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TMI Blog2019 (9) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... oved as waste and scrap, provisions of Rule 3(5A) of Cenvat Credit Rules, 2004 cannot be invoked. In these circumstances, demand under Rule 3(5A) of Cenvat Credit Rules, 2004 is set-aside. CENVAT Credit - demand on waste and scrap items lime MS Oil paint drums, spent zinc based catalyst, used therminol, comox catalyst etc., these items - HELD THAT:- The Section 2(d) defines the excisable goods and to be excisable goods, is to be first manufactured. The goods coming into existence as by-product during the process of manufacture cannot be treated as manufactured goods - Thus, even if the items cleared answered to the description under Section 2(d) of the Central Excise Act, duty can be charged only if they pass through the process under Section 2(f) of the Act - demand do not sustain. Appeal allowed - decided in favor of appellant. - Excise Appeal No. 13128 of 2013 - FINAL ORDER NO. A/11772 / 2019 - Dated:- 16-9-2019 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Willingdon Christian, Advocate for the Appellant Shri K.J. Kinariwala, Assistant Commissioner (AR) for the Respondent ORDER This appeal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question are waste and scrap of capital goods as defined in Rule 2(a) of Cenvat Credit Rules, and also that the assessee had taken Cenvat credit of the duty paid on such capital goods. He argued that these goods are not falling within the definition of capital goods. He relied on the following judgments:- (a) 2008 (225) ELT 50 (Raj) UOI vs. Hindustan Zinc Limited (b) 2009 (233) ELT 412 (Tri. Del.) CCE vs. Grasim Industries (c) 2005 (69) RLT 12 (CESTAT) CCE vs. Banswara Textile Mills Ltd. (d) 2017 (345) ELT 130 (Tri. Del.) Ultra Tec Cement Ltd. vs. CCE He further argued that none of the item has been specifically classified before demanding the duty. He argued that Rule 3(5A) mandates the manufacturer to pay an amount equal to the duty leviable on the transaction value. For the said period, the goods have to be first classified and such classification has not been undertaken by the Revenue and general rate of either10%, 16% or 8% depending on the timeline has been applied. He further argued that there is no machinery provision to recover the amount under Rule 3(5A). He argued that as per Explanation-III appended to Rule 6, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit on the capital goods which are being removed as waste and scrap, provisions of Rule 3(5A) of Cenvat Credit Rules, 2004 cannot be invoked. In these circumstances, demand under Rule 3(5A) of Cenvat Credit Rules, 2004 is set-aside. 9. The next issue relates to demand on waste and scrap items lime MS Oil paint drums, spent zinc based catalyst, used therminol, comox catalyst etc., these items are in the nature of items the Revenue has invoked Section 2(d). SECTION 2. Definitions .- In this Act, unless there is anything repugnant in the subject or context, - (a) to (c) .. . . (d) excisable goods means goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt; Explanation - For the purposes of this clause, goods includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable. It is seen that said Section has not application in the instant case. The Section 2(d) defines the excisable goods and to be excisable goods, is to be first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule for determining the applicable rate of duty and it cannot be readily construed to have any deeming effect in relation to the process of manufacture as contemplated by Section 2(f) of the Act, unless expressly mentioned in the said Section Note. In Shyam Oil Cake Ltd. v. CCE, (2005) 1 SCC 264 = 2004 (174) E.L.T. 145 (S.C.), this Court has held : 16. Thus, the amended definition enlarges the scope of manufacture by roping in process which may or may not strictly amount to manufacture provided those processes are specified in the section or chapter notes of the tariff schedule as amounting to manufacture. It is clear that the legislature realised that it was not possible to put in an exhaustive list of various processes but that some methodology was required for declaring that a particular process amounted to manufacture. The language of the amended Section 2(f) indicates that what is required is not just specification of the goods but a specification of the process and a declaration that the same amounts to manufacture. Of course, the specification must be in relation to any goods. .. 23. We are in agreement with the submission that under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or process in relation to manufacture of the end product, which involves bringing some kind of change to the raw material at various stages by different operations. The process in manufacture must have the effect of bringing change or transformation in the raw material and this should also lead to creation of any new or distinct and excisable product. The process in relation to manufacture means a process which is so integrally connected to the manufacturing of the end product without which, the manufacture of the end product would be impossible or commercially inexpedient. This Court has in several decisions starting from Tungabhadra Industries v. CTO, AIR 1961 SC 412, Union of India v. Delhi Cloth General Mills Co. Ltd., AIR 1963 SC 791 = 1977 (1) E.L.T. J199 (S.C.), South Bihar Sugar Mills Ltd. v. Union of India, AIR 1968 SC 922 = 1978 (2) E.L.T. J336 (S.C.) and in line of other decisions has explained the meaning of the word manufacture thus : 14. The Act charges duty on manufacture of goods. The word manufacture implies a change but every change in the raw material is not manufacture. There must be such a transformation that a new and different article must e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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