2017 (11) TMI 1793 - AT - Central Excise

Excisability - scrap - cut away portion of the HR coil arising in the course of manufacture of pipes - Held that - The cutting away of the uneven edge of the HR pipes cannot be considered as an independent process unconnected with manufacture of pipes. It is a process carried out by way of preparation in the continuous process leading to the finished product i.e. pipes. There is no dispute that the pieces of HR coils which are cut away are nothing but scrap. Such scrap has to be considered as emerging in the manufacture of finished product only - the same is liable to excise duty as a scrap. Benefit of N/N. 89/1995 - Held that - This notification exempts waste and scrap arising in the course of manufacture of exempted goods - in the present case in addition to exempted clearance as above pipes are also cleared on payment of duty from the same factory - benefit of notification not available to the appellant. Appeal dismissed - decided against appellant.

Summary

Issues involved:
Manufacture of MS spirally welded pipes, liability for duty on cut away portions of HR coils, applicability of Notification No. 89/1995, interpretation of scrap arising in the course of manufacture.

Analysis:
The appellant, engaged in manufacturing spirally welded pipes, faced a dispute regarding the duty liability on the cut away portions of HR coils cleared without payment of duty. The department contended that the cut away portion constituted scrap arising during the manufacturing process of pipes, demanding duty and imposing penalties. The appellant argued that the cutting of HR coils did not amount to manufacture, citing legal precedents. The Tribunal analyzed whether the cut away portions of HR coils, considered scrap, had arisen in the course of manufacturing pipes. It was established that the cutting process was integral to the continuous manufacturing process of pipes, making the scrap liable for excise duty. The Tribunal rejected the appellant's reliance on case laws and upheld the duty liability on the scrap.

Regarding the appellant's claim for the benefit of Notification No. 89/1995, which exempts waste and scrap arising during the manufacture of exempted goods, the Tribunal found that while some pipes were cleared under an exemption notification, others were cleared with duty payment from the same factory. Consequently, the appellant was deemed ineligible for the benefits under Notification No. 89/1995. The Tribunal concluded that there was no justification to overturn the impugned order, upholding the duty liability on the scrap and rejecting the appeal.

In summary, the judgment clarified the duty liability on scrap arising during the manufacturing process of spirally welded pipes, emphasizing the integral nature of the cutting process in the production of the final product. Additionally, the Tribunal addressed the inapplicability of the exemption notification due to mixed clearances of pipes from the factory, leading to the rejection of the appellant's appeal.