Excise Duty Liability on Scrap generated at Job Worker Premises, Central Excise

[Rakesh K Paliwal]

Dear All,

Pl let me know the judgments on above subject, when Principle Manufacture sent goods[ under rule 4(5)a] for fuhrer processing to job worker /processor , and get back after processing , which is add in final product on which duty paid by principle manufacturer, what is the treatment of scrap generated at job worker premises regarding duty liabilty ????

Regards

Rakesh Paliwal

Posts / Replies

[Arun Kumar Singh]

The excise duty will paid on scrap also. Job worker should return the processed goods along with scrap to principal manufacturer.

[MUKUND THAKKAR]

Dear Rakesh,

in such situation you have two option.

1) you may cleared the scrap from your end by paying excise duty on realization value.

2) As suggested by Mr.Arun you may returned to your principal manufacturer along with processed goods.

[YAGAY AND SUN]

Dear Rakesh,

Waste and Scrap not required to be returned – Waste and Scrap generated at job worker’s end is not required to be returned to manufacturer. Only finished product is required to be returned- Forbes Aquatech v CCE (2008) 230 ELT 629 (CESTAT SMB)= 2008 (1) TMI 770 - CESTAT, BANGALORE – relying on CCE v Shahumbari Sugar (2004) 176 ELT 819 (CESTAT) = 2003 (9) TMI 268 - CESTAT, NEW DELHI. In Windals Auto v CCE (2012) 279 ELT 298 (CESTAT SMB)= 2012 (11) TMI 479 - CESTAT, NEW DELHI, scrap was not brought back but was directly sold from place of job worker on payment of excise duty. It was held that there is no loss and demand is not sustainable.No penalty can be imposed if waste and scrap is not returned or permission not obtained for clearance as rules do not require obtaining any permission – Bata India v CCE (2009) 238 ELT 316 (CESTAT SMB).= 2009 (1) TMI 575 - CESTAT, KOLKATA

This is for your kind information.

Regards,

YAGAY and SUN

(Management, Business & Indirect Tax Consultants)