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TMI Blog2025 (3) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... ste & scrap could be sent to a job worker for purpose of processing and manufacture of intermediate products which could be further put to use in the manufacture of final product at the end of the principal manufacturer. The said rule obligates that the goods that are sent by the principal manufacturer without payment of central excise duty, are subsequently returned for further processing to the principal manufacturer for utilization in the final product (viz. lead storage battery, in the present case), within the specified period. Also, with respect to the Standard Input Output Norms (SION), we take note of the appellant's assertion that quality of lead scrap is an important variable and is necessary for consideration to arrive at the recovery percentage (based on thorough testing of waste and scrap) as undertaken by EIL in their R&D section. The percentage of recovery would depend on the lead content in the waste and scrap and the nature of the scrap, like lead scrap or dross or sludge etc. There cannot therefore be a fixed one-to-one formula. Thus as for the Department's contention on the recovery part and adoption of the SION norms to the present matter is concerned, it canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which they secure the job charges depending upon the grade and type of lead alloy produced out of various types of inputs like lead scrap, lead dross, lead sludge etc. 3. Revenue issued Show Cause Notice dt.30.10.2014,for the period January 2014 to July 2014 to the appellant, alleging suppression of material facts concerning job work undertaken and realization of conversion charges. The department also invoked larger period of limitation in the matter. 4. It is the case of the department that the appellant never disclosed the facts of manufacture of 2067787.20 kgs of finished goods under job work/conversion work in their ER-1 returns. The department alleges that the appellant brought scrap from Haldia and Shyamnagar units of M/s Exide India Limited(EIL) and stored them separately, but at times it would get mixed up with their own inputs on account of shortage of space. Moreover, the assessee was not paying service tax on job work done for conversion of material brought from EIL. The Show Cause Notice alleged that EIL, a manufacturer of Lead Acid Storage Battery, sent waste and scrap to the appellant- their job worker for conversion to finish lead alloy under Cenvat Credit Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is thus improper, incorrect, and not maintainable as the show cause notice has been issued to the appellant being a job worker, and not to the principal manufacturer. 7. As for the Department's assertion that the processes undertaken by the appellant as a job worker did amount to manufacture and therefore the appellant did not fall within the ambit of Rule 4(5)(a) of the CENVAT Credit Rules, 2004, we are of the view that the understanding rendered by the Ld. Commissioner does not flow from the provision of the rules and the law as settled by judicial bodies. For the sake of ready reference, Rule 4(5)(a) of the CENVAT Credit Rules, 2004 is reproduced hereunder: - "RULE 4. Conditions for allowing cenvat credit. - (1) ......... (2) ......... (5)(a) The cenvat credit shall be allowed even if any input or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning, or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery part and adoption of the SION norms to the present matter is concerned, it cannot be doubted that the recovery percentage would vary from case to case, more so when the scrap supplied is not the kind of standard scrap as enumerated in the norms as has also been duly tested and certified by the R&D wing of EIL at the time of supply. We further note that the kind of scrap indicated in the norms is well-defined and clearly states of its constitution, etc. For instance, in respect of "Radio Mixed Hard/Soft Scrap Lead", "Rakes Battery Lugs" and "Relay Lead Covered Copper Cable", it states: - i. "-Radio MIXED HARD/SOFT SCRAP LEAD ii. Shall consist of clean lead solids, free of other materials, such as drosses. battery plates, lead covered cable, collapsible tubes, type metals, aluminium, zinc, iron and brass fittings, dirty chemical lead and radio- active materials. Review packaging specifications and regulatory status pertaining to shipping with buyer prior to sale. iii. -Rakes BATTERY LUGS iv. To be free of scrap lead, wheel weights, battery plates, rubber and or plastic case material and other foreign material. A minimum of 97% metallic content is required. Review packagin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al/commercially feasible manner be converted to a final product or desired to be converted further. Thus, what would be 'waste' for a manufacturer, may not be a 'waste' in the case of another manufacturer, even in the case of same kind of goods. It is significant to note, that while Rule 57D talks of three stages i.e. waste, Refuse or by- product, Rule 57F(4) only talks of waste. Therefore, it appears, that the framers of the rules have used the word 'waste' in Rule 57F(4) to be understood in a limited fashion; this has to be restricted to such converted inputs which are not desired to be used any further, for use, in or in relation to the manufacture of the final product. 13. The Larger Bench, in its order, further held as under: 3(e) Once we give such a meaning to the word 'waste' occurring in Rule 57F(4), then inputs, semi-processed, fully processed or converted into any other stage or further form, called by any name, would be covered by the provisions of the Rule 57F(2) used, inside or outside the Modvat credit availers facilities i.e. on job work, provided job work procedures are followed, such movements would be permissible as long as the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no evidence of any clandestine clearance, except presumptions and surmises based on theoretical calculations. 17. We also find no merit in the department's proposition in denying the appellant the job work status by imputing that the lead converted from lead scrap could not be cleared from their end upon payment of central excise duty as the said amounts to manufacture. As discussed above, the issue falls, well within the realm of Rule 4(5)(a) of the Cenvat Credit Rules, 2004. 18. In view of the position as settled by the Larger Bench of the Tribunal, the issue involved is thus no more res integra. Therefore, the claim of the Department disentitling the waste and scrap for the benefit of Rule 4(5)(a) of the Cenvat Credit Rules, 2004 does not stand to any merit. For reasons aforesaid the case of the Revenue fails both on merits as well as limitation. We therefore find no justification for the demand of duty or imposition of penalty on the appellant in the matter. 19. In view of our findings aforestated, we set aside the Order-in-Original No.16-17/Commissioner/CE/Kol-IV/2015 dated 30.11.2015 and allow the appeals filed by the appellants with consequential relief, if any, as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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