2004 (5) TMI 171 - AT - Central Excise

Summary

Issues: Excisability of gun metal scrap and rubber scrap

In this appeal, the issue pertains to the excisability of gun metal scrap and rubber scrap. The adjudicating authority had confirmed the duty demand against the appellants for these items. The appellants contested the excisability of gun metal scrap, arguing that it did not arise from capital goods on which Modvat credit was availed. The authority invoked Rule 57-S(2)(c) and Rule 57AB(1)(b) of the Central Excise Rules, which the appellants disputed. The Tribunal reviewed the records and found merit in the appellants' contention. It was noted that the gun metal scrap did not arise from the shaft bush, a capital good on which credit was availed. Gun metal, being a tin alloy with zinc, was used by the appellants for castings and was considered an essential component of machinery/equipment. The Tribunal concluded that the provisions of Rule 57-S(2)(c) and Rule 57AB(2)(b) were incorrectly applied as the gun metal scrap was not sold as waste and scrap, and no credit was availed for it. Therefore, the order holding the gun metal scrap as excisable was set aside.

Regarding the conveyor belt scrap/rubber scrap, their excisability was not disputed as they had arisen from capital goods on which Modvat credit was availed. Hence, the order demanding duty for these scraps was upheld. However, considering the circumstances and issues involved, the imposition of penalty on the appellants was deemed unwarranted and set aside. Consequently, the impugned order was modified, with the appeal of the appellants being disposed of accordingly.