2025 (3) TMI 677 - AT - Central Excise

Levy of excise duty - clearance of zinc scrap - clearance of structural grills - reversal of Cenvat credit on inputs cleared as such - invocation of the extended period of limitation. Whether the demand for excise duty on the clearance of zinc scrap is justified? - HELD THAT - The appellant has purchased zinc ingots for the manufacture of their final product namely galvanized steel structural. These zinc ingots were used for the purpose of galvanization and the appellant has availed Cenvat credit on the zinc ingots. The appellant has cleared the final product namely galvanized steel structure on payment of duty. However they have not paid the Excise Duty on the zinc scarp emerged during the course of manufacture - the zinc scrap emerged during the course of manufacture are chargeable to Central Excise Duty. However it is observed that the appellant has cleared the zinc scrap on the delivery challan and as not discharged Central Excise Duty on the same. Accordingly the Lower Authorities have rightly confirmed the demand of Excise duty of Rs.8, 25, 921/- along with interest on the zinc scrap cleared without payment of duty. Whether the demand for excise duty on the clearance of structural grills is sustainable? - HELD THAT - The appellant has not raised any invoice for the clearance of steel structural to their civil division. The steel structural were cleared without payment of duty. They have issued non-returnable delivery challan and cleared the goods without payment of duty. Thus it is observed that the appellant is liable to pay duty on the steel structural cleared to their Fabrication Division - the appellant has cleared the steel structural grill to their own Fabrication Division under a delivery challan without payment of duty. Thus the appellant is liable to pay duty for the clearance to the structural grills made to their fabrication division - the Lower Authorities have rightly confirmed the demand of Rs.1, 68, 936/- on the clearance of steel structural. Whether the demand for reversal of Cenvat credit on inputs cleared as such is valid? - HELD THAT - The appellant has cleared inputs as such without reversal of the Cenvat credit availed on the same on 27.11.2009. The appellant has given the explanation that non-reversal has happened due to change in personnel due to the amalgamation of the Appellant s company with M/s.Crown Fabricators (P) Ltd. the explanation of the Appellant not acceptable. The appellant is liable to reverse the Cenvat credit availed on the inputs when the same are cleared as such . As the appellant has not reversed the credit availed on the inputs the Lower Authorities have righty confirmed the demand. Invocation of the extended period of limitation - HELD THAT - The entire issue has come to the light only on the basis of the investigation conducted by the Headquarters preventive unit. The appellant has not disclosed these details in any of the returns filed by them. Thus the suppression of facts with an intention to evade payment of duty has been established in this case and hence the extended period has been rightly invoked. Conclusion - i) The Lower Authorities have rightly confirmed the demand of Excise duty of Rs.8, 25, 921/- along with interest on the zinc scrap cleared without payment of duty. ii) The Lower Authorities have rightly confirmed the demand of Rs.1, 68, 936/- on the clearance of steel structural. iii) The appellant is liable to reverse the Cenvat credit availed on the inputs when the same are cleared as such . As the appellant has not reversed the credit availed on the inputs the Lower Authorities have righty confirmed the demand. iv) The suppression of facts with an intention to evade payment of duty has been established in this case and hence the extended period has been rightly invoked. The impugned order is upheld and the appeal filed by the appellant is rejected.

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the demand for excise duty on the clearance of zinc scrap is justified.
Whether the demand for excise duty on the clearance of structural grills is sustainable.
Whether the demand for reversal of Cenvat credit on inputs cleared 'as such' is valid.
Whether the invocation of the extended period of limitation for confirming demands is appropriate.

ISSUE-WISE DETAILED ANALYSIS

Excise Duty on Zinc Scrap

Relevant Legal Framework and Precedents: The appellant argued that the zinc scrap was non-manufacturing scrap and hence not subject to excise duty. However, the court found that since Cenvat credit was availed on zinc ingots used in manufacturing, the resulting zinc scrap is chargeable to duty.
Court's Interpretation and Reasoning: The court rejected the appellant's argument, emphasizing that the zinc scrap emerged during the manufacturing process and thus should be subject to excise duty.
Key Evidence and Findings: The appellant had cleared the zinc scrap without paying excise duty, using delivery challans instead of proper invoices.
Application of Law to Facts: The court applied the principle that goods resulting from a manufacturing process, where input credits are availed, are subject to duty.
Treatment of Competing Arguments: The appellant's contention regarding non-manufacturing scrap was dismissed due to the clear emergence of scrap during manufacturing.
Conclusions: The demand for excise duty on zinc scrap was upheld.

Excise Duty on Structural Grills

Relevant Legal Framework and Precedents: The appellant claimed exemption under the Commercial or Industrial Construction Services as per the Finance Act, 1994.
Court's Interpretation and Reasoning: The court found that the appellant cleared the structural grills to their own division without raising invoices or paying duty, thus not qualifying for the claimed exemption.
Key Evidence and Findings: The structural grills were cleared using non-returnable delivery challans without duty payment.
Application of Law to Facts: The court held that the exemption under the Finance Act, 1994, was not applicable as the goods were not cleared under proper documentation.
Treatment of Competing Arguments: The appellant's argument for exemption was dismissed due to the lack of proper clearance documentation.
Conclusions: The demand for excise duty on structural grills was upheld.

Reversal of Cenvat Credit on Inputs Cleared 'As Such'

Relevant Legal Framework and Precedents: Cenvat credit availed on inputs must be reversed if those inputs are cleared 'as such' without further processing.
Court's Interpretation and Reasoning: The court rejected the appellant's explanation of personnel changes, emphasizing the obligation to reverse credit.
Key Evidence and Findings: The appellant failed to reverse the Cenvat credit on inputs cleared 'as such'.
Application of Law to Facts: The court applied the requirement for reversing credit on inputs cleared without further manufacture.
Treatment of Competing Arguments: The appellant's explanation was found insufficient to negate the reversal requirement.
Conclusions: The demand for reversal of Cenvat credit was upheld.

Invocation of Extended Period of Limitation

Relevant Legal Framework and Precedents: The extended period can be invoked in cases of suppression of facts with intent to evade duty.
Court's Interpretation and Reasoning: The court found that the appellant had not disclosed relevant facts in their returns, justifying the extended period.
Key Evidence and Findings: The investigation revealed non-disclosure of facts in the appellant's returns.
Application of Law to Facts: The court applied the principle that non-disclosure with intent to evade duty warrants the extended period.
Treatment of Competing Arguments: The appellant's reliance on Supreme Court decisions was dismissed as irrelevant to the established suppression in this case.
Conclusions: The invocation of the extended period was upheld.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "As the appellant has availed Cenvat credit on the zinc ingots used in the manufacture of galvanize scrap, I hold that the zinc scrap emerged during the course of manufacture are chargeable to Central Excise Duty."
Core Principles Established: Goods resulting from a manufacturing process where input credits are availed are subject to duty; proper documentation is necessary for claiming exemptions; non-disclosure of facts justifies the invocation of the extended period.
Final Determinations on Each Issue: The demands for excise duty on zinc scrap, structural grills, and reversal of Cenvat credit were all upheld, along with the invocation of the extended period.

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