At, Customs Excise Service Tax Appellate Tribunal New Delhi
By, THE HONORABLE JUSTICE: DR. SATISH CHANDRA (PRESIDENT) & THE HONORABLE JUSTICE: V. PADMANABHAN
For Petitioner: Dhruv Tiwari, Advocate And For Respondents: R.K. Mishra, AR
1. All the three appeals have been filed against the order in appeal No. BHO-EXCUS-001-APP-28 to 30/17-18 dated 30.06.2017 passed by the Commissioner (Appeals-I), Customs, Central excise & Service Tax, Bhopal. The dispute in all the three appeals is identical which pertains to the excisability of the scrap generated in the factory.
2. Brief facts of the case are that the appellant is engaged in the manufacture of tractors and also parts of tractors. Trac
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tors are exempted from excise duty. For the purpose, various parts and components are bought out and used in the assembly of tractors. In addition to the division for manufacture of tractors, the appellant also had another division where spare parts are procured and repacked and labelled and sold after payment of excise duty since the packing is being considered as process of manufacture. During the course of manufacture of tractors, some of the components are found to be unfit. Some other components are also broken/damaged in the course of manufacture of tractor. The present dispute concerns such defective components. Revenue by entertaining a view that appellant is required to discharge duty in respect of such unfit/damage components, raised duty demand for the period December 2011 to September, 2015. The demand was dropped initially by adjudicating authority on the ground that it is not the appellant who has manufactured the said rejected goods. However, at the level of Commissioner (A), the order was reversed and demand was confirmed. Aggrieved by the impugned order, present appeals have been filed.
3. With this background, we heard Sh. Dhruv Tiwari, ld. Advocate for the appellant and Sh. R. K. Mishra, ld. AR for the Revenue.
4. After hearing both sides and on perusal of record, it appears that the identical issue has come up in assessee own case before the Tribunal (Final Order No. 57654/2017 dt. 06.11.2017) where it was observed that-
"5. After hearing both sides and on perusal of record, it is not in dispute that the defective/damaged components have not been manufactured in the appellants factory. Such components were procured by the appellants for use in the manufacture of tractors which are exempted from duty. Some of the components were found unfit or got damaged from duty. Some of the components were found unfit or got damaged during the manufacturing process and have been cleared as waste and scrap. It is evident that damaged goods have not been manufactured by the appellant but were procured from outside after payment of duty. The section note 8(a) to section XV has no application to such goods.
6. We find that the similar issue came for consideration before the Tribunal in the case of Panasonic Energy India Co. Ltd. vs. CCE, Indore : 2016 (11) TMI 1283-CESTAT-New Delhi]. The observations by the Tribunal are reproduced below:
"4. We find that the appellant is not engaged in the manufacture of any paper or paper board. These items were their inputs procured after payment of Central Excise duty. These inputs were put to intended use in appellant's factory. In such a situation this is not tenable to hold that appellant was engaged in the manufacture of waste and scrap of paper. We note the similar dispute was before the Tribunal in the case of WIMCO Ltd., vs. CCE Lucknow : 2008 (230) ELT 106 (Tri. Del)]. The Tribunal held as below:
"In the present case, we find that the appellant has purchased duty paid paper and paperboard from the market. They are not the manufacturer of paper and paperboard and they are merely consumers of paper and paperboard. When they used paper and paperboard for manufacture of empty boxes, some quantity of waste, scrap and parings of paper and paperboard has arisen. They had no intention to manufacture of scrap waste or paring. The intention is to minimize/avoid the waste and not to produce the same. These scrap/waste/paring also cannot be considered as intermediate product or by-product during the course of manufacture of any excisable goods. No new product has come into existence. The scrap of paper cannot be considered as a product different from the paper, the waste arising out of paperboard is not a product different from paperboard. We also do not find any special definition rendering emergence of such waste, scrap, paring as amounting manufacture. Mere mentioning in the tariff is not sufficient to attract excise duty."
5. Following the above ratio, we find no justification in the impugned order and accordingly set aside the same. Appeal is allowed".
5. By following the decision of the Tribunal (supra), we are of the view that the impugned order cannot be sustained. Same is set aside and appeals are allowed