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Shree Kamrej Vibhag Sahakari Khand, Udyog Mandali Limited Versus C.C.E. & S. Tax, Surat-II

2017 (11) TMI 758 - CESTAT AHMEDABAD

CENVAT credit - waste and scrap - Iron and scrap generated out of the capital goods installed in the factory - Whether clearance of Iron waste and scrap after 16.06.2005 alleged to be generated out of capital goods on which CENVAT Credit availed, be subjected to duty on its transaction value or otherwise? - Held that: - No doubt the onus lies on the department to establish that the waste and scrap did arise out of the capital goods on which credit availed, but, in the present case, the evidences .....

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ameer Chitkara, A.R. for the Respondent-Revenue ORDER Per: Dr. D.M. Misra This is an appeal filed against OIA No.BC/298/SURAT/2011 dated 20.10.2011 passed by the Commissioner (Appeals II), Central Excise, Customs & Service Tax, Surat II. 2. Briefly stated the facts of the case are that the appellants are engaged in the manufacture of Molasses & Special Denatured Spirit falling under Chapter 17 and 22 of the CETA, 1985. During the course of audit, on scrutiny of their records, it was noti .....

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peals) upheld the Order but reduced the quantum of demand by restricting it to the sale of scrap from 16.05.2005. Aggrieved by the said order of the Ld. Commissioner (Appeals), the present appeal is filed before this forum. 3. The principal contention of the Ld. Advocate for the appellant is that the recovery proceeding initiated against the appellant mainly on the ground that during the relevant period they had cleared waste and scrap arising out of the capital goods installed in their factory .....

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s procured in 1992-93 on which no CENVAT credit as capital goods had been availed by them. It is his contention that before applying the provisions of amended Rule 3 (5A) of CCR, 2004, the onus lies on the department to show that the waste and scrap, which were cleared arose out of capital goods on which CENVAT credit had been availed. In support of his contention, the Ld. Advocate referred to the decisions of this Tribunal in the case of Mangalam Cement Ltd. Vs. Commissioner of Central Excise, .....

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ly reflected in their books of accounts and the waste and scrap had been cleared against commercial invoices and both the authorities below had failed to appreciate their argument that the demand is thus barred by limitation. 5. Per contra, the Ld. AR for the Revenue submitted that in view of the specific provision inserted w.e.f 16.06.2005 as Rule 3(5A) in CCR, 2004, waste and scrap of capital goods are liable to duty on the transaction value of such waste and scrap. In the present case, the ap .....

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been demanded by the department, not generated out of those capital goods on which CENVAT credit had been availed.; the certificate now produced for the first time before this Tribunal, since not scrutinized by the department cannot be accepted. The Ld. AR further submitted that in view of the judgement of Hon'ble Gujarat High Court in the case of GNFC Ltd Vs. Union of India - 2007 (214) ELT 18 (Guj.) waste and scrap of capital goods under Rule 57-S(2)(c) erstwhile Central Excise Rules,1944, .....

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after 16.06.2005 alleged to be generated out of capital goods on which CENVAT Credit availed, be subjected to duty on its transaction value or otherwise. Before considering the rival contentions, it is necessary to refer to Rule 3(5A) of CCR, 2004, inserted w.e.f. 16.06.2005 which reads as follows:- 3(5A) If the capital goods are cleared as waste and scrap, the manufacturer shall pay an amount equal to the duty leviable on transaction value. 7. A plain reading of the said provision makes it cle .....

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