2018 (2) TMI 1612 - AT - Central Excise

Excisability - scrap generated in the factory - Revenue by entertaining a view that appellant is required to discharge duty in respect of such unfit/ damage components, raised duty demand for the period December 2011 to September, 2015 - Held that - the identical issue has come up in assessee own case before the Tribunal M/s Tafe Motors & Tractors Ltd. Versus Commissioner of Central Excise Bhopal 2017 (12) TMI 1296 - CESTAT NEW DELHI , where it was held that scrap of paper cannot be considered as a product different from the paper and Mere mentioning in the tariff is not sufficient to attract excise levy - appeal allowed - decided in favor of appellant.

Summary

Issues: Excisability of scrap generated in the factory.

In the case before the Appellate Tribunal CESTAT NEW DELHI, three appeals were filed against the order dated 30.06.2017 passed by the Commissioner (Appeals-I), Customs, Central excise & Service Tax, Bhopal, regarding the excisability of scrap generated in the factory. The appellant, engaged in manufacturing tractors and parts, faced a dispute over the excisability of defective components found during the manufacturing process. The Revenue claimed duty on these defective components, which the appellant contested. Initially, the duty demand was dropped, but the Commissioner (A) reversed the decision, leading to the filing of the present appeals. The Tribunal noted that the defective/damaged components were not manufactured in the appellant's factory but were procured from outside for use in manufacturing exempted tractors. Referring to previous Tribunal decisions, the Tribunal held that the damaged goods, not manufactured by the appellant, were procured after duty payment, and thus, the duty demand was not justified. Consequently, the impugned order was set aside, and the appeals were allowed.

The Tribunal analyzed the issue by considering the nature of the defective components, which were not manufactured in the appellant's factory but procured from outside for use in manufacturing tractors exempted from duty. Referring to previous Tribunal decisions, the Tribunal emphasized that the damaged components were not a result of the appellant's manufacturing process but were procured goods. The Tribunal highlighted that the damaged goods were cleared as waste and scrap, and the duty demand was not applicable as the damaged components were not manufactured by the appellant. Relying on the decisions in similar cases, the Tribunal concluded that the duty demand was unjustified, setting aside the impugned order and allowing the appeals. The Tribunal's decision was based on the principle that the appellant, not being the manufacturer of the damaged components, was not liable to pay duty on goods procured from outside, even if they became defective during the manufacturing process.