2003 (11) TMI 143 - AT - Central Excise

Summary

Issues:
Demand of duty on iron and steel scrap in contravention of Central Excise Rules.

Analysis:
The appellants were aggrieved by the demand of duty confirmed against them by the Commissioner, along with a penalty and interest, in relation to iron and steel scrap. The allegation was that they removed iron and steel scrap in contravention of the Central Excise Rules. The show cause notice also sought to recover duty on furnace oil and used refractory bricks, but the demand on these items was dropped, focusing solely on the duty related to iron and steel scrap.

The appellants, who are manufacturers of cement, argued that the iron and steel scrap in question arose while using duty paid iron and steel material for construction work in their factory. They claimed that they did not take any credit under the Modvat Scheme for the duty paid on the iron and steel material brought into the factory for construction work. The show cause notice alleged that the clearances should have been effected on payment of duty as per specific rules.

After hearing both sides and examining the record, the Tribunal found that there was no evidence presented to counter the appellants' assertion that they had not taken any Modvat credit for the steel material. It was highlighted that the question of recovering duty on inputs that become waste and scrap only arises if Modvat credit was claimed on the material. Since there was no indication that the manufacturer had claimed such credit, and it was acknowledged that the scrap was generated during construction work without claiming credit, the Tribunal concluded that the scrap was not liable to excise duty.

Therefore, the Tribunal held that the impugned order was not sustainable and set it aside, allowing the appeal and providing consequential relief in accordance with the law.