2008 (2) TMI 72 - AT - Central Excise

Scrap and waste arising in course of dismantling old and use parts of old machines is not due to mechanical working of metal in the factory, therefore, such waste scrap are not dutiable in absence of any rule - chapter note 8a in Section xv of Central Excise Tariff Act, covers the metal waste and scrap arising from the working of metal and metal goods, hence not applicable - Impugned order is set aside and appeals are allowed

Summary

Issues:
Demand confirmed for waste and scrap of old and used capital goods.

Analysis:
The appellant contested the demand confirmed on the waste and scrap of old and used capital goods, arguing that during the relevant period, there was no provision under the Cenvat Credit Rules for the reversal of credit in such cases. The appellant cited previous Tribunal decisions where similar demands were set aside, emphasizing that waste and scrap arising from dismantling old machines do not result from the mechanical working of metal in the factory and should not be considered dutiable in the absence of specific rules. The Tribunal agreed with the appellant's argument, noting that the waste and scrap in question were from old and used capital goods and did not arise from the mechanical working of metals in the factory. The Tribunal referenced the chapter note 8a in Section XV of the Central Excise Tariff Act, which covers metal waste and scrap resulting from the working of metal and metal goods, but concluded that the scrap in this case did not fall under this category. Therefore, the Tribunal found merit in the appellant's contention and set aside the impugned order, allowing the appeals.

This judgment highlights the importance of specific rules and definitions in determining the dutiability of waste and scrap in the context of central excise laws. It also underscores the significance of previous tribunal decisions in establishing precedents and guiding current judgments. The analysis demonstrates how the interpretation of relevant legal provisions, such as Section 2f of the Central Excise Act and chapter note 8a in the Central Excise Tariff Act, plays a crucial role in resolving disputes related to the classification and taxation of waste and scrap. Ultimately, the Tribunal's decision in this case was based on a thorough examination of the facts, legal arguments, and precedents, leading to the setting aside of the demand confirmed for waste and scrap of old and used capital goods.