2009 (3) TMI 181 - AT - Central Excise

Job Work under cenvat credit rule 4(5) waste and scrap whether entitled to be sent on job work - remnants were sent to job worker for conversion into Copper bar in terms of provision of Rule 4(5)(a) of Cenvat Credit Rules, 2004, under job work challans, and returned. - During the scrutiny of the monthly records, the Range Superintendent pointed out discrepancy that, the scrap being final product is not entitled to be cleared in terms of Rule 4(5)(a) of Cenvat Credit Rules, 2004, and that the same needed to be cleared on payment of duty held that - there is no question of holding scrap as final product and disallowing the benefit of clearance of scrap for converting into ingots, under Rule 4(5)(a). The demand of duty can only be confirmed, if there is diversion of generated scrap for any other purpose other than reconversion. It is not in dispute that in the present case, the scrap cleared by the appellants under job work challan has been returned in the form of ingots and properly accounted for. demand set aside.

Summary

In the Appellate Tribunal CESTAT, Mumbai case of M/s. Shakti Wire Products, the appellants were engaged in the manufacture of excisable goods, including copper flats, rods, wires, and strips. The Range Superintendent noted a discrepancy in the clearance of scrap for job work, resulting in a Show Cause Notice being issued. The Assistant Commissioner confirmed a demand for duty, penalty, and interest, which was upheld by the Commissioner (Appeals).

The Tribunal reviewed the case and found that the scrap generated during the manufacturing process was being recycled and re-converted into copper bars for further processing. Citing previous, the Tribunal ruled that the clearance of scrap for conversion into ingots under Rule 4(5)(a) of the Cenvat Credit Rules, 2004, was permissible as long as there was no diversion of the scrap for other purposes.

Comparing Bradley's case, which is not relevant to the present issue, the Tribunal determined that the judgments cited by the Commissioner (Appeals) were not applicable' relevance. The appellants were successful in their appeal, and the impugned order was set aside. The Tribunal allowed the appeal, finding in favor of the appellants.