1992 (12) TMI 126 - AT - Central Excise

Summary

Issues: Liability to pay central excise duty on scrap of bare aluminium and copper wires with MODVAT credit, as well as on scrap of insulated wires and cables.

In this case, the appellants, manufacturers of wires and cables, were availing MODVAT credit on wire rods and clearing scrap without duty payment based on a circular. However, a show cause notice was issued demanding duty on the cleared scrap. The Department alleged that duty was payable as the durability of the scrap was not disputed, and there was no evidence that the imported aluminium and copper had paid the additional duty. The adjudicating authority confirmed the duty demand. The appellants argued that they classified the scrap as assessable to Nil duty and paid duty only after the notice was issued. They contended that they had the right to seek a refund if duty was not payable. They also highlighted total exemption notifications for waste and scrap of copper and aluminium. The Tribunal found that the appellants were not liable to pay duty on the scrap in question due to various reasons, including the classification list showing Nil duty, lack of evidence on duty payment, and the total exemption notifications. The impugned order was set aside, and no further aspects were considered.

The Tribunal noted that the charge in the show cause notice was based on Rule 57F, which allows for the removal of waste with or without duty payment subject to specified conditions. The appellants demonstrated that the inputs had borne the additional duty, and the classification list indicated Nil duty, leaving the approval to the department. They maintained that their accounts were compliant and pointed out discrepancies in classification by the officers. The appellants referenced circulars and notifications supporting their case, which were not specifically challenged by the Department. The Tribunal observed the lack of specific notifications or orders under Rule 57F(4)(b) and the significance of treating items with availed MODVAT credit as non-duty paid. The Ministry's letter referring to the exemption under certain notifications, despite MODVAT credit, was considered, with no challenge from the Collector or the Department. The argument that duty was paid voluntarily was rejected, and the absence of time bar on the refund claim was noted. Consequently, the appeal was accepted, and the appellants were entitled to any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellants, absolving them of the duty liability on the scrap in question, emphasizing various legal and procedural aspects, including the classification list, exemption notifications, and the application of Rule 57F. The decision highlighted the importance of proper documentation, compliance with regulations, and the interpretation of relevant laws and circulars in excise duty matters.