2005 (2) TMI 414 - AT - Central Excise

Summary

Issues: Revenue's contention on classification of worn-out machinery as waste and scrap under Central Excise Act.

In this case, the appeal arose from the Original Order of the department to recover duty on worn-out machinery cleared as scrap by the assessee. The department argued that such machinery should be classified as waste and scrap falling under Chapter Heading 7204.90 of the Central Excise Act. The Commissioner, after examination, concluded that the material cleared did not meet the definition under Note 8(a) of Section XV of the Act. The Commissioner relied on previous Tribunal rulings in similar cases and set aside the Deputy Commissioner's order. The Revenue appealed this decision.

The key argument from the Revenue was that even worn-out machineries cleared should be treated as waste and scrap under the Central Excise Act. However, the assessee's counsel contended that for material to be considered waste and scrap, it must arise during the manufacturing or mechanical working of metal and metal parts. In this case, the assessee, a Kraft Paper manufacturer, did not engage in mechanical working of metals to generate such waste and scrap. The counsel supported the Commissioner's decision by referencing relevant case law, including a judgment by the same Bench in a similar matter.

Upon review, the Tribunal found that the assessee was not a steel industry and did not generate waste and scrap from the mechanical working of metal goods. Dismantling worn-out machinery, in this context, did not align with the definition of waste and scrap under Note 8(a) of Section XV. The Tribunal upheld the Commissioner's decision based on previous judgments cited by both the Commissioner and the assessee's counsel. The Tribunal deemed the Commissioner's decision as just, proper, and legally sound, rejecting the Revenue's appeal.

In conclusion, the Tribunal's decision clarified the classification of worn-out machinery as waste and scrap under the Central Excise Act, emphasizing the necessity for such material to arise from the manufacturing or mechanical working of metal goods to be considered as waste and scrap. The judgment highlighted the importance of aligning with statutory definitions and previous legal precedents in determining such classifications under the Act.