1997 (1) TMI 210 - AT - Central Excise

Summary

Issues: Manufacturing of electricity wires and cables, clearance of scrap without duty payment, duty on cutting pieces of wires for testing, validity of Collector's observations in the order.

Analysis:
1. The appellants, engaged in the manufacture of electricity wires and cables, faced a demand for duty on scrap arising during processing, cleared without payment. The Assistant Commissioner issued a show cause notice, but the Collector (Appeals) later set aside the demand, ruling it did not sustain. Additionally, a dispute arose regarding duty on cutting pieces of fully finished wires for testing purposes. The Collector referred this issue back to the Assistant Collector for re-verification, along with observations on maintaining proper accounts for waste and scrap segregation.

2. The appeal primarily challenged the Collector's observations in the order, contending that they were extraneous to the original issues raised in the show cause notice.

3. The Advocate for the appellants argued that the Collector's order was not sustainable as it introduced new issues not present in the show cause notice. Referring to relevant case law and Central Excise Rules, it was asserted that the waste and scrap of wires and cables did not attract duty, as upheld by the Tribunal and Supreme Court in previous cases. The Advocate emphasized that the Collector's directions regarding maintaining RG 1 Register for excisable goods were not applicable since the scrap was non-excisable, causing operational difficulties for the appellants.

4. On the other hand, the Respondent defended the Collector's orders related to maintaining proper accounts for waste and scrap segregation.

5. After considering both arguments, the Judge acknowledged that the RG 1 account was designed for excisable goods and not applicable where goods were non-excisable. The Judge noted that the appellants were already maintaining separate accounts for waste, providing the department with necessary information for verification. The Judge concluded that the Collector's directions, although well-intentioned for segregation, contradicted Central Excise Rules and harmed the appellants' interests. Consequently, the appeal was allowed, and directions were issued to delete the contentious portion of the order.