2005 (7) TMI 275 - AT - Central Excise

Summary

Issues: Alleged waste and scrap arising at job worker's premises, disallowance of Modvat credit, imposition of duty, personal penalty under Section 11AC, Rule 173Q.

In this case, the dispute revolved around the alleged waste and scrap generated at the job worker's premises from raw materials sent by the appellant for processing operations. The authorities confirmed a duty amount against the appellant for the said waste and scrap, disallowing the Modvat credit. Additionally, a personal penalty was imposed under Section 11AC and Rule 173Q of the Central Excise Rules, 1944. The appellant argued that the waste generated during processing operations, such as burr/sweeping/dust, was not collectible and hence could not be brought back from the job worker's factory. The appellant contended that even if such waste was collected and sold by the job worker, it should not be considered excisable goods. The appellant relied on a Tribunal decision in a similar case.

The lower authorities rejected the appellant's argument, stating that since there was a weight loss of products, the waste was not invisible. They held that the duty had to be recovered based on the difference in weight of raw material, scrap, waste, and processed goods received. However, after considering both sides' submissions, the Member (J) found that the appellant had asserted that no identifiable scrap was generated during processing, and the loss in weight was due to burr, which was invisible. The revenue failed to provide evidence of identifiable waste and scrap at the job worker's factory. The Member (J) concluded that the Tribunal's decision in a similar case was applicable, and therefore, set aside the impugned order, allowing the appeal with consequential relief to the appellant.

In conclusion, the judgment focused on the issue of waste and scrap arising at the job worker's premises, the disallowance of Modvat credit, duty imposition, and personal penalty under Section 11AC and Rule 173Q. The decision highlighted the importance of evidence and the applicability of precedent in determining the liability of duty and penalties in cases involving waste and scrap generated during processing operations.