9911796707
TMI Blog1996 (7) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... s, arose from 12 show cause notices relating to different relevant periods, the instant twelve appeals which involve a common issue are disposed of by this common order. 2. The brief facts of the case are that the appellants are manufacturers of valves and valve cores using duty paid inputs like copper, zinc and lead. They are availing of Modvat credit facility in respect of the inputs used by them for which they had filed necessary declaration. During the course of manufacture of their final products, they obtain scrap of brass as a by-product. They removed such scrap to their job workers for getting it converted into rods which they received from the job workers and used in the manufacture of their declared final products. They had removed the brass scrap to their job workers after obtaining the permission of the Assistant Collector under Rule 57F(2) of the Central Excise Rules as it then stood. Such removals were without payment of duty. The demand of duty contested in the instant appeals is in respect of such removal of brass scrap. 3. Shri Krishna Srinivasan, learned counsel for the appellants referred to the miscellaneous application filed by them for permission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector of Central Excise v. Alco Wire Products Pvt. Ltd.. As held by the Tribunal, removal of scrap from the manufacturer's premises is not governed by Rule 57F(2) but by Rule 57F(4) as they stood at the material time. Under the former sub-rule only the inputs themselves or partially processed inputs could be removed to an outside place for specified processes. The scrap that had arisen in their factory was not such material and hence the facility availed by them was not permissible. Demand has been confirmed correctly, he contended and pleaded for the dismissal of the appeals. 4. We have considered the rival submissions and perused the record. We shall first deal with the question of jurisdiction raised by the learned counsel. We find that in Kiran Singh v. Chaman Paswan cited by him the Supreme Court had observed inter alia, as follows : "It is a fundamental principle that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collaterial proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar decisions of the Tribunal which have been cited by the Senior Departmental Representative. These have been referred to in Paragraph 3 supra. In these decisions, the specific applicability of sub-rule (4) of Rule 57F had been taken note of for waste products arising in the course of manufacture of the final product. The said Rule is extracted below : "Any waste arising from the processing of inputs in respect of which credit has been taken may - (a) be removed on payment of duty as if such waste is manufactured in the factory; or (b) be removed without payment of duty where it belongs to such class or category of waste as the Central Government may from time to time by order specify for the purpose of being used in the manufacture of the class or categories of goods as may be specified in the order, subject to the procedure under Chapter X being followed." The Tribunal in the aforesaid cases had observed that Government had issued orders in respect of Aluminium waste while no such facility had been extended to the subject goods. It was, therefore, held that as specific provision has been made in respect of waste arising during the course of processing of inputs in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of generated scrap. However, on the question of law, the Departmental Representative pleads that copper scrap is an excisable item and it is final product by itself and has to be cleared under Rule 57F(4), since it is manufactured by the appellant, Rule 57F(2) could not have been applied in such circumstances, hence the demand is justified. Even I am inclined to agree with this legal proposition made by the departmental representative, the consequences of duty payment have been completely lost sight of by the authorities. When the duty is paid on the generated scrap, it becomes a duty paid input for the appellant, which can be legitimately sent to the job workers under Rule 57F(2), for which no objection can be taken by the department. Only for this reason the Board appears to have allowed such generated scrap of Aluminium under Rule 57F(2) in an earlier circular, hence, so long as the department is satisfied that the scrap generated had been sent to the job workers and processed goods have been returned in the form of rods and castings to the appellant, there is no purpose in recovering the amount and again giving it as credit. Subject to verification of this aspect, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so is generated which is a by-product. In that context, the disposal of the waste will be only as per the provisions of Rule 57F(4) which specifically deals with such waste. But the fact that scrap is also declared as an input will entitle them to the benefit available under Rule 57F(2). Accordingly the permission granted by the Assistant Collector was in order. 7. The consequences of the said permission have to be examined. The sub-rule (sub-rule 3 now) provides that notwithstanding anything contained in sub-rule (1) a manufacturer may, after intimating the Assistant Collector of Central Excise having jurisdiction over the factory and obtaining dated acknowledgment of the same, remove the inputs as such or after the inputs have been partially processed during the course of manufacture of final products to a place outside the factory - (a) for the purposes of test, repairs, refining, reconditioning or carrying on any other operation necessary for the manufacture of the final products and return the same to his factory for further use in the manufacture of the final product ............... ; (b) for the purpose of manufacture of intermediate products necessary for the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory of the manufacture is also not subject to the exemption available under Notification 217/86, dated 2-4-1986 as the same is available to goods manufactured in a factory and used in that factory. In the present case, the goods are used in the factory of the job worker for conversion into brass rods. There is no exemption for the scrap cleared to the job worker for such conversion job. The job worker no doubt is entitled to duty free facility for their product which facility has been granted. The disputed duty liability is on the scrap which is the input. It has to pay duty leviable thereon whether cleared under Rule 57F(4) as held by the authorities below or even for availing the benefit under Rule 57F(2) as claimed by the appellants as for that facility also, the duty paid nature of the inputs is an essential requirement. We see no reason to interfere with the impugned order except in regard to that portion of the demand which was barred by limitation. The notice dated 6-2-1989 is time barred for the amount of duty relating to a period beyond six months prior to that date. We do not agree that the South Regional Bench decisions in the Nucon Industries Pvt. Limited and other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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