1) TMI 283 - CESTAT NEW DELHI - no duty liability can be sustained in case of waste material wooden scrap/ plastic scrap oily cotton canvas scrap the details of which are given in the table annexed with the appellant s reply to the Show Cause Notice. In case of the duty liability on SS Steel MS aluminium scrap the matter is remanded to the original adjudicating authority to verify the fact that no Cenvat credit on the machinery or iron and steel removed as scrap were taken by the appellant and thereafter decide the matter afresh after giving opportunity of personal hearing to the appellant. Appeal allowed in part and part matter on remand.

Summary

Issues Involved:
Appeal against Order-in-Appeal sustaining demand of duty of Central Excise along with interest and penalty on the sale of scrap machinery and other materials.

Detailed Analysis:

1. Manufacture of Biscuits and Miscellaneous Income:
- The appellant, engaged in biscuit manufacturing, had miscellaneous income from the scrap of old machinery.

2. Show Cause Notice and Duty Proposals:
- The department issued a Show Cause Notice regarding the sale of scrap machinery without reversing Cenvat credit and proposed duty on such sales.
- Additionally, duty on clearance of waste, scrap of inputs, packing material, and capital goods was proposed.

3. Tribunal's Decision and Precedents:
- The Tribunal referred to a previous decision in the appellant's case, setting aside duty liability on waste material, wooden scrap, plastic scrap, and oily cotton canvas scrap.
- The decision highlighted that certain items were not considered inputs for biscuit manufacturing, thus no duty liability arose.

4. Verification of Records and Penalty Imposition:
- The Tribunal directed a verification of records to ensure no Cenvat credit was taken on certain items like SS Steel, MS, and aluminum scrap.
- Penalty under Section 11AC of the Central Excise Act was set aside due to the lack of malafide intentions in the information gathered from the balance sheet.

5. Remand and De Novo Adjudication:
- The matter concerning duty liability on scrap machinery, steel, and aluminum scrap was remanded to the original adjudicating authority for fresh consideration after verifying Cenvat credit.
- The impugned order was set aside, and the appeal was allowed in part based on the Tribunal's previous decision and the need for further verification.

This comprehensive analysis covers the issues raised in the appeal against the duty demand on the sale of scrap machinery and other materials, detailing the Tribunal's decision, precedents cited, verification requirements, penalty imposition, and the remand for fresh adjudication.