2004 (8) TMI 169 - AT - Central Excise

Summary

Issues:
1. Duty payable on waste and scrap of iron and steel generated during civil construction.
2. Duty payable on copper and aluminium scrap when Modvat credit is availed.
3. Duty leviable on used refractory bricks cleared as scrap.
4. Classification of sludge of Furnace oil under Chapter Heading 2710.90.

Analysis:

(a) Duty on waste and scrap of iron and steel:
The Tribunal considered the issue of duty on waste and scrap of iron and steel generated during civil construction. The appellant argued that scrap arising from iron and steel used in construction should not attract excise duty as no credit was availed on the material. The Tribunal noted that the Department's claim that all scrap sold without duty payment came from inputs with credit taken was based on assumptions and lacked evidence. The Tribunal agreed with the appellant's contention, considering the significant quantity of scrap generated and the lack of evidence supporting the Department's claim.

(b) Duty on copper and aluminium scrap:
The Commissioner asserted that duty was payable on copper and aluminium scrap, regardless of Modvat credit availed on other materials. However, the appellant argued that waste from copper and aluminium cables should not be classified under dutiable chapters. The Tribunal highlighted the appellant's claim that the cables fell under Chapter 85, and the credit was taken accordingly. Referring to a previous case, the Tribunal held that waste and scrap of wires and cables are not excisable, supporting the appellant's argument that no duty should be paid on such scrap under relevant chapters.

(c) Duty on used refractory bricks:
The issue of duty on used refractory bricks cleared as scrap was raised. The Commissioner did not address this issue thoroughly, stating it was not argued before him. However, the appellant contested this issue, arguing that waste of refractory bricks is not excisable goods. The Tribunal agreed with the appellant, stating that in the absence of a specific entry covering such waste, it should not be considered dutiable.

(d) Classification of sludge of Furnace oil:
Regarding the classification of sludge of Furnace oil, the Commissioner did not delve into the issue extensively, mentioning that duty had already been paid. However, the appellant contested this issue, arguing that sludge should not be considered excisable unless specifically covered in the tariff. The Tribunal agreed with the appellant's contention, stating that sludge, being a result of industrial waste, does not fall under excisable goods, as it is not a product of a manufacturing process defined under the Central Excise Act.

In conclusion, the Tribunal accepted the appellant's contentions on all issues, ruling that duty was not payable on the scrap of iron and steel, waste of copper and aluminium cables, used refractory bricks, and sludge of Furnace oil. The penalty imposed, along with the interest demanded, was set aside, and the appeal was allowed.