9911796707
TMI Blog2023 (8) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Whether, the appellant have properly followed the inputoutput ratio as per the statutorily prescribed norms of wastage, for the manufacturing of final goods, in terms and conditions of the aforesaid Notification No. 52/2003-CUS, or not; (ii) Whether, the clearance of brass scrap classified under the CTH, other than the CTH of import by the appellant was proper or otherwise. (iii) Whether, any manufacturing activity was carried out by way of segregation of the scrap, inasmuch as the adjudicating authority has held that since, the activity of segregation does not amount to manufacture as per the Export Import policy, no manufacturing was carried out and likewise the classification and value of the goods cleared in the DTA considering as wastage, was required to be considered as declared while importing. (iv) Peripheral issue on the anvil, in case of one of the appeal (No. V2/334/RAJ/2012) to be decided is also as to whether, the duty on slag generated in excess of 2% of the input quantity is to be recovered or otherwise along with the legal status of the imposition of interest and penalty is to verified. 7. Before embarking upon to decide the present set of appeals, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the finished goods and therefore, classifying the same under the main brass scrap heading for the purpose of charging duty and valuation, is incorrect. 8. Now, briefly understanding the nitty-gritty of the import of the brass scrap and its procedure by 100 % EOU units, I find that the brass scrap is imported by the various manufacturers/importers of the brass parts hailing from in and around Jamnagar, at the port of import. At the port of import, the container imported by 100 % EOUS laden with the brass scrap is superficially examined and from their under proper seal, it is transported to the factory premises of the appellant holding. 100 % EOU unit, which is virtually a sort of warehouse, allowing duty free storage of inputs for manufacture of the goods, which are to be eventually exported or dealt with as per the provisions applicable to 100% EOUS, as laid down under the said Notification, as also as per the Foreign Trade Policy. At warehouse/EOU, imported scrap is unloaded in the presence of the party or the assessee (appellant) concerned, who imported such scrap, as well as the jurisdictional Central Excise officers, who examines the same. After being the goods being unload ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f SION difficult in the case of a particular unit, the Norms Committee may refer the case to the Board of Approval for a decision.": in the paragraph 4, after the second proviso, in the clause (u) (a), for the words "such clearance or debonding of capital goods may be allowed on payment of duty on the depreciated value thereof and at the rate in force on the date of debonding or clearance. as the case may be", the following shall be substituted, namely:- "such clearance or debonding of capital goods may be allowed on payment of duty on the depreciated value thereof and at the rate in force on the date of debonding or clearance, as the case may be, if the unit has fulfilled the positive NFE criteria taking into consideration the depreciation allowable on the capital goods at the time of clearance or debonding. In case of failure to achieve the said positive NFE, the depreciation shall be allowed on the value of capital goods in the same proportion as the achieved portion of NFE": after paragraph 13, in the (iii) Explanation, after serial number (xiii) and entry relating thereto, the following serial number and entry shall be inserted, namely:- "(xiv) "Norms Committee" me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EZ, Gandhidham, and provisions of the said Notification No. 52/2003-Cus, as amended, in respect of the appellant i.e. M/s Deep Recycling Industries, Jamnagar. 10.3 I find that the Norms Committee, while fixing the wastage norms in two stages of manufacturing had observed that: "Dated: 04.05.2011. To The Development Commissioner, Office of the Development Commissioner, Kandla Special Economic Zone (KSEZ), Gandhidham-Kutch, Pin-370320 (Gujarat). Sub: Fixation of wastage norms in terms of Para 6.8(e) of Foreign Trade Policy, 2009-14 for the manufacture of brass items. I am directed to refer to your letter No. dated.... on the above mentioned subject and to inform that based on the recommendations of a team of Norms Committee which visited EOUS, manufacturing brass iterns from mixed metal brass scrap in Jamnagar area, the following wastage nors are fixed in terms of Para 6.8 (e) of Foreign Trade Policy, 2008-14 for the manufacture of brass items by M/s........... A. Wastage Norms during segregation: The input raw material namely mixed metal brass scrap is not normal brass scarp, as it contains brass scrap with high impunities like iron & ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33% has been granted at the first stage and from 7% to 25% (approx) has been granted at the second stage. 10.4 Furthermore, I observe that though the activity of segregation was NOT covered under the definition of "manufacture" w.e.f. 01.04.2002, as clarified under para 9 of Appendix 14-1-C titled "Sector Specific Requirements for EOU Units" of the FTP 2004- 09, and as held by the lower adjudicating authority in the impugned order, Hind that the said activity being essential for carrying out further manufacturing activities by the appellant, the same seems to have been relaxed and allowed by the Norms Committee, vide the aforesaid letter supra dated 04.05.2011, in terms of para 6.8(e) of the FTP 009-2009-14. I also observe that the Letter of Permission was granted to the appellant on 17.01.2003 i.e. after the amendment to FTP on 01.04.2002, wherein, the appellant had shown segregation of mixed brass metal scrap, as an initial stage of manufacturing process of the export products. Thus, it seems that even though the activity of segregation" was explicitly excluded from the definition of "manufacture" in the FTP, still the said activity being essential in nature towards manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Norms Committee. The appellant had also contended, while submitting the quantitative month- wise statement/s, that wastages were well within the prescribed limits, as specified by the Norms Committee, and therefore, the ratio of input-output norms followed by the appellant should be held to be acceptable and no demand in this regard, should be confirmed. However, I find that there are multitudes of cases requiring such verifications of the data, and for this appellate office, it would not be possible to verify all the quantitative data and worksheets submitted by the appellant, in accurate and precise manner, owing to the frugal infrastructure and time constraint. In any case, the jurisdictional authority are well versed and well equipped and suitably placed to analyse such verification of data. 10.6 I accordingly decide the cases/ appeals in following terms and subject to following verifications:- (a) Entire issue hinges upon the applicability of the aforesaid letter dated 04.05.2011, whereunder the wastage norms have been fixed by the Norms Committee. At the last para of the said letter dated 04.05.2011, the Foreign Trade Development Officer, New Delhi, has enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the norms fixed by the norms committee is only applicable to the consignment and the party who imported "Brass scrap containing impurities like iron and steel, plastic/ rubber etc.", carrying out such exercise by the jurisdictional authorities is of prime importance. (c) To reiterate for the sake of clarity, the verification of veracity of the data contained in the monthly quantitative statements submitted by the appellant, in the appeal memorandum, is required to be carried out by the jurisdictional Central Excise authorities, who after satisfying himself about the stage-wise consumption of 'brass scrap with impurities' and segregated/ processed mixed brass scarp and thereafter, usage of the same towards the manufactured goods, if found in order, allow the benefit. 11. On the second issue, I observe that the lower authority had held that the non-foundry scarp which was obtained after segregation was not utilised towards the intended purpose and was cleared 'as such' and thus, the very purpose of the said notification was defeated. In this context, I find that the Norms Committee had already allowed/ approved the usage/ consumption of 1.5 MT of mixed metal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis, that the same had not undergone the activity of manufacturing activity. Therefore, 1, in principle, hold that the individual classification adopted by the appellant at the time of clearance was appropriate. However, the benefit of this issue to the appellant, also hinges upon the main issue, for which they are in first place, required to satisfy and prove to the jurisdictional Central Excise authority, along with cogent documentary evidences, that they have imported and used the 'Brass scrap with impurities', of the type and ilk, for which the Norms Committee have fixed norms. However, if the appellant are eligible for the norms fixed by the Norms Committee, the appellant would be eligible for separate classification and valuation adopted thereof. And in case if they are not eligible of the benefit of wastage norms fixed by the Norms Committee, in that case the appellant would be eligible only upto 2% of the total wastages for the benefit of separate classification/valuation. 13. On the last issue of utilization of excess brass scrap by showing the same as the urning loss, I find that in the relevant SCN, it has been alleged that after allowing dmissible ratio of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities, if at all the same is different from this order. Furthermore, the reason for digressing, if at all, from such decisions is also amply palpable by way of my discussion and findings hereinabove, in this order. 15. Needless to state that since the demand of duty and confiscation has been subject to the verification. The same would not be imposable, in a situation if the appellant proves the jurisdictional authorities, about the applicability of the wastage norms fixed by the Norms Committee, to their cases. However, in case of failure to prove such fact, I see no reason to interfere with the actions proposed and confirmed in the impugned order germane to duty, interest, confiscation and penalties. 16. In view of above discussions and findings, I hold that the input-output norms in respect of the appellant, as fixed by the Noms Committee under the provisions of FTP, read together with the provisions of said notification, would be subject to the verification and directions given hereinabove in this order." From the above order, it is apparent that in principle on all the issues relief has been granted but the matter has been remanded for determination of the nature of scra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learance of segregated foreign materials namely iron, steel, rubber, plastic, dust etc, from honey grade brass scrap before feeding in the furnace cannot be treated as removal of "input as such" as envisaged under Rule 3(5) of CENVAT Credit Rules, 2004. The segregated foreign material in such situation, as has been explained above, shall be cleared on payment of Central Excise duty on transaction value as per its appropriate classification and rate of duty determined on merits." 4.2 He pointed out that in para 4 of the aforesaid circular, clearly recognizes that removal of foreign materials namely iron, steel, rubber, plastic etc., from "honey grade brass scrap" would not fall under rule 3(5) of CCR, 2004. He pointed out that it is apparent from the circular that even the department recognizes that honey scrap is also brass scrap with impurities. 5. Learned AR relied on the impugned order. 6. We have considered rival submissions. As can be seen from the order of Commissioner (Appeals) reproduced above, he has in principle allowed the benefit on all the issues however remanded the matter for verification of the fact, if the brass scrap imported by the appellants was in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
