2001 (12) TMI 120 - AT - Central Excise

Summary

Issues involved: Duty demands and penalties arising from clandestine removal of dutiable waste and scrap of aluminium, iron, and steel.

Summary:

1. Duty demands and penalties:
The appellants were found to have clandestinely removed dutiable waste and scrap of aluminium, iron, and steel from their factory. The appellants contested the demands, particularly regarding the waste and scrap of iron and steel, arguing that they were primarily manufacturers of aluminium and did not engage in manufacturing activities involving iron and steel. Despite detailed explanations provided by the appellants, the lower authority upheld the duty demands. The appellants maintained the same defense in the appeal before the Tribunal.

2. Explanation of iron and steel scrap:
The appellants explained that certain types of waste and scrap were not liable to excise duty, citing various processes through which the waste arose. They argued that only specific types of waste fell under duty liability, while others, such as remnants of duty-paid steel and items from old civil constructions, were not excisable. The appellants also emphasized that they did not claim Modvat credit for the scrap in question.

3. Precedents and legal arguments:
The appellants referenced several Tribunal decisions to support their claim that the waste and scrap in question were not dutiable. The appellants highlighted that waste and scrap arising from the manufacture or mechanical working of iron or steel were the only items subject to duty, while other types of waste were not excisable.

4. Verification and remand request:
The Standing Counsel pointed out the eligibility of capital goods for Modvat credit from 1994 onwards and requested verification to determine if the waste and scrap originated from such goods. The appellants opposed the remand, stating that they had already addressed this aspect during adjudication, which was not refuted. They argued against the need for further verification.

5. Tribunal decision and modification of order:
The Tribunal clarified that only waste and scrap arising from the manufacture or mechanical working of iron or steel were subject to duty. The duty demand was upheld for waste and scrap valued over Rs. 1 lakh, while demands for other items were set aside. The penalty imposed was reduced, and the appeal was allowed accordingly.