2018 (12) TMI 714 - AT - Central Excise

CENVAT Credit - contravention to the provisions of Rule 3 (5A) of the Cenvat Credit Rules, 2004 - it was alleged that assesses have not paid Central Excise duty on the clearance of used and rejected machinery/machinery spare/equipment - Held that - Rule 3(5A) of Cenvat Credit Rules, 2004, prescribes that if the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on the transaction value - the appellant all along stated that waste and scrap generated from the capital goods were brought into the factory much before 01.04.1994, when where was no provisions for availing credit on the capital goods. It is the case of the appellant that since there is no provision for availing credit on the capital goods, no Excise duty was required to be paid - appeal dismissed - decided against appellant.

Summary

Issues:
- Allegation of non-payment of Central Excise duty on clearance of used and rejected machinery.
- Interpretation of Rule 3(5A) of Cenvat Credit Rules, 2004.
- Applicability of duty on waste and scrap generated from capital goods.
- Dispute regarding availing credit on capital goods procured before a specific date.
- Assessment of documentary evidence for availing modvat credit.

Analysis:
The case involved an appeal against an Order-in-Appeal passed by the Commissioner of CGST & Central Excise (Appeals-I), Ranchi, alleging non-payment of Central Excise duty on the clearance of used and rejected machinery by the appellant, M/s Steel Authority of India Ltd. (SAIL), Bokaro Steel Plant. The Adjudicating Authority had confirmed a demand of &8377; 2,31,875/- along with interest and imposed a penalty under Section 11AC of the Central Excise Act, 1944. The appellant contended that waste and scrap generated from capital goods were brought into the factory before a specific date when there was no provision for availing credit on capital goods, hence no Excise duty was required to be paid.

The Tribunal analyzed Rule 3(5A) of the Cenvat Credit Rules, 2004, which mandates payment of duty if capital goods are cleared as waste and scrap. The appellant's argument that no duty was required to be paid on waste and scrap from capital goods procured before the introduction of the modvat scheme was considered. The Adjudicating Authority had dropped the demand related to rejected machinery procured before the modvat scheme on capital goods. However, the demand was confirmed on machinery items where the appellant failed to provide documentary evidence showing no availing of modvat credit.

After hearing both sides and examining the records, the Tribunal found no infirmity in the impugned order. It was held that the demand for duty on machinery items where modvat credit was not evidenced was valid. Consequently, the appeal filed by the appellant was dismissed, upholding the decision of the Adjudicating Authority and the Commissioner (Appeals). The Tribunal's decision was based on the interpretation of relevant rules and the assessment of documentary evidence presented during the proceedings.