2024 (5) TMI 1470 - AT - Central Excise

Levy of excise duty - scrap / waste which is generated during the job work, which was cleared by the job worker without payment of duty - HELD THAT - The issue stands settled by the various orders of this very Bench in respect of the very same appellant for various earlier years - reliance can be placed in M/S. GREAVES COTTON LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE 2019 (3) TMI 1785 - CESTAT CHENNAI where it was held that ' the appellant is not the manufacturer of the waste and scrap and therefore, there is no liability on the appellant to pay the duty on the waste and scrap manufactured at the job worker s end. Further, the provision of Rule 4(5)(a) of the CENVAT Credit Rules, 2004 nowhere states that the waste and scrap generated at the job worker s end makes the principal manufacturer liable to payment of duty on such waste and scrap.' There are no merit in the impugned orders and resultantly same is set aside - appeal allowed.

Summary

Issues:
Whether the demand of excise duty on scrap/waste generated during job work and cleared without payment of duty is valid?

Analysis:
The judgment pertains to appeals arising from Orders-in-Appeal passed by the Commissioner of Central Excise (Appeals) in Chennai. The appellant, a manufacturer of diesel engines, sent various components for machining and tubing to job workers, with the scrap/waste generated during processing being cleared by the job workers themselves. The issue revolved around the demand for excise duty on this scrap/waste. The Adjudicating Authority confirmed the duty demand made in Show Cause Notices, leading to the appeals. The main contention was whether the appellant was liable to pay duty on the scrap/waste cleared by the job workers without payment of duty.

The Tribunal referred to previous orders involving the same appellant, such as M/s. Greaves Cotton Ltd., where it was held that the principal manufacturer is not liable to pay duty on waste and scrap generated at the job worker's end. The Tribunal emphasized that Rule 4(5)(a) of the CENVAT Credit Rules, 2004 does not impose such liability on the principal manufacturer. The Tribunal cited precedents and rulings to support this position, including decisions from earlier years and subsequent periods involving the same appellant. It was noted that the issue had already been settled in the appellant's favor in previous orders.

The Tribunal highlighted that the impugned orders had invoked Rule 4(5)(a) of the CENVAT Credit Rules, 2004, but the rule does not make the principal manufacturer liable for duty on waste and scrap generated at the job workers' end. This position was reinforced by previous orders and legal analysis. Consequently, the Tribunal set aside the impugned orders and allowed the appeals, providing consequential relief as per the law. The decision was based on the settled legal principle that the principal manufacturer is not responsible for paying duty on scrap/waste cleared by job workers without payment of duty.

In conclusion, the Tribunal found no merit in the demand for excise duty on the scrap/waste generated during job work and cleared without payment of duty. The judgment reaffirmed the established legal position that the principal manufacturer is not liable for such duty under Rule 4(5)(a) of the CENVAT Credit Rules, 2004. The appeals were allowed, and the impugned orders were set aside, providing consequential benefits to the appellant as per the law.