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2017 (11) TMI 758 - AT - Central ExciseCENVAT credit - waste and scrap - Iron and scrap generated out of the capital goods installed in the factory - Whether clearance of Iron waste and scrap after 16.06.2005 alleged to be generated out of capital goods on which CENVAT Credit availed, be subjected to duty on its transaction value or otherwise? - Held that - No doubt the onus lies on the department to establish that the waste and scrap did arise out of the capital goods on which credit availed, but, in the present case, the evidences adduced by the appellant in establishing the fact no CENVAT credit had been availed on plant and machinery, cleared as waste and scrap, needs to be verified, before confirming the duty on transaction value of waste and scrap under Rule 3(5A) of CCR,2004 - appeal allowed by way of remand.
Issues:
1. Duty liability on clearance of iron waste and scrap arising out of capital goods. 2. Interpretation of Rule 3(5A) of CCR, 2004. 3. Verification of CENVAT credit availed on capital goods generating waste and scrap. Detailed Analysis: Issue 1: The case involved a dispute regarding the duty liability on the clearance of iron waste and scrap generated from capital goods without payment of duty. The appellant argued that the waste and scrap cleared were not generated from capital goods on which CENVAT credit had been availed. The Ld. Advocate contended that the waste and scrap arose from worn-out parts/machines procured prior to 1994, for which no CENVAT credit had been availed. The appellant maintained that the demand for duty was unjustified as they had not availed CENVAT credit on the capital goods sold as scrap. Issue 2: The interpretation of Rule 3(5A) of CCR, 2004 was crucial in determining the duty liability on the waste and scrap cleared by the appellant. The rule mandated that if capital goods are cleared as waste and scrap, the manufacturer must pay duty on the transaction value. The Tribunal emphasized the importance of ascertaining whether CENVAT credit had been availed on the capital goods that later became waste and scrap before imposing duty under Rule 3(5A). The rule applied when waste and scrap arose from capital goods on which CENVAT credit had been availed. Issue 3: The verification of CENVAT credit availed on the capital goods that generated waste and scrap was a pivotal aspect of the case. The appellant provided a Chartered Accountant's Certificate to support their claim that no CENVAT credit had been availed on the capital goods sold as scrap. The Tribunal highlighted the necessity of verifying the evidence presented by the appellant to establish whether CENVAT credit had indeed been availed on the capital goods that later turned into waste and scrap. The case was remanded to the original adjudicating authority for further verification and examination of the evidence to determine the duty liability accurately. Overall, the Tribunal set aside the impugned order and remanded the case for a detailed examination of the evidence regarding the availing of CENVAT credit on the capital goods that led to the generation of waste and scrap. The decision highlighted the importance of verifying the factual aspects before imposing duty under Rule 3(5A) of CCR, 2004, ensuring a fair and accurate determination of duty liability in such cases.
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