2005 (7) TMI 269 - AT - Central Excise

Summary

Issues:
Demand of duty on M.S. Scrap, Aluminium/copper scrap, used grinding wheels, and empty M.S. drums/plastic containers sold by the assessee from its factory.

Analysis:
The Commissioner (Appeals) confirmed the demands related to different items:
1. M.S. Scrap: The Commissioner classified metal waste as waste and scrap under chapter sub-heading 72.04 of the Central Excise Schedule, even though Modvat credit was not obtained on the goods. However, the Tribunal held that dutiability on scrap would only arise if it emerges from the skilful manipulation of raw material, citing the law laid down by the Apex Court. As there was no evidence that the machinery from which the scrap was cut was Capital goods on which credit was availed, duty on M.S. Scrap was not applicable.

2. Aluminium/copper scrap: The Tribunal noted that the scrap was recovered from machining activity in the workshop, contrary to the belief that it was recovered from construction activity. The Tribunal agreed with the appellant's submission that the scrap was described clearly in the invoice and challan, and no duty could be recovered on such scrap arising from old and used cables.

3. Grinding Wheel: The Tribunal held that no duty could be demanded on used grinding wheels, citing previous decisions. It was noted that duty cannot be demanded when evidence of credit availed of duty paid when they were brought into use is not on record.

4. M.S. drums/plastic container: The Tribunal referred to a Supreme Court decision and held that no duty could be demanded on M.S. drums and plastic containers obtained from emptying the inputs material in the appellant's unit unless they were sold as scrap of M.S. or another identifiable item came into existence in the appellant's unit.

The Tribunal concluded that based on the findings above, no penalty could be sustained, and consequently, the appeal was allowed.