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TMI Blog2008 (7) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... overed, and interest, and penalty etc. may not be imposed. The statement of the Vice-President Shri P.K. Jain were recorded on 8-4-1999 under Section 14(2) of the Central Excise Act, 1944, and he stated that various types of scrap viz. M.S. Scrap, Conveyer scrap, scrap of Wooden Boxes, Cartoons scrap, Bearing scrap, Cement bags scrap etc. had arisen in their factory, and that said scrap had arisen from packaging material of goods received for use in the factory, and from machine and parts, bearing, conveyer belts etc., which became unusable in the plant, during the course of manufacture of cement, that welding machine scrap, Heat Casting scrap, Liner plate scrap, steel scrap, 5 Kg. Packing machine scrap, Blow Bar Scrap, Grinding segment, Grinding Media, Electrical scrap, Cable scrap, Aluminum etc. were generated out of items used in the manufacturing machinery, and of white cement which became unusable on account of wear and tear, and various types of scrap were sent to scrap yard from various parts of the plant, and related department used to maintain a return pass which was sent to stores. The statement of Shri H.R. Kapoor, DGM (Mechanical) of the Unit was also recorded, wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by cutting of metal plates, angles, channels, sheets etc., for making of parts of their plant and machinery, during the course of repair and maintenance, and that these are cut pieces/trimmings of metal, arising during making of parts, which were being replaced in place of old and worn out parts, although these are not resulting directly from the process of manufacturing of their final product i.e. Cement. However, the process undertaken by the assessee is definitely covered by the expression "mechanical working of metal" as given in the definition of waste and scrap. In the opinion of learned Commissioner, thus these goods satisfied the definition as contained in Section Note 8(a) of Section XV of the Central Excise Tariff. Learned Commissioner sought support from a judgment of Tribunal, in Budhewala Co-op Sugar Mills Ltd. Vs. CCE, Chandigarh-I reported in 2002 (141) E.L.T. 490. It was also found, that the fact that these waste and scrap have been generated by cutting of M.S. Sheets etc. in the workshop has not been refuted by the assessee. Thus, it was found that adjudicating authority correctly demanded duty on such waste and scrap. So far other two categories are concerned, le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the catagorisation made by the learned Commissioner is wrong. Not only this even the learned Tribunal has not found the exercise of catagorisation into three categories by the learned Commissioner (Appeals) to be incorrect, or unwarranted. In these circumstances, the findings recorded by the learned Tribunal shows, that the learned Tribunal has found the scrap to be arising during wear/tear of the machine and machinery, and not to be arising out of manufacturing activity, and has relied upon its judgment in Birla Corporation's case, while a look at the judgment in Birla Corporation's case would show, that in that case the goods related to second category of scrap, in the categories formulated by the learned Commissioner (Appeals), and was not a case with respect to first category of scrap. Thus, the finding as recorded is perverse, and is required to be set aside. It was also contended, that according to Section Note 8(a), metal waste and scrap from the manufacture or mechanical working of metals and metal goods definitely not usable as such because of breakage, cutting-up, wear or other reasons is described as waste and scrap. According to the learned counsel, in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, and for the purpose of charging of the duty, the dismantling of the capital goods, and waste arising in that process, also cannot be said to be manufactured goods. In our view, thus this judgment clearly relates to the second category of scrap, as categorised by the learned Commissioner (Appeals), and not to the first category. Then, we may refer to another judgment of the learned Tribunal cited by the learned counsel for the Revenue, being in Budhewal Co-op Sugar Mills Ltd.'s case. A look thereat shows, that in that case, the duty was claimed on the sale of MS scrap generated in the workshop of the assessee, whereon duty was affirmed. It was also found, that no duty has been demanded in that case on sale of old parts of the machinery or scrap, allegedly generated by dismantling of used machinery. This judgment in our view, of course, does help the cause of the Revenue, but then the fact remains, that this is judgment of the learned Tribunal only, and then, it does not give any reasons. 13. Next judgment relied upon is, in SIV Industries Ltd. Vs. CCE reported in 2004 (177) E.L.T. 856. This again is a judgment of the learned Tribunal, South Zonal Bench, Chennai. In that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leviable to excise duty, where the prescribed amount of duty has been paid on the copper or copper content of alloys, in which event it would be exempted, therefore, this case has no bearing either ways. 16. Then, we come to WIMCO Ltd.'s case. In that case the waste was, the waste, scrap and parings of paper and paper board, generated during manufacture of printed paperboard boxes, and it was found, that the scrap is not new, distinct in name, character and use, and hence was not found to be dutiable. It was further held in this judgment, that merely because there is a tariff entry, goods would not become excisable, unless manufacture is involved. In our view, this judgment helps the assessee, to the extent it propounds the proposition, that excise duty cannot be attracted unless manufacture is involved, and the mere fact that there is tariff entry, the goods cannot become excisable. 17. Now, we proceed to examine the case in hand, bearing in mind the above legal position. We may at this place gainfully quote Section Note 8(a), which reads as under:- "(a) waste and scrap : metal waste and scrap from the manufacture or mechanical working of metals, and metal goods definitely not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the production or manufacture, on his own account. 21. Thus, in our view, firstly any process incidental or ancillary to the completion of a manufactured product also amounts to manufacture, and secondly, it is not necessary that the scrap should emerge in the process of manufacture of an excisable goods only, or in the process of manufacture of the end product only. 22. Now, we come to the factual aspect of the matter. In our view, the learned Commissioner (Appeals) has rightly put the entire lot of scrap in three categories, and the catagorisation has not been assailed by either side as well. Likewise the scrap falling in category (ii) and (iii) have not been found to be excisable to duty, and we have to concentrate only on category (i) which is "Waste & scrap generated by cutting of plates, sheets etc., during the course of repair and maintenance of plant & machinery". 23. In our view, it is clear from the record, that this category of scrap is a scrap generated by cutting of plates, sheets, as noticed by the learned Commissioner (Appeals), and obviously also welding electrodes, Mild Steel, Mild Steel Channel, M.S. Angles, beams, cutting tools etc., and this scrap is ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te, some pulley, or the like, at times it may be required to be fitted by nuts and bolts, at times it may be required to be fitted by heat process, while at times it may be required to be fitted by welding process, and in those events, the bringing about of the part concerned in existence in the workshop by a mechanical process, from out of plates, sheets, channels, beams, angles, welding electrodes etc. would definitely amount to manufacturing process, and if metal waste, and/or its scrap is generated in the course of manufacturing, in our view, there is no escape from the conclusion, that such metal waste, and scrap, would be exigible to excise duty. 25. It is a different story, that in that event, the raw-material used in manufacture of that particular part, may amount to input, and if the assessee has purchased that input duly paid, and fulfills other requirement of law, the assessee may claim Modvat and Cenvat Credit in that regard, but then, in our view, we are firm, that the metal waste, or scrap, generated in such circumstances, would definitely be a waste or scrap arising out of manufacture, as comprehended by Section 2(f) of the Act. 26. Thus, the question as framed is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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