1995 (11) TMI 194 - AT - Central Excise

Summary

Issues:
1. Whether the parts replaced in Motor Cycles can be considered as waste and scrap.
2. Whether the demand for Excise Duty on the replaced parts is justified.
3. Whether the demand is time-barred.

Detailed Analysis:
The appeal challenged an order confirming the demand for Excise Duty on Motor Cycle parts replaced and sold as scrap. The appellants sought permission to replace Engine Sprockets and Fourth Gear in vehicles kept in the Bonded Store Room due to complaints about performance. The replaced parts were treated as scrap, leading to a demand of Rs. 27,183.06 under Rule 57-I of the Central Excise Rules. The Collector of Central Excise (Appeals) concluded that the replaced parts were not waste generated during manufacturing and rejected the appeal, stating they were not defective but were fitted in vehicles initially.

The appellant's advocate argued that the replaced parts were declared as scrap under Rule 57G and referred to the definition of waste and scrap in the Central Excise Tariff Act. He contended that the parts, once non-usable, should be deemed as scrap, and Rules 196B and 173P were inapplicable. The SDR argued that the parts were not processed to be non-functional and thus did not qualify as scrap. The issue of limitation was raised but lacked adequate data for consideration, as the date of removal of parts as scrap was not provided.

The main issue was whether the replaced parts constituted waste and scrap as defined in the Central Excise Tariff Act. The definition includes metal waste and scrap not usable due to various reasons. The appellants claimed the parts were not usable due to customer complaints, but the parts were functional and used in vehicles before replacement. The parts were removed without alterations and did not qualify as by-products. Consequently, the demand for Excise Duty was deemed justified, and the appeal was rejected.

In conclusion, the judgment upheld the demand for Excise Duty on the replaced Motor Cycle parts sold as scrap, as the parts did not meet the criteria for waste and scrap under the Central Excise Tariff Act. The lack of evidence on the date of removal of parts as scrap affected the argument on time limitation, and the parts were considered usable before replacement, leading to the rejection of the appeal.