2000 (10) TMI 373 - AT - Central Excise

Summary

Issues:
1. Demand of duty on scrap obtained in the manufacture of ball and roller bearings.
2. Determination of the percentage of scrap generated and duty demanded.
3. Allegation of suppression of facts regarding the percentage of recoverable scrap.
4. Applicability of the extended period of limitation.
5. Adequacy of departmental actions in determining the scrap percentage.

Analysis:

Issue 1: Demand of duty on scrap obtained in the manufacture of ball and roller bearings
The appellant sent rough forgings to job workers for finishing, resulting in scrap generation. The Collector confirmed the duty demand on the scrap, leading to the appeal.

Issue 2: Determination of the percentage of scrap generated and duty demanded
The appellant initially mentioned an approximate 10% scrap generation, which the department accepted. Subsequently, the department independently determined the scrap to be 40%, leading to duty demands for specific periods. The appellant contested this calculation based on a report indicating a 50% loss, suggesting duty should only apply to visible scrap.

Issue 3: Allegation of suppression of facts regarding the percentage of recoverable scrap
The Collector alleged suppression of facts regarding the 40% recoverable scrap, which the appellant disputed based on the lack of clarity in the department's determination process and reliance on the 40.21% loss figure without disclosing the basis.

Issue 4: Applicability of the extended period of limitation
The appellant raised a limitation defense, arguing that the department should have determined the waste percentage instead of relying on appellant-provided figures. The Tribunal found fault with the department for not ascertaining the scrap amount independently and criticized the accusation of suppression.

Issue 5: Adequacy of departmental actions in determining the scrap percentage
The Tribunal criticized the department for not independently verifying the scrap percentage and instead accepting appellant-provided figures. It questioned the department's approach of directing the appellant to determine the waste percentage and then accusing the appellant of suppression.

In conclusion, the Tribunal set aside the impugned order, citing the lack of clarity in determining the scrap percentage, the department's failure to independently verify the figures, and the unfair accusation of suppression. The Tribunal also highlighted the department's flawed approach in handling the duty demand issue and the limitation aspect.