2018 (10) TMI 522 - AT - Central Excise

Liability of duty - clearances of scrap arising out of MS Plates, Moulds, Liners, etc. - Held that - This fact is not in dispute by the Revenue as assessee issued letters dated 10.12.2005 informing the audit party is on record, and not disputed or controverted in any manner. Reliance placed in the judgment was carried SLP in Apex Court in M/S. GRASIM INDUSTRIES LTD. VERSUS UNION OF INDIA 2011 (10) TMI 2 - SUPREME COURT OF INDIA , where it was held that such scrap is not dutiable. CENVAT Credit - non-maintenance of separate records - Held that - Appellant should have produced records to show that they had maintained separate accounts of the Grog received by the market and non-duty paid nature of the said Grog. In the absence of any such records, the appellant is not able to justify his claim that they are not required to pay duty on Grog - demand upheld. Appeal allowed in part.

Summary

Issues:
1. Duty liability on clearances of waste and M.S. scrap arising from maintenance and repairs.
2. Duty liability on clearances of Grog.

Analysis:

Issue 1: Duty liability on clearances of waste and M.S. scrap arising from maintenance and repairs:
The appellant contested a show cause notice demanding Central Excise duty on amounts realized from the sale of steel scrap, miscellaneous scrap, and Grog. The Adjudicating Authority confirmed the demands along with interest and penalties. The First Appellate Authority upheld the decision. The appellant argued that the scrap generated during maintenance and repair of machinery should not incur duty liability, citing a judgment by the Apex Court in the case of Grasim Industries Vs. Union of India. The Tribunal noted that the scrap arising from repair and maintenance activities, such as M.S. scrap and Iron scrap, does not contribute to the manufacturing process of the final product. Referring to the Apex Court's judgment, the Tribunal held that such scrap is not dutiable. Therefore, the demand of duty liability on the M.S. scrap arising from repair and maintenance was set aside.

Issue 2: Duty liability on clearances of Grog:
Regarding the duty liability on clearances of Grog, the appellant failed to provide evidence to support their claim that the Grog cleared by them was non-duty paid and received from the open market. The Tribunal emphasized that the appellant should have maintained separate accounts for the Grog received from the market to establish its non-duty paid nature. As the appellant could not substantiate their claim, the Tribunal upheld the lower authorities' decision to confirm the demand on clearances of Grog along with interest and penalties. The Tribunal found no reason to interfere with the reasoned order of the lower authorities on the duty liability concerning Grog.

In conclusion, the Tribunal set aside the demand of duty liability on M.S. scrap arising from maintenance and repairs, while confirming the demand on clearances of Grog. The appeal was disposed of accordingly.