2021 (11) TMI 597 - AT - Central Excise

Removal of goods from premises of job-worker - return of Waste/scrap and subsequent clearance - Demand of Excise duty on the estimate quantity of copper which was not returned/ explained by the appellant - SCN alleged that on an average approximately 2 % of copper was scraped during the various processes such as drawing, paper insulation/covering etc. - HELD THAT - The issue decided in the case of M/S VOLTAMP TRANSFORMER LTD. VERSUS CCE VADODARA 2013 (11) TMI 1215 - CESTAT AHMEDABAD where it was held that There is also no binding clause in Rule 4(5)(a) of CENVAT Credit Rules, 2004 that any loss of inputs by generation of waste and scrap has to be compensated by reversing equivalent credit taken on the virgin metal, demand if any on waste and scrap has to be raised against the manufacturer job worker and not upon the raw material supplier. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of Central Excise duty, interest, and penalty on the grounds of loss of weight during job work process.

Analysis:
1. The appeal was filed by M/s. Voltamp Transformers Ltd contesting the demand of Central Excise duty, interest, and penalty. The appellant, engaged in transformer manufacturing, sent inputs like copper strips and rods to job workers for further processing on a job work basis. The goods were returned to the appellant on a "weight to weight basis," with an alleged loss of copper during the job work process. The dispute arose due to the estimation of copper loss, leading to the demand for Central Excise Duty based on unreturned copper quantity.

2. The appellant's counsel highlighted previous instances where similar demands against the appellant were set aside by the Commissioner (Appeals) and the tribunal. The argument emphasized the inconsistency in decisions regarding the duty liability on waste and scrap generated during job work processes, citing relevant legal precedents and judgments in support of the appellant's position.

3. The appellate tribunal considered the submissions and referred to its previous decision on a similar issue, where it was observed that the waste and scrap generated during job work processes do not necessarily need to be brought back to the principal manufacturer. The tribunal relied on legal interpretations and judgments to establish that duty liability on waste and scrap should fall on the job worker rather than the raw material supplier, unless specifically mandated by the rules.

4. Based on the legal principles and precedents cited, the tribunal concluded that the impugned order demanding Central Excise Duty, interest, and penalty could not be sustained. The appeal was allowed, and the impugned order was set aside, emphasizing the consistent legal interpretation regarding duty liability on waste and scrap generated during job work processes.

This detailed analysis of the judgment highlights the legal intricacies surrounding duty liability in cases involving loss of weight during job work processes, emphasizing the importance of legal precedents and interpretations in resolving such disputes.