2019 (5) TMI 1224 - AT - Central Excise

Excisability - Job-work - scrap generated at the end of job worker - Rule 4 (6) of Cenvat Credit Rules, 2004 - Revenue entertained a view that scrap generated at the end of job worker is dutiable in the hands of the appellant and appellant has not pay duty thereof - HELD THAT - Admittedly, in this case, the job worker has paid duty on the scrap, which is generated during the course of job work. As duty has already been paid on the said scrap, therefore, no duty is payable by the appellant, otherwise, it will be the duty has been demanded twice. Similar issue has been dealt by this Tribunal in the case of M/S. NATIONAL ENGINEERING INDUSTRIES LTD. VERSUS C.C.E. JAIPUR-I 2015 (9) TMI 769 - CESTAT NEW DELHI , wherein this Tribunal held that waste and scrap generated by job worker while processing the goods sent by the principal manufacturer, the Principal manufacturer is not liable to pay duty on such waste and scrap. Thus, as the scrap generated at the end of job worker has already suffered duty in job worker s end therefore, the appellant is not required to pay duty thereon - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is liable to pay duty on scrap generated at the end of job worker who has already paid duty on the same?

Analysis:
The appellant, engaged in manufacturing automobile parts, entered into an agreement with Honda Cars India Limited for supply. The appellant procured steel coils and sent semi-finished goods to another entity for job work. The Revenue contended that the scrap generated at the end of the job worker is dutiable in the hands of the appellant. The appellant argued that the job worker had already paid duty on the scrap, and demanding duty from the appellant would amount to double taxation, which is impermissible in law. The appellant also cited precedents to support their case, including Mahindra Hinoday Industries Limited v. CCE and National Engineering Industries Limited v. CCE.

The appellant further contended that they had obtained permission under Rule 4 (6) of Cenvat Credit Rules, 2004, and should not be liable to pay duty. They also raised the issue of the show cause notice being time-barred. The authorized representative reiterated the findings of the impugned order.

The Tribunal considered the submissions and held that since duty had already been paid on the scrap by the job worker, the appellant was not liable to pay duty again. Citing the case of National Engineering Industries Ltd., the Tribunal ruled that the principal manufacturer is not required to pay duty on waste and scrap generated by the job worker during processing. Referring to the decision in Rocket Engineering Corporation Ltd., the Tribunal further established that the appellant was not obligated to pay duty on the scrap that had already been subject to duty at the job worker's end.

Consequently, the Tribunal set aside the impugned order and allowed the appeal with any consequential relief.