2017 (11) TMI 1477 - AT - Central Excise

CENVAT credit - Department was of the view that part of the imported scrap cleared has to be considered as clearance of impugned, as such and hence as per Rule 3 (5) of the CCR 2004, the appellant should reverse the credit availed on this portion of the scrap instead of paying duty on the transaction value on such segregated material - Held that - there is no dispute regarding the receipt of goods at the appellant s factory. To prove the point, the appellant has submitted detailed documentation through which they have attempted to establish that the part consignments belong to the original bills of entry - for verification, the matter may be remanded. CENVAT credit - Aluminum scrap - The view of the Revenue is that this amounts to clearance of inputs as such and will incur the mischief of rule 3 (5) of the Cenvat Credit Rules, 2004 and requires reversal of credit availed on this portion of the scrap - Held that - a similar issue pertaining to segregation of copper scrap has arisen in the past and Circular No. 1029/17/2016 CX dated 10/05/2016 was issued by CBEC. The circular has clarified the treatment to be given to the clearance of segregated foreign material - It is not clear from the impugned order whether the Adjudicating Authority had the benefit of the clarification issued by the board at the time of passing the order - matter on remand. Appeal allowed by way of remand.

Summary

Issues:
1. Disallowance of Cenvat Credit for imported scrap by the Bhiwadi unit.
2. Demand for differential duty on segregated scrap other than aluminum.

Analysis:
1. The first issue revolves around the disallowance of Cenvat Credit amounting to ?3,71,54,802/- for the Bhiwadi unit's imported scrap. The appellant imported scrap in a consolidated manner for all five units, with part consignments sent to different units. The Adjudicating Authority disallowed the credit due to challans not being specified documents under Cenvat Credit Rules, 2004. However, the appellate tribunal found no dispute regarding the receipt of goods at the Bhiwadi unit and remanded the matter for verification of documents to confirm the receipt and allow credit accordingly.

2. The second issue concerns the demand for differential duty of ?4,84,52,101/- on scrap other than aluminum cleared after segregation. The Revenue viewed this as clearance of inputs as such, necessitating reversal of credit availed. Referring to a CBEC circular clarifying the treatment of segregated foreign material, the tribunal directed the Adjudicating Authority to re-decide the issue considering the circular. The tribunal set aside the impugned order and remanded the matter for a fresh decision, allowing additional evidence as per law.

In conclusion, the appellate tribunal addressed the issues of Cenvat Credit disallowance for imported scrap by the Bhiwadi unit and the demand for duty on segregated non-aluminum scrap. The tribunal emphasized the need for proper verification and consideration of relevant circulars in deciding the matters, ultimately remanding the case for a fresh decision by the Adjudicating Authority.