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TMI Blog2025 (1) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs.4,96,580/-, I order for appropriation of the same against the demand being confirmed. 2. I also demand interest at applicable rates on the amount confirmed above (1) under the provisions of Section 11AB (now Section 11AA] of the Central Excise Act. 1944. 3. I also impose a penalty of Rs. 1,43,47,121.75 (Rs One Crore Forty Three Lakhs Forty Seven Thousand One Hundred Twenty One & Seventy Five Paisa) on the party, under the provisions of Section 11AC of Central Excise Act, 1944, read with Rule 15 of the Cenvat Credit Rules, 2002. 4. I also impose a penalty of Rs. 5,000/- (Rupees Five thousand only) on the party under the provisions of Rule 27 of the Central Excise Rules, 2002." 2.1 Appellant is engaged in manufacture and sale of different types of Chemicals namely Caustic Soda, SBP, Liquid Chlorine etc. falling under Chapter hearing No.28, 29 and 31 of the First Schedule to the Central Excise Tariff Act, 1985, as amended, and are also availing facility of CENVAT credit on various inputs and capital goods under the Cenvat Credit Rules, 2004. 2.2 Appellant had sold scrap of capital goods without paying any Central Excise duty on the said sale. On being asked, appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ONER OF C. EX., JAIPUR 2016 (338) E.L.T. 145 (Tri. - Del.) Hindustan Coca Cola Beverages Pvt. Ltd vs. C.C.E. & S.T., Patna 2016 (343) E.L.T. 1016 (Tri. - Kolkata) Karnal Co-Operative Sugar Mills Ltd vs Commr. Of C. Ex., Panchkula 2011 (265) E.L.T. 236 (Tri. - Del.) CCE, Chandigarh v. Winsome Textile Industries Ltd. reported at 2017 (358) ELT 387 (Tri-Chan) Shree Bhageswari Papers Ltd. v. CCE, Meerut reported at 2016 (338) ELT 132 (Tri-All) Chemplast Sanmar Ltd. v. CCE, Chennai reported at 2010 (262) ELT 1124 (Tri-Mad), The perverse impugned order based on factually wrong and illogical verification report. The waste and scrap cleared were not manufactured items by the appellant, therefore duty was determinable and thus nil amount was payable. Reliance is placed on the following decisions:- CCE, Jaipur-II Vs Birla Corporation Ltd. 2005 (181) ELT 263 (Tri.-Del.); Grasim Industries Ltd. Vs UOI 2011 (273) ELT 10 (SC); CCE, Jaipur-II Vs Grasim Industries 2009 (233) ELT 412 (Tri.-Del.); Prism Cement Ltd. 2009 (243) ELT 231 (Tri.-Del.); Ultratech Cement Ltd. 2017 (345) ELT 130 (Tri.-Del.) Commissioner of Central Excise, Pondicherry Vs CESTAT, Chennai 2013 (297) EL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Cenvat Credit Rules, 2004 is liable to be imposed on the party? 14a. Now, I proceed to take up the above issues, one by one, the first being whether the duty was payable on waste & scrap of capital goods cleared by the party. I observe that in the present case, it is alleged that the waste & scrap of capital goods have been sold by the party during the period from 01.04.2008 to 31.03.2013, without paying the due Central Excise duty. The department was of the view that duty was payable on these clearances in view of the provisions of sub Section 5A of Rule 3 of the Cenvat Credit Rules, 2002. On the other hand, the contention of the party is that they were not liable to pay any duty on clearances of such waste & scrap arising from various materials on which Cenvat Credit was not taken, as they were purchased well before the introduction of CENVAT Credit scheme / MODVAT Credit scheme. However, on being asked, the party failed to furnish the evidence to back up their claim that the subject goods were purchased before the inception of such Modvat/Cenvat Scheme or that no credit was availed/utilized on it. 14b. Thus, in a nutshell, the dispute in the matter is that the depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained illustrations of the sample Cenvat Credit entries of such items, which were later-on cleared as scrap, the details of which are as under:- a) Purchase Invoice No. 2657 dt 31.08.2005 of M/s Thermax Ltd, Pune for the item "Beam/Joist' 1650 Kgs with CSH 72165000 & Cenvat Credit Entry in RG23 Pt-I Register No 2306 dt 27.09.2005 [Central Excise Tariff Act, 1985 description of the said CSH is 'Angles, Shapes & Sections of Iron or Non- Alloy Steel'] b) Purchase Invoice No. 2657 dt 31.08.2005 of M/s Thermax Ltd, Pune for the item 'MS Angle 50 x 50 x 6mm 3240 Kgs with CSH 72165000 & Cenvat Credit Entry in RG23 Pt-1 Register No 2307 dt 27.09.2005 [Central Excise Tariff Act, 1985 description of the said CSH is 'Angles, Shapes & Sections of Iron or Non-Alloy Steel'] c) Purchase Invoice No. 21 dt 11.08.2005 of M/s Castwell Industries, Nagpur for the item 'Shapes and Sections' 1220 Kgs with CSH 72224000 & Cenvat Credit Entry in RG23 Pt-I Register No 2124-2125 dt 15.09.2005 (Central Excise Tariff Act, 1985 description of the said CSH is 'Other Bars & Rods of Stainless Steel; Angles, Shapes & Sections of Stainless Steel"] d) Purchase Invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the party during the said period. The Range Officer had been entrusted to verify the claim of non-availment of Cenvat Credit by the party on items of Iron & Steel such as Angles, Channels. Plates, Pipes, Joist etc. The verification was done by the R.O. by scrutinizing the RG 23 Part-1 register of the party for the period April, 2002 to March, 2008, just to detect if Cenvat Credit had actually been availed by the party on any such item, or not. The five specific entries illustrated by the R.O. were just to show/prove that the Cenvat Credit was actually availed on items such as MS Angles, Beams, Joist, Pipes etc., which is contrary to the claim of the party. It was not incumbent upon the verifying officer to enlist each of the entries on which Cenvat Credit had been availed by the party. Thus, in conclusion, I hold, that the party in fact have availed Capital Goods Cenvat Credit on items of Iron & Steel. Copper etc., falling under Chapters 72, 74, 76. 78 etc. Thus, the claim of the party, to the contrary, stands proven wrong. 14h. I observe that the party, along with the submission made at the time of Personal Hearing on 24.01.2014, have submitted the details of only those In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cenvated/non-cenvated, so as to arrive at the dutiability of the same Further, if the same related to the period prior to 1994, the value addition and capital goods used in the plant & machinery after the introduction of the Modval scheme was also not provided to Audit for correct quantification of the same issue. They were also requested to provide the summary/ RG23 Pt-I & II details to enable the audit to scrutinize the availment of Cenvat Credit on MS Scrap/Channels etc shown in the list attached. They have nothing on record to substantiate their claim that no Central Excise duty is payable on such sale." I observe that once a doubt had been raised in this regard by the department, the onus automatically shifted to the party to produce the evidences on the basis of which they have presumed that the clearance of waste and scrap made by them was generated out of non cenvated materials Moreover, the sub-rule (5) of Rule 9 of Cenvat Credit Rules 2004 also provides that: "5) The manufacturer of final products or the provider of output service shall maintain proper records for the receipt, disposal, consumption and inventory of the input and capital goods in which the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of demand. Appellant has taken a categorical stand before the Adjudicating Authority that these scraps have arisen out of non-cenvated capital goods, some of them even prior to the insertion of Modvat/Cenvat credit scheme in respect of capital goods, this stand of the appellant was to be rebutted by the Adjudicating Authority in the impugned order by relying upon the suitable and concrete evidences. Presumption made against the appellant cannot be the ground for confirming the demand. In case of M/s Saraya Sugar Mills Ltd. Vs CCE, Allahabad 2024 (5) TMI 1329 this Tribunal has held as follows:- "4.5 It is clear from the above para of the show cause notice that it was the contention of the appellant even before the show cause notice was issued that the waste & scarp sold by them has arisen out of the Capital goods procured by them before 2000, when they were not availing the Modvat Credit in respect of the capital goods. Revenue has not produce an iota of evidence to prove the contrary. Both the lower authorities have stated that the burden to prove is on the appellant. The said contention of the authorities is contrary to the law of evidence. The burden to prove the fact lies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The above provision does not treat the waste and scrap as manufactured goods. It stipulates that the manufacturer who has availed capital goods credit, when clearing the capital goods as scrap, an amount equal to the duty leviable on the transaction value of waste and scrap shall be payable." 4.7 In case of Grasim Industries [2009 (233) E.L.T. 412 (Tri. - Del.)] Delhi bench has held as follows:- "6. We have carefully considered the submissions from both sides. We have also gone through the grounds of appeal. In the show cause notice, it was alleged that the assessee had taken Modvat credit on capital goods in respect of a number of items and after use of such capital goods, these were dismantled and sold as scrap. In terms of Rule 57-S(2)(c) the assessee was required to pay the duty leviable on such waste and scrap. It was also proposed that they were required to pay duty on waste of the packages/containers in which modvatable inputs were received as per the provisions of sub-rule 18(a) of Rule 57F of Central Excise Rules, 1944. 7. The original authority held that waste and scrap has been generated at the workshop as well as in the plant during the course of repairing and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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