TMI Blog2015 (9) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the demand of ₹ 8,65,408/- and penalty under Section 11AC of the Central Excise Act, 1944, read with relevant CENVAT Credit Rules, is imposable. However, no option of 25% reduced penalty was extended to the appellant by the Adjudicating authority. - As penalty under Section 11AC of the Central Excise Act, 1944 has been upheld the other penalty of ₹ 5,00,000/- imposed upon the appellant is set aside - Decided partly in favour of assessee. - Appeal No. EA-32/06 - Order No. FO/A/75503/2015 - Dated:- 15-9-2015 - Dr. D. M. Misra, Member (Judicial) And Shri H. K. Thakur, Member (Technical), JJ. For the Appellant : Shri R. Raghavan, Advocate For the Respondent : Shri A. Roy, Supdt. (AR) ORDER Per Shri H. K. Thakur Appellant M/s.TATA Cummins Limited, Jamshedpur filed this appeal against Order-in-Original No.16-19/COMMR/2005 dated 30.09.2005 issued on 21.10.2005. Under this Adjudication Order Commissioner, Central Excise, Jamshedpur confirmed demands of ₹ 8,65,408/- ₹ 1,08,88,453/- regarding inadmissible CENVAT Credit, alongwith interest. Penalties were also imposed upon the appellant under Section 11AC of the Central Excise Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar F.No.B-4/7/200-TRU dt.03.04.2000. 2.1 Learned Advocate further argued that the fact of scrap emerging during the manufacturing process and the clearance of such scrap on payment of duty was brought to the notice of the Adjudicating authority but the same has been conveniently avoided when this fact is not otherwise disputed in the Adjudication order. He made the Bench go through para-11 (iii), (iv) (v) of the Order-in-Original dated 30.09.2005 passed by the Adjudicating authority. That scrap generated during the course of manufacture cannot disentitle CENVAT Credit on these inputs from which such scrap has been generated during assembly of engines. 2.2 Learned Advocate also argued that the entire demand is time barred as extended period is not invokable. It was his case that as per Rule-173B declaration filed with the department where component waste/scrap arising during manufacture of engines during assembly has been specifically declared and the quantity of such scrap is also reflected in the monthly returns filed with the field formation. That there was no suppression on the part of the appellant and extended period of 5 years canot be invoked. Learned Advocate relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troyed/cut to pieces and sent to specified scrap yard. Thereafter, the same is removed as waste and scrap on payment of Excise duty on assessable value of the same in accordance with Sec.4 through proper excise invoice under Rule 11 of the Central Excise Rules, 2002. (v) The demand on components scrapped during the process of assembly should be treated as normal loss of inputs used in or in relation to the manufacture of the final product. Scrap had emerged during the process of manufacture i.e. before the finished goods came into existence. 4.1 It is clearly coming out from the above submissions made by the appellant before the Adjudicating Authority that when inputs are defective on account of supplier s fault then the same are rejected and sent back to the supplier by reversing the CENVAT Credit. The remaining inputs have to be treated as inputs cleared for manufacture of the finished goods a negligible part of which become damaged during the course of assembly of finished goods. Percentage of such loss is only 0.28 to 0.49% of the total value of the inputs/parts utilized by the appellant. The same is also converted into scrap by the appellant and sold on payment of du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot such waste or refuse or by-product is exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty or not specified as a final product under Rule 57A. 31. In substance, when the material? i.e. glass sheet is used for the manufacturing process and merely because at a later point of time after the glass has undergone the process of manufacture, it was found defective and rejected or part of the input being found defective and rejected is no ground in view of Rule 57A read with Rule 57D to deny the benefit. Though this order was passed with respect to erstwhile Rule 57A and Rule 57D of the CENVAT Credit Excise Rules, 1944, but the ratio laid by Delhi High Court, upheld by Apex Court, is squarely applicable to the facts of the present appeal. 4.3 Similarly CESTAT Delhi in the case of Monika Electronics Ltd. v. CCE, Delhi (supra), after relying upon the case law of Asahi Safety Glass Ltd. v. UOI (supra), also held that CENVAT Credit on the inputs rejected on line, in the manufacturing process, cannot be denied. 4.4 Appellant has also taken an argument that demand of ₹ 1,08,88,453/- is time barred as they filed Rule-173B declarat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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