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TMI Blog2015 (7) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... ation No. 67/95 - if any other person carry out the manufacture, even in the premises of another manufacturer for the purpose of job work basis it cannot be said that job worker is hired labourer therefore job work shall be treated as independent manufacture and not the premises owner It has been alleged in the show cause notice that since the scrap is a finished goods, it is not permitted to be cleared in terms of Rule 4(5)(a) to a job worker. However, it is seen that the scrap so sent to the job worker is returned back to the Appellants in the form of ingots, which is then further processed in the Appellants' unit to manufacture flats, strips, rods, which are cleared on payment of duty. Thus there is absolutely no loss of any revenue to the Government. The waste and scrap generated are the remnants emerging as a necessary consequence of the manufacturing activity of cold rolling and cold drawing of copper bar undertaken by the appellants for bringing out the final product. These waste and scrap generated during the process of manufacture instead of being disposed of in the market, is being recycled and re-converted into copper bars, by following the procedure of Rule 4(5)(a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11AC(1)(b) of the Central Excise Act, 1944. (vi) I also impose penalty of ₹ 6,00,000/- and ₹ 8,00,000/- on M/s. Aurangabad Electricals Ltd. and M/s. Shridhar Metal Works respectively under Rule 25 of the Central Excise Rules, 2002. In terms of above order, the demand of duty was confirmed against two assessees i.e. present appellant M/s. Aurangabad Electricals Ltd. and other assessee i.e. M/s. Shridhar Metal Works. The present appellant is against confirmation of demand of duty and penalty on the clearance of Aluminium dross, Aluminium turning and Aluminium oily flash cleared to M/s. Shridhar Metal Works. The fact of the case is that the Appellant is manufacturer of Motor Vehicle Aluminium parts. During the manufacturing process, some quantity of Aluminium dross, Aluminium Turning Aluminium oily flash generates which is given to one M/s. Shridhar Metal Works who converts these waste aluminium material into Aluminium Ingots. M/s. Shridhar Metal Works Metals was given a portion of the factory premises of the Appellant for carrying out such process. The said waste aluminium material is not sold to M/s. Shridhar Metal Works but given freely for carrying out job work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed by Rule 4(5) of Cenvat Credit Rules, 2004. It his submission that on receipt of initial input they have availed Cenvat Credit and after processing the said inputs this remnant material emerged therefore this remnant material is partial processed inputs. Moreover when remnant material is undisputedly meant for use as inputs for further manufacture of ingots and thereafter motor vehicle part, nature of remnant material is nothing but input or partly processed inputs, therefore remnant material is permitted under Rule 4(5)(a) of Cenvat Credit Rules, 2004 without payment of duty as after job work the ingots are admittedly used in the manufacture of motor vehicle parts. In this support, Ld. Counsel relied upon following judgments. (a) Wyeth Laboratories Ltd. Vs. Collector of Central Excise, Bombay [2000 (120) E.L.T. 218 (Tribunal-LB)]. (b) Shakti Wire Products Vs. Commissioner of C.Ex. Mumbai-IV [2009 (241) E.L.T. 223 (Tri. - Mumbai)] (d) Jain Metal Component Pvt Ltd. Vs. Commissioner of C.Ex. Jaipur-II [2006 (206) E.L.T. 842 (Tri-Del)] (e) Comet Brass Industries Vs. Commissioner of Central Excise, Daman [2005 (189) ELT 62 (Tri-Mumbai) He further submits that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. We have carefully considered the submissions made by both sides. 5. As regard issue whether the remnant material cleared by the appellant to M/s. Shridhar Metal Works is clearance for the home consumption and leviable to excise duty or it is captive consumption and exempted under Notification No. 67/95-CE dated 16/3/1995, we observed that a part of the premises of the appellant was given on leave and licence agreement to different entity i.e. M/s. Shridhar Metal Works who is unrelated to the appellant therefore in our view the premises which is used by M/s. Shridhar Metal Works is out side premises of the appellant. Secondly M/s. Shridhar Metal Works is an independent entity who carried out job work on the material supplied by the appellant in such situation M/s. Shridhar Metal Works has independent manufacturer of aluminium ingots therefore removal of remnant material to M/s. Shridhar Metal Works cannot be treated as captive consumption and therefore the same shall not be entitled for exemption under Notification No. 67/95. In various judgment by various forum's, view has been taken if any other person carry out the manufacture, even in the premises of another manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturers and, therefore, the duty on Aluminium and lead electrodes got manufactured by them on job work basis cannot be demanded from the appellant by treating them as manufacturers. The impugned orders are set aside. The appeals are allowed. In view of the above judgment of coordinate bench of this Tribunal it is settled that if job worker is doing job work within the factory premises of the principal with his own capital goods, it is job work and shall be treated as manufacture. In the present case, job worker M/s. Shridhar Metal Works carried out manufacturing process of aluminium ingots in the premises, which was taken on leave and licence basis on consideration of rent, therefore M/s. Shridhar Metal Works is manufacturer on job work basis therefore removal of remnant material by the appellant to M/s. Shridhar Metal Works cannot be considered captive consumption. As regard the issue that even if the removal of remnant material by the appellant to M/s. Shridhar Metal Works is not treated as captive consumption and it is home consumption, whether appellant is required to pay duty on such removal. We are of the view that the removal of remnant material to M/s. Shridhar Metal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y inputs received in a factory may be removed as such or after being partially processed to a job worker for further processing, testing, repair, re-conditioning or any other purpose subject to the fulfillment of conditions specified in this behalf by the Commissioner of Central Excise having jurisdiction.] From the above rule also it is permitted that input can be removed for job work. Even in the job work if the resultant product is returned and used in the manufacture of dutiable goods the said job work is not liable for duty, in terms of notification 214/86-CE dated 25/3/1986. It is observed that in view of Rule 4(5)(a) and Rule 16 (a) of Central Excise Rules, 2002 and Notification No. 214/86-CE it indicates that intention of the legislator is that if the input whether as such, or partially processed or after processing by the job worker finally used in the final product which is cleared on payment of duty, all these stags of the movement of goods from the raw material stage up to the final product no duty is levaiable. In the present case remnant are at intermediate stage that means initial input on which Cenvat credit is availed has under gone the process of manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or allowed on the part of the inputs contained in any waste or refuse or by-product arising during the manufacture. (b) Words used in these Modvat Rules, like repairing, rejoining, reconditioning, waste, refuse, by-product, are not defined in the Rules. (c) Reading of these Rules 57D, 57F(2), 57F(4) in the light of common understanding of the words would indicate, that inputs in their course of conversion, or when used in or in relation to the manufacture of the final products, may require reprocessing, reconditioning or any other further processing and due to such partial and final processing can undergo and result in any stage of intermediate goods, by-products; refuse or/and waste. (c) Commercial prudence and technological feasibility would induce a manufacturer to reconvert, reprocess, recondition and otherwise deal with intermediate goods, by-products, scrap, refuse, waste etc. to obtain maximum targeted production of the final product by utilising the facilities available in his premises or by sending them out on job work to other places. Only when final product is no longer profitable or technologically possible, a manufacturer would treat such resultant stage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... catalyst was used in the process but was not itself subjected to any such process. It was a result of process of raw materials that the catalyst became spent and could not be used further. Therefore, in the manufacturing activity under consideration, catalyst was not subject to any process and could not be said to have been processed in the catalyst was the subject of the manufacturing process. are not correct. As we find that a catalyst is entitled for input credit under Rule 57A, as no distinctions are made in the Modvat rules between input catalyst or input raw material, no limitations on desire of the assessees of the catalyst under Rule 57F(2) are called for by invoking the route of Rule 57F(4). A catalyst, by its very nature would be subjected to a process or assist in the processing of goods and would get consumed or by its very nature require reconditioning. (g) When we do not find any provisions of law to impede and raise duty liability at any stage on the assessees efforts/desire to use the inputs in or in relation to the manufacture of the final products. Therefore, Rule 57F(4) cannot be read to be applicable to partially processed inputs or inputs required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be termed as partially processed inputs. 2009(241) E.L.T. 223 (Tri.-Mumbai) SHAKTI WIRE PRODUCTS Versus COMMISSIOINER OF C. EX., MUMBAI-V 7. We have examined the position. It has been alleged in the show cause notice that since the scrap is a finished goods, it is not permitted to be cleared in terms of Rule 4(5)(a) to a job worker. However, it is seen that the scrap so sent to the job worker is returned back to the Appellants in the form of ingots, which is then further processed in the Appellants' unit to manufacture flats, strips, rods, which are cleared on payment of duty. Thus there is absolutely no loss of any revenue to the Government. 8. The waste and scrap generated are the remnants emerging as a necessary consequence of the manufacturing activity of cold rolling and cold drawing of copper bar undertaken by the appellants for bringing out the final product. These waste and scrap generated during the process of manufacture instead of being disposed of in the market, is being recycled and re-converted into copper bars, by following the procedure of Rule 4(5)(a) as the appellants do not have any facility for such reconversion. They further consumed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of generated scrap for any other purpose other than reconversion. It is not in dispute that in the present case, the scrap cleared by the appellants under job work challan has been returned in the form of ingots and properly accounted for. 11. The Tribunal in the case of Narmada Plastics (P) Ltd. v. Commissioner of Central Excise, Bhopal reported in 2004 (178) E.L.T. 806 (Tri-Del.) held : Cenvat/Modvat - Waste and scrap, removal of, for reprocessing and return - Rule 57F of erstwhile Central Excise Rules, 1944 - Benefit of Rule 57F(3) now Rule 4(5)(a) ibid not deniable if after use of plastic granules in manufacture of HDPE/PP Fabrics, left over material sent out under said Rule, for being reprocessed into granules and on return to be used in manufacture of fabrics - Such a material not waste or scrap, ineligible to such benefit as an input, if assessee considers it technologically suitable for being reprocessed and again used thereafter as an input in manufacture of final products. 12. To the same effect is the decision of the Tribunal in the case of Jain Metal Components Pvt. Ltd. v. CCE, Jaipur-II reported in 2006 (206) E.L.T. 842 (Tri-Del.) which holds as under : C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aste. The appellants were clearing the brass waste and scrap without payment of duty for job work under the cover of challans for getting the waste remelted and reconverted into brass rods and were receiving back the brass rods which were used as inputs for the manufacture of their final product i.e. brass components. 3. The case of the Revenue is that the appellant wrongly followed the procedure under Rule 57AC of Central Excise Rules as this Rule provides that manufacturer can remove any inputs or capital goods as such to the job worker for further processing, testing, repairing, reconditioning or any other purpose. The case of the Revenue is that as the brass waste and scrap is not input, therefore, the appellant has to pay the duty on the brass waste and scrap. 4. We find that this issue is covered by the decision of the Larger Bench of this Tribunal in the case of Wyeth Laboratories Ltd. v. CCE reported in 2000 (120) E.L.T. 218. In this case the Tribunal held as under: 3(c) commercial prudence and technological feasibility would induce a manufacturer to reconvert, reprocess, recondition and otherwise deal with intermediate goods, by-produces, scrap, refuse, waste etc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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