2017 (11) TMI 284 - AT - Central Excise

Removal of waste and scrap generated on breakage of glass bottle - levy of tax - Held that - reliance placed in the case of Dhillon Kool Drinks & Beverages 2001 (5) TMI 942 - SUPREME COURT , where it was held that the waste and scrap arising out of the broken bottles through the process of filling, handling etc. was neither generated during the course of manufacture of glass bottles nor it could be considered as a manufactured product - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of duty and imposition of penalty for clearance of scrap of glass bottle without payment of duty.

Analysis:
The appeal was filed against the demand of duty and penalty for clearing scrap glass bottles without paying duty. The appellant argued that the scrap generated from broken glass bottles during the manufacturing process should not be chargeable to tax, citing previous decisions where similar demands were dropped. The revenue, however, relied on a decision by the Hon'ble High Court regarding the removal of waste and scrap generated during the processing of inputs. The High Court concluded that waste arising from processing of inputs, in respect of which credit has been taken, should be removed on payment of duty. The Court clarified that waste cannot be removed without payment of duty unless specified by the Central Government. The appellant also referred to a Supreme Court decision supporting the view that waste and scrap from broken bottles during filling and handling processes are not considered manufactured products.

The Tribunal noted that there is no provision similar to the one cited in the Cenvat Credit Rules. As the appellant's argument aligned with the findings of the Division Bench of the Tribunal and the apex court in a previous case, the appeal was allowed. The decision was pronounced in court on 27/10/17.