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2005 (1) TMI 714 - CESTAT BANGALORE

2005 (1) TMI 714 - CESTAT BANGALORE - [2005] 2 STT 117 (BANG. - CESTAT) - APPEAL NO. E/ST/741/03, E/1209/03 - 153 OF 2005 - Dated:- 31-1-2005 - Dr. S.L. Peeran, Judicial Member, And T.K. Jayaraman, Technical Member For the Appellant : G. Shivadas For the Respondent : L. Narasimha Murthy ORDER Per Shri T.K. Jayaraman - Appellants filed an application for stay in respect of OIO 25/03/04, dated 19-9-2003 passed by the Commissioner of Central Excise, Visakhapatnam. Since the issue lies within a shor .....

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intenance of the machinery. The adjudicating authority held that scrap which has arisen as a result of mechanical working is liable to duty. After going through the details given in the Annexure to the show-cause notice he has identified certain items which have arisen due to mechanical working and has demanded duty on them. The duty demanded under proviso to section 11A(1) of the CE Act, 1944 was ₹ 1,32,67,470. A penalty of ₹ 1,00,00,000 was imposed under Rule 173Q. Further a penalt .....

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2003 (153) ELT 491 (SC) (c) Union of India v. Ahmedabad Electricity Co. Ltd. 2003 (158) ELT 3 (SC) (d) Deepak Fertilisers & Petrochem Corpn. Ltd. v. CCE 2004 (174) ELT 468 (Trib. - Mum.). (e) Kumbhi Kasari SSK Ltd. v. CCE 2004 (173) ELT 61 (Trib. - Mum.) (ii)Mere mention of the item in the Central Excise Tariff is not sufficient to fasten duty liability. The product must be the result of a process of manufacture. The following case laws were relied on : (a) Hyderabad Industries Ltd. v. Union .....

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use is not liable to central excise duty even though Modvat credit was taken on them. The following case law was relied on: Rashtriya Ispat Nigam Ltd. v. CCE 2002 (148) ELT 41 (Bang.) (iv)The scrap sold by the appellants had been gene-rated out of construction materials and on which the appellants had not taken Modvat credit. Most of the items were procured prior to 1-3-1994 when the capital goods Modvat scheme was not in existence. The scrap was not generated out of mechanical workings as alleg .....

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ion had been generated as a result of mechanical working associated with manufacturing activity or that the appellants had taken Modvat credit of duty paid on the items. (vii)The onus is on the department to prove that the scrap was indeed generated as a result of manufacturing activity. The following case law was relied: K.M. Sugar Mills Ltd. v. CCE 2004 (164) ELT 40 (Trib. - Delhi). (viii)The adjudicating authority picked up the following items to hold that they are scrap arising out of manufa .....

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d it cannot be said that the appellants were indulging in clandestine removal right under the nose of the Central Excise Officers. The longer period can be invoked only in cases of fraud, collusion or any wilful misstatement or suppression of facts. The following case laws were relied: (a) CCE v. Chemphar Drugs & Linements 1989 (40) ELT 276 (SC) (b) Padmini Products v. CCE 1989 (43) ELT 195 (SC) 4. The learned SDR urged that the Commissioner has given a clear finding that the scrap has arise .....

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