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2018 (11) TMI 149 - AT - Central ExciseClearance of capital goods as Waste & Scrap - demand of excise duty - Department was of the view that such Waste & Scrap of capital goods will be liable to payment of duty at the time of its clearance since such Waste & Scrap has been generated during the course of manufacture of the final product - Held that - The identical question was considered by the Apex Court in the case of Grasim Industries 2011 (10) TMI 2 - SUPREME COURT OF INDIA in which the Apex Court examined the precise question of Waste & Scrap arising from the repair & maintenance of the capital goods. The Apex Court held that Waste & Scrap arising from repair & maintenance cannot be covered within the Note 8 (a) ibid. The dutiability Waste & Scrap arising out of old and used capital goods has also been considered by the Tribunal in various decisions and it has been decided that such scrap will be not dutiable. Waste & Scrap cleared by the appellant is not dutiable - appeal dismissed - decided against Revenue.
Issues:
Whether duty is liable to be paid for clearance of Waste & Scrap arising out of old and used capital goods during the period 01.02.2000 to 31.12.2004. Analysis: The present appeal before the Appellate Tribunal CESTAT Kolkata involves a dispute regarding the payment of duty on Waste & Scrap arising from old and used capital goods cleared by the respondent during a specific period. The original authority had ordered the payment of duty, interest, and penalty, which was challenged by the assessee before the Commissioner (Appeals). The Commissioner set aside the demand, leading to the Revenue filing the current appeal. The main contention revolves around whether such Waste & Scrap is liable for duty payment. The Revenue argued that Waste & Scrap of capital goods cleared by the assessee should be liable for duty payment based on Section Note 8(a) to Section XV Central Excise Tariff. They disagreed with the Commissioner's view that there was no provision for duty payment on such goods during the relevant period, citing Rule 57-S(2) of Central Excise Rules, 1944. The Revenue contended that the Waste & Scrap of metal arising from capital goods have a distinct identity and should be classified under CETH 72.04, emphasizing the duty payment aspect. On the other hand, the respondent, represented by a Senior Advocate, argued that the Waste & Scrap cleared by them does not fall within the mentioned Section Note, relying on a Supreme Court decision regarding similar issues. They also highlighted Tribunal decisions where Waste & Scrap of old and used capital goods were held to be not dutiable. By referencing specific cases, the respondent justified the lower authority's decision to drop the demand for duty payment. After hearing both sides and examining the records, the Tribunal delved into the crux of the dispute, focusing on whether the generation of scrap from capital goods amounts to manufacturing under the Central Excise Act. Reference was made to the Supreme Court's decision in a similar context, where it was clarified that scrap arising from repair and maintenance activities does not constitute manufacturing. Additionally, Tribunal decisions were cited to support the non-dutiable nature of Waste & Scrap from old capital goods. Ultimately, the Tribunal upheld the lower authority's decision, stating that the Waste & Scrap cleared by the appellant is not dutiable, thereby rejecting the Revenue's appeal. In conclusion, the Tribunal's detailed analysis and reliance on legal precedents led to the affirmation of the lower authority's decision, determining that duty payment on Waste & Scrap from old and used capital goods was not warranted during the specified period.
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