9911796707
TMI Blog2000 (11) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... nue. 3. M/s. TELCO manufactured motor vehicles. During the manufacture of such vehicles and component parts thereof, scrap is generated. Some raw materials are sent by them to outside job workers'. In the job workers' factory also, scrap is generated. The appellants M/s. TELCO took Modvat credit on all the inputs so sent. Such scrap was dutiable. The assessees were to keep accounts of actual generation of the waste and to discharge the duty thereon. Under the relevant Rule, the scrap generated in the factory of the job workers had to be returned to the factory of the principal manufacturer for due clearance. In the alternative, the job worker was capable of removing such scrap on payment of duty. The appellants in their own factory ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that the percentage of generation of scrap was wrongly computed. For example, where 100 kgs of inputs were received, 80 kgs were retained for processing in the assessees' factory, 20 kgs were sent to the job workers. The scrap generated in the assessees' factory was 8 kgs. When compared to the raw material consumed, this scrap represented 10%. However, the actual scrap of 8 kilos was compared with l00 kgs total inputs (irrespective of the fact that 20 kgs were sent to the job workers) and the scrap percentage arrived at was 8% instead of 10%. The same percentage was periodically applied to the job workers' production. On such computation, the actual generation of scrap being 10%, what was declared was 9.6%. This resulted in underdecl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f denial of natural justice. 7. The very strong point made by the appellants is on limitation. We have extracted the first letter dated 14-4-1987. We also reproduce below the typical letter sent on 10-10-1997 which is relevant to the period under dispute :- "Sub :- Payment of Excise Duty on scrap generated at sub-contractor's end out of inputs sent under Rule 57F(4) Chartered Accountants Certificate. As the Department is aware we have been effecting the payment of Excise Duty on scrap getting generated at sub-contractor's end from inputs despatched by us to various sub-contractors under the procedure of Rule 57F(4) of Central Excise Rules, 1944. Accordingly, we have been paying the Excise Duty on such scrap regularly on the basis ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (as per workings enclosed) 61278.00 Weight of Forgings in MT 31851.84 Estimated quantity of bars issued in MT 1370.30 Total issue of Forgings and Bars in MT 33222.14 Quantity of Forgings scrap generated during the year in MT 8513.22 Percentage of scrap generated 25.62 Quantity of Forgings despatched to sub-contractors during the year in MT 9285.91 Scrap generated at sub-contractor's end in MT 2379.04 No. of Vehicles produced 1455.... Scrap generated per vehicle in kgs 16.35 9. In this working, the value of the raw material is given. The value of the forging made is expressed as percentage. The prevailing rate of forging per MT is then applied to convert the value in physical forging and the scrap generated is ascer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l duty liability will, however, have to be determined by the jurisdictional officer and for this purpose, proceedings will have to be remanded to the jurisdictional Commissioner. 12. In view of our findings above, we make the following order : A. The demand in excess of the period permissible without invoking the proviso to Section 11A is hit by limitation; B. The demand within the permissible period shall be recalculated by the jurisdictional Commissioner in de novo proceedings. C. The jurisdictional Commissioner shall be free to decide on the aspects of penalty leviable on these appellants in the de novo proceedings. 13. Appeals are al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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