2022 (11) TMI 793 - AT - Central Excise
Reversal of CENVAT Credit - credit attributable to the inputs contained in waste and scraps, which have not been received from the job-worker - shortages in quantity of processed inputs received back by the Appellant - Rule 4(5)(a) of the Cenvat Credit Rules, 2004 - HELD THAT:- The duty is being demanded by treating them as a manufacturer of waste and scrap, which is factually incorrect. The present provisions of Rule 4(5)(a), when compared with erstwhile Rule 57F(4) of Central Excise Rules, 1944, makes a clear distinction, inasmuch as the said Rule nowhere requires the return of waste and scrap generated at the job worker’s end.
The issue stands settled by the Tribunal’s decision in the case of ROCKET ENGINEERING CORPORATION LTD. VERSUS COMMISSIONER OF C. EX., PUNE-II [2005 (6) TMI 184 - CESTAT, MUMBAI]. By relying upon the Tribunal’s decision in the case of INTERNATIONAL TOBACCO CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, GHAZIABAD [2003 (10) TMI 171 - CESTAT, NEW DELHI], it was held that when no process of manufacture of waste and scrap has taken place at the end of principal manufacturer, duty cannot be demanded from the principal manufacturer.
The waste and scrap are not manufactured goods whether they are generated at the premises of the principal manufacturer or at the premises of job-worker and accordingly, the legislature have consciously not made any provisions for reversal of any credit taken on duty paid inputs in case of clearance of waste and scrap and/or, there non-return from the job worker’s premises under the Central Excise Rules, 2002 read with Cenvat Credit Rules, 2002/2004.
The demand of duty, interest and imposition of penalty upon the Appellant is set aside by holding that the Appellant was under no obligation to pay duty on waste and scrap used at the job worker’s end - appeal allowed.