1999 (8) TMI 360 - AT - Central Excise

Summary

Issues:
- Duty liability on waste and scrap arising from manufacturing railway parts
- Classification of waste and scrap as marketable commodity
- Quantum of waste and scrap and invisible losses estimation
- Time limitation for duty demand
- Applicability of specific notifications not raised before adjudicating authority

Duty Liability on Waste and Scrap:
The case involved a dispute regarding the duty liability on waste and scrap arising during the manufacturing of railway parts. The appellants, who were manufacturing railway parts using steel and pig iron, were availing Modvat credit on the raw materials. The issue arose when waste and scrap were generated during the manufacturing process, and the duty on such waste and scrap was not paid by the appellants. The adjudicating authority confirmed the duty amount and imposed a penalty, leading to the appeal before the Tribunal.

Classification of Waste and Scrap:
The appellants argued that the waste and scrap, whether generated in their own factory or in the job workers' premises, should not be considered excisable goods as it was deemed as scum or junk, relying on previous judgments. However, the Tribunal disagreed, stating that waste and scrap of iron and steel, including that from the manufacturing process of railway parts, is a marketable commodity and falls under the tariff heading for duty liability.

Quantum of Waste and Scrap:
The appellants contested the quantum of waste and scrap determined for duty payment, claiming that the estimation did not consider invisible losses during the manufacturing process. They argued that no evidence was presented regarding such losses and that duty demand on invisible losses was unjustifiable. The Tribunal rejected this argument, stating that no credible evidence or estimates were provided by the appellants regarding invisible losses, especially for heavy metallic waste and scrap.

Time Limitation for Duty Demand:
The appellants raised the issue of time limitation for duty demand, claiming that the show cause notice was issued beyond the prescribed period of six months. They argued that the department was aware of their processes and should have pointed out any duty discrepancies earlier. However, the Tribunal agreed with the adjudicating authority, stating that the duty liability was clear, and the larger limitation period of five years was rightfully applied.

Applicability of Specific Notifications:
Lastly, the appellants referenced specific notifications in their appeal memo, which were not raised before the adjudicating authority during the proceedings. The Tribunal noted that these pleas were not considered as the appellants had decided not to pursue them during the arguments, leading to the dismissal of the appeal.

In conclusion, the Tribunal upheld the duty liability on waste and scrap generated during the manufacturing process of railway parts, considering it a marketable commodity. The arguments regarding quantum estimation, time limitation, and specific notifications were dismissed, leading to the rejection of the appeal.