2008 (12) TMI 341 - AT - Central Excise

Excisability- The finding of the Adjudicating Authority is that the respondents cleared M.S. and C.I. scrap without payment of duty, which were generated during the manufacture of dies, jigs, fixture and tooling etc. It is observed that these scraps are chargeable to duty or may be exempted if consumed captively in the factory premises and the scrap so generated classified under sub-heading 7204.90 of the Schedule to the Central Excise Tariff Act, 1985. Commissioner (Appeals) observed that M.S. and C.I. scrap generated during the manufacture of dies, jigs, fixtures and tooling etc. and removed without payment of duty in respect of the inputs on which no Modvat credit was availed by the respondents and would not be liable to duty. Held that- we find that the respondents had taken a stand before the Commissioner (Appeals) that the items used in relation of repair and maintenance of work of factory, plant and office building. The learned DR placed a copy of the letter dated 6-11-08 issued by the Superintendent addressed to the learned DR, wherein it is stated that the respondents had mostly used its items for repair and maintenance of dies/jigs, fixtures, tooling etc. It appears that there is a dispute on the use of the items as to whether the items were used in the manufacturing or repairing of the items. We find that facts are required to be verified in the light of the decision of the Hon ble Rajasthan High Court UOI v. Grasim Industries Ltd. - 2008 (229) E.L.T. 328 (Raj.). In view of the above discussions, we set aside the orders and the matter are remanded to the Adjudicating authority to decide afresh on the basis of use of items and in the light of the decision of the Hon ble High Court in accordance with law. All the appeals are allowed by way of remand.

Summary

The Appellate Tribunal CESTAT, New Delhi, comprising of S/Shri M. Veeraiyan and P.K. Das, heard appeals filed by the Revenue against an order-in-appeal passed by the Commissioner (Appeals) related to the clearance of M.S. and C.I. scrap without payment of duty. The Commissioner (Appeals) found that the scrap was generated during the manufacture of dies, jigs, fixtures, and tooling, and removed without duty payment. The Appeals Tribunal noted that the scraps were chargeable to duty or could be exempt if consumed in the factory premises. The Tribunal observed that the scraps were classified under sub-heading 7204.90 of the Schedule to the Central Excise Tariff Act, 1985. The Revenue argued in favor of the appeals citing a decision of the Hon'ble Rajasthan High Court in the case of UOI v. Grasim Industries Ltd. The respondent's advocate argued that the wastes were generated from processing inputs without Cenvat credit and were used for repair and maintenance purposes. He cited a decision of the Hon'ble Rajasthan High Court in the case of UOI v. J.K. Industries Ltd. After hearing both sides, the Tribunal found merit in the Revenue's submissions. They referred to the decision of the Hon'ble Rajasthan High Court in the case of Grasim Industries Ltd., which stated that any process incidental to the completion of a manufactured product amounts to manufacture. The Tribunal concluded that the case of J.K. Industries Ltd. was not applicable, and there was a dispute over the use of items in the manufacturing or repairing process. Therefore, the Tribunal set aside the orders and remanded the matter to the Adjudicating authority for a fresh decision based on the use of items and the relevant court decisions. All the appeals were allowed by way of remand. The judgment was dictated and pronounced in open court.

This summary covers the issues raised in the judgment, including the clearance of M.S. and C.I. scrap without payment of duty, the classification of the scraps under the Central Excise Tariff Act, the arguments presented by both the Revenue and the respondent, and the Tribunal's decision to remand the matter to the Adjudicating authority for further consideration.