1993 (12) TMI 119 - AT - Central Excise

Summary

Issues:
1. Appeal against the order of the Collector of Central Excise regarding reversal of Modvat credit on waste/scrap of Graphite Electrodes.
2. Interpretation of provisions under Central Excises and Salt Act, 1944 and Rule 57D(1) in relation to Modvat credit.
3. Whether waste generated is liable to excise duty and reversal of Modvat credit.
4. Allegations of suppression and invocation of longer period of limitation.
5. Compliance with Rule 57F(4) under the Modvat Scheme regarding clearance of waste generated.

Analysis:
1. The appeal challenged the Collector of Central Excise's order directing the reversal of Modvat credit on waste/scrap of Graphite Electrodes used as an input for manufacturing Calcium Carbide. The issue arose from a show cause notice invoking the longer period of limitation under Section 11A of the Central Excises and Salt Act, 1944, read with Rule 57-I of the Rules.

2. The appellant contended that waste generated from the input in question is not excisable, citing Rule 57D(1) which states that credit of duty on an input shall not be denied due to waste generated during manufacturing. The appellant argued against the reversal of Modvat credit, emphasizing that the Department was aware of their activities and there was no suppression warranting the longer period of limitation.

3. Conversely, the Department argued that the waste generated was liable to excise duty as it was sold by the appellant, making it marketable. They alleged non-compliance with Rule 57F(4) under the Modvat Scheme and failure to inform the Department about the sale of goods, justifying the reversal of Modvat credit.

4. The Tribunal noted the absence of a specific finding in the impugned order regarding the excisability of the waste in question. While acknowledging the sale of waste by the appellant, the Tribunal refrained from expressing a definitive opinion on the suppression issue due to insufficient records. Consequently, the Tribunal set aside the order and remanded the matter for reconsideration, ensuring the appellant's right to be heard.

5. Regarding the Modvat credit reversal, the Tribunal observed that the lower authority's order lacked proper consideration of the Modvat rules. It highlighted the necessity of determining the excisability and tariff heading of the waste before demanding duty payment. The Tribunal held that the matter required fresh consideration, emphasizing the correct application of Modvat rules and classification of the waste for duty payment purposes. Thus, the Tribunal set aside the lower authority's order and remanded the issue for a fresh decision.