1997 (2) TMI 254 - AT - Central Excise

Summary

Issues: Duty liability on waste and scrap of Copper and Aluminium

In this judgment by the Appellate Tribunal CEGAT, New Delhi, the issue at hand involved the duty liability on waste and scrap of Copper and Aluminium cleared by the appellant, M/s. Perfect Circle Victor Ltd. The waste and scrap in question arose during the manufacture of Gaskets, a motor vehicle part. The appellant had received duty-paid Copper and Aluminium Metal, availed Modvat credit, and sought to clear the Copper waste without payment of central excise duty under specific notifications. The Collector of Central Excise (Appeals), Bombay denied them the exemption based on Rule 57F(4)(b) of the Central Excise Rules, 1944, which required payment of appropriate duty on the waste.

The key contention raised by the respondent was that after availing Modvat credit on the inputs, the waste could not be considered as manufactured from goods on which excise duty had been paid. The respondent argued that the appellant needed to reverse the credit taken and that the waste was not eligible for clearance at a nil rate of central excise duty. The Tribunal analyzed the situation, focusing on the fact that the waste and scrap were generated during the manufacture of motor vehicle parts from duty-paid inputs, and the appellants were utilizing Modvat credit for the clearance of the parts. The waste and scrap fell under the definitions of waste and scrap under the respective Tariff Entries for Copper and Aluminium.

The Tribunal examined the relevant notifications, specifically Notification No. 172/84-C.E. for Copper waste and Notification No. 182/84-C.E. for Aluminium waste, which provided exemptions if the waste was manufactured from duty-paid materials. The Tribunal noted changes in these notifications due to the introduction of the new Central Excise Tariff Act in 1985. The Revenue argued that the waste and scrap should be cleared by paying duty as if they were manufactured in the factory, citing Rule 57F(4)(a) of the Central Excise Rules, 1944. However, the Tribunal referred to previous decisions where it was established that inputs did not lose their duty-paid status even after availing Modvat credit.

The Tribunal concluded that the waste and scrap were eligible for exemption from duty based on the applicable notifications. It rejected the Revenue's argument regarding the retrospective effect of an amending notification issued in 1987, emphasizing that the original notifications did not provide for retrospective application. The Tribunal held that the appellants were entitled to the exemption for the waste and scrap separately, considering the available facts and circumstances. Consequently, the appeal was allowed in favor of the appellant, M/s. Perfect Circle Victor Ltd.