By TIOL News Service

MUMBAI, FEB 25, 2016: THIS is a Revenue appeal.

The respondents were availing MODVAT/CENVAT credit on inputs and discharging CE duty on the final products. During the period 1998-99 to 1999-2000, waste and scrap generated during the course of manufacture was cleared for job-work under Notification 214/86-CE without payment of duty and received back as semi-finished products viz. granules.

Revenue harbored a view that only Inputs and semi-finished goods could be cleared for job work under notification 214/86-CE but not waste and scrap. Inasmuch as the department demanded CE duty on waste and scrap cleared for job work.

The adjudicating authority dropped the proceedings initiated and the Commissioner (A) concurred with this view resulting in Revenue being aggrieved, again. This was in the year 2005.

By the time the appeal came before the Tribunal, the respondent assessee had "left the place" as the hearing notice issued by the Tribunal was returned back undelivered.

Revenue stuck to the allegations leveled in the SCN and also relied upon the Tribunal decisions in Narmada Plastics (P) Ltd. & Techno Cable Pvt. Ltd. wherein it was held that waste and scrap removal of, for reprocessing and return, erstwhile Rule 57F is not applicable.

The Bench noted that both the lower authorities had given concurrent findings as to the demand being unsustainable.

It was further observed -

++ Revenue's claim that benefit of Notification 214/86-CE cannot be made applicable to ‘waste' is incorrect as the said Notification applies for the goods manufactured by a job-worker on job-work basis and to be used in or in relation to the manufacture of final products on which duty of excise is leviable whether in whole or in part.

++ In the case in hand, it is undisputed that the plastic waste and scrap which gets generated during the manufacture of final products are sent to job-worker and received back as granules which are further consumed in the manufacture of final products. On the face of such factual matrix, in our view, both the lower authorities were correct in holding that no liability arises on the respondent-assessee.

++ Further, the benefit of Notification 214/86 should be applicable to the inputs on which cenvat credit is availed but at the same time the assessee kept the department informed by following the procedure to indicate that that they are clearing the waste and scrap to the job-worker and received the same back as granules.

++ This transparency in the appellant's dispatch of waste and scrap and receiving the granules back cannot be questioned only on the ground that the Notification 214/86-CE is not applicable to waste and scrap. Factually also, it is not in dispute that the waste and scrap which is sent to job-worker is received back as granules, nothing survives in the appeal.

The Revenue appeal was rejected.

(See 2016-TIOL-507-CESTAT-MUM)