9911796707
TMI Blog2015 (5) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... ring accessories. During scrutiny of records by Audit conducted during October-Nov. 2007, it was pointed out that in case of rejected duty paid goods, namely, brass components received back by the assessee, he took Cenvat credit under Rule 16(1) of the Central Excise Rules. However, the rejected goods after being subjected to process of testing were rejected and cleared as scrap to their job workers for melting and conversion into brass bar and cleared under proper invoice, on which applicable duty was charged, which after conversion as bars were purchased by the assessee vide proper invoice. As per Revenue, the rejected goods are cleared as scrap and the process to which the rejected goods are subjected to, does not amount to manufacture. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Rules, 2002 read with Section 11AC of the Central Excise Act. 2.1 The appellant contested the show cause notice stating that the department was having entire knowledge of the activity as the duty paid on scrap cleared was reflected in the ER-1 returns and accordingly, there being no element of suppression or contumacious conduct, extended period of limitation was not attracted under the provisions of Section 11A of the Act. 2.2 As regards the limitation, it was observed by the adjudicating authority that in some of the returns, i.e., ER-1 the clearance of scrap was disclosed and any way, in the returns, the appellant have specifically mentioned the quantum of scrap generated from the rejected/re-processed materials received u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport dated 27-11-2008 wherein reply dated 17-3-2008 & 30-7-2008 of the appellant have been recorded. Thus, a show cause notice was issued on 8-7-2009 almost after 12 months (a few days less), is time-barred for majority of the period. He further urged that the testing is an integral part of the manufacturing process and rejected goods after testing were sent for job working conversion which was a manufactured scrap. It is further urged that the goods were not sold but transferred to their sister unit located at Jamnagar in Gujarat and invoice was issued and duty as applicable was paid on scrap to avoid procedural difficulty raised by the Octroi authority of the State but as it was actually job work, no Central Excise duty was charged and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and destroyed in the factory before clearance and accordingly, the demand of Cenvat credit under Section 16(2) of the Central Excise Rules under the Hindalco case was upheld. Such facts are not obtaining in the present case. 2.5 It is further urged that in the facts and circumstances, no penalty is attracted as the penalty imposed under Section 11AC read with Rule 25 of Central Excise Rules is fit to be set aside. 3. The learned Counsel for the appellant submitted that the period involved in the case is from September, 2005 to March, 2009 and a show cause notice was issued to them on 8-7-2009. Therefore, the majority of the demand involved in the show cause notice is hit by limitation. He also submitted that the applicant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods were not actually sold but transferred to their own unit at Jamnagar for conversion. It was stated that due to objection raised by the Octroi Authority "sister unit" being located in other State, the appellant under the Rule 4(5)(a) of Central Excise Rules, have issued invoice for clearing goods for job work. This fact is further supported from the facts with reference to sample invoice that no Central Sales Tax is discharged on removal of scrap. The show cause notice was adjudicated by the Assistant Commissioner's order dated 12-2-2010 holding that when the appellant received back the rejected goods, there was no wrong on taking of the credit under Rule 16(1). However, when rejected goods were cleared as scrap, then Rule 16(2) co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etable and hence, credit taken by the appellant is to be reversed on the goods being received back. Accordingly, he prays for rejecting the appeal. 5. Having considered the rival contentions, the issue before the Tribunal is to decide whether the process undertaken by the appellant, i.e., testing of returned rejected goods amounts to manufacture. 'Manufacture' includes any process - (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; and the term manufacturer shall be construed accordingly. 5.1 In the facts of the appellant's ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
