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TMI Blog2005 (6) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... uch of these foils which could not be refurbished and resulted in scrap were being cleared, as scrap on payment of duty. (ii) It was observed that subsequent resales were made at much reduced price which they charged for virgin foils. The scrap percentage was substantially high at 40%. In absence of records & no distinction between virgin & rejected foils & scrap having been generated from Aluminium foil, the assessee was charged for. (a) Contravention of Rule 57F(i)(ii) inasmuch as assessee had (i) Removed inputs as such at lower price without having undertaken on them any process or removed them as waste & scrap of Aluminium. (ii) Duty was not determined to the extent of cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the notice was issued on 19-6-2001 i.e. after substitution. 2.3 On merits, the Commissioner has found - (i) clearance of rejected material described as 'inputs' on which assessee had availed Modvat credit without subjecting them to any process of manufacture by paying lower duty because of lower valuation while selling, by the assessee a lower rate. (ii) clearance of rejected material received by terming these as inputs by clearing these as scrap without subjecting them to any process of manufacture. Now regarding the second aspect. It is important to note that during the subject period the assessee had discontinued the use of furnace i.e. from mid-November, 1995 render ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee on the subject inputs. The reasons for considering only 10% has already been discussed in para 34 of my findings. Now as far as clearance of the remaining 70%, the statement of Shri M.N. Kulkarni, employee of the assessee reveals that they had cleared the inputs after carrying out certain processes which has been discussed in the preceding para; that the inputs were cleared as such without any processing; and (iii) cleared as process waste and scrap. Here the assessee have contained that the Department have not given any evidence of how they have considered the scrap generated as 30%. Here it is to note that the records maintained by the assessee reveal clearance of 40% scrap during the said period. However, in view of the discussions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid, I do not find any justification on the assessee's submissions as it is an admitted fact that they had not maintained any records for accounting these inputs vis-a-vis final products nor have they produced any documentary evidence to substantiate their claim for clearances of the waste and scrap when in his statement Shri M.N. Kulkami has admitted that scrap generation was on account of non-conformity to metallurgical composition, failure to meet parameters viz. bursting strength, VTS, inadequate annealing, failure to meet physical properties viz width, built up, etc. Thus it was assessee, themselves who were deciding whether the goods were to be disposed of as scrap or otherwise without adhering to the laid norms as per Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... small percentage as scrap on lamination process is an assumption followed by the adjudicator. As to when the input shall become waste & scrap and has to be treated as such should be and at the option of the assessee, who availed the Modvat Credit and this position has been upheld by the Larger Bench in the case of Wyeth Laboratories [2000 (120) E.L.T. 218 (Tri.-LB)]. Therefore the finding, on presumption that 40% scrap is excess, that it should not exceed 10%, cannot be upheld. It cannot be a cause for duty demand differentials, as made act. 2.7 As regards the duty differential demands on 70% approximation of the resales, made at prices lower than existing rates & 30% were cleared as scrap is without any basis. The finding that retur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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