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2008 (12) TMI 465 - AT - Central Excise
Issues involved: Determination of duty liability on scrap arising from polyethylene films used for wrapping inputs and intermediate products.
Issue 1: Duty liability on scrap arising from duty paid inputs. The Original authority held that duty liability should be discharged on scrap from duty paid inputs, while no duty is leviable on scrap from non-paid inputs. Commissioner (Appeals) favored the Respondents, stating no duty is payable even on scrap from duty paid inputs. The Tribunal, however, ruled in favor of the Revenue, holding duty must be discharged on all scrap. Assistant Commissioner quantified the amount, excluding duty on scrap from non-duty payable inputs. Commissioner (Appeals) upheld the Order-in-Original. Revenue appealed, citing precedents where waste and scrap were deemed dutiable regardless of input duty status. The Tribunal dismissed the Revenue's appeal, stating the scrap did not arise in the course of manufacturing any product, as it was used solely for wrapping inputs and intermediate products, with no manufacturing process involved. Consequently, the duty demand on the scrap was deemed illogical, and the Revenue's appeal was dismissed. Issue 2: Compliance with previous CESTAT ruling. The Revenue argued that the Commissioner (Appeals) should have accepted the previous CESTAT ruling on the dutiability of the scrap, which was contradictory to the Commissioner's decision. The Tribunal, however, found no merit in the Revenue's appeal, as the scrap did not arise during the manufacturing process, leading to the dismissal of the appeal. Issue 3: Request for setting aside the impugned order. The Revenue prayed for setting aside the impugned order and allowing the appeal with consequential relief based on the grounds mentioned. However, the Tribunal dismissed the appeal, emphasizing that the scrap did not arise during manufacturing and therefore did not warrant duty liability.
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