1999 (3) TMI 413 - AT - Central Excise

Summary

Issues:
1. Classification of metal drums as scrap under Chapter No. 72 of C.E.T.
2. Availment of Modvat credit on metal drums.
3. Interpretation of Rule 57F of C.E. Rules regarding removal of metal drums after availing Modvat credit.
4. Comparison of judgments by different benches regarding duty on metal drums.

Classification of Metal Drums as Scrap:
The case involved the classification of metal drums as scrap under Chapter No. 72 of C.E.T. The appellants had imported degraded Lubricating Oil in metal drums and availed Modvat credit on the value of the drums. The Superintendent of Central Excise issued show cause notices demanding duty on the metal drums cleared as scrap. The Asst. Commissioner held that the metal containers were being cleared as waste and scrap without payment of duty. The Commissioner (Appeals) confirmed this view based on the SRB judgment in West Coast Industrial Gases Ltd. The appellants argued that the WRB judgment in I.O.L. Ltd. held no duty could be demanded on empty drums after availing Modvat credit.

Availment of Modvat Credit on Metal Drums:
The appellants had availed Modvat credit of CVD paid on the metal drums included in the imported raw materials. The Asst. Commissioner held that since the CVD payment on these inputs included the value of metal containers, duty was required to be paid on the metal drums cleared as scrap. However, the appellants argued that they were entitled to remove the metal drums after availing Modvat credit without payment of duty, as per Rule 57F of C.E. Rules.

Interpretation of Rule 57F of C.E. Rules:
The Asst. Commissioner interpreted Rule 57F to prescribe that waste arising from processing of inputs on which credit had been taken should be removed on payment of duty as if it is manufactured. He held that since the Modvat credit had been availed on the metal containers, duty was required on their removal as scrap. However, the appellants argued that the uniformity of opinion across all Tribunal benches now allowed for the removal of metal drums after availing Modvat credit without payment of duty.

Comparison of Judgments by Different Benches:
The judgment highlighted the comparison between different Tribunal benches' decisions on the issue of duty on metal drums. It noted that the SRB judgment in West Coast Industrial Gases Ltd. had been recalled and re-heard, aligning with the decision in I.O.L. Ltd. The WRB also passed a similar order in Castrol India Ltd., establishing uniformity of opinion across all benches that no duty could be demanded on metal drums after availing Modvat credit. Consequently, the impugned order was set aside, and the appeals were allowed based on the prevailing legal position and uniformity of opinion among the Tribunal benches.