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TMI Blog2019 (1) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... that the CBEC Circular No.1029/17/2016-CX dated 10.05.2016 is relevant though the same has been issued in respect to Cenvat Credit Rules, 2004, especially when the facts and circumstances of the present case are identical and properly clarified and covered under the Circular No.62/2001-Cus dated 12.11.2001, which has been issued in respect to EOU/SEZ Units? [c]Whether the Hon'ble CESTAT is correct in allowing the clearance of foundry scrap beyond the ratio/norms of scrap laid down by the Norms Committee and in contravention to the provisions of Notification No.52/2003-Cus dated 31.03.2003?" Since all the appeals arise of a common order and the facts are also similar, the same were taken up for hearing together and are disposed of by this common judgment. 2. The respondents-assessees are 100% Export Oriented Units engaged in the manufacture of brass articles. During the relevant period, the assessees had imported brass metal scrap containing other impurities without payment of duty as per Notification No.52/2003-Cus dated 31.03.2003, as amended. Such scrap was later segregated into foundry and non-foundry scrap: foundry scrap was used in the manufacture of brass products, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scrap, cleared in DTA applying, CIF value of the scrap at the time of its import. 2.3 The assessee challenged the orders passed by the Commissioner (Appeals) contending that the input output ratio fixed by the Norms Committee cannot be made applicable in view of clause (3) of Notification No.50/2003-Cus dated 31.03.2003, since the scrap had been cleared on payment of appropriate excise duty in DTA after obtaining necessary permission from the Development Commissioner. 2.4 The Tribunal, by the impugned order, found that the question as to whether the activity of segregation of imported mixed brass scrap into foundry and non-foundry grade amounts to manufacture is more or less covered by the recent circular of the Board dated 10.05.2016 and accordingly, held that the non-foundry scrap cleared in DTA on payment of excise duty, cannot be construed as clearance of imported scrap "as such". 2.5 On the issue of payment of duty on the excess use/consumption of scrap material in the activity of segregation/manufacture of finished goods, the Tribunal was of the view that the Commissioner (Appeals) had rightly relied upon clause (3) of Notification No.52/2003-Cus dated 31.03.2003 and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the impugned order, the Tribunal has held that after segregation of the mixed imported scrap, the segregated scrap, if cleared, cannot be considered as clearance of inputs "as such". The facts reveal that what was imported was brass scrap. The brass scrap was segregated into brass and foundry and non foundry scrap. The brass and foundry items came to be used for the manufacture of brass articles for which purpose the scrap had been imported. The non foundry scrap obtained as a result of such segregation came to be cleared in DTA. In the opinion of this court, such non foundry scrap can by no means be said to be articles imported as such inasmuch as it was brass scrap which was imported for the purpose of manufacture of brass articles. The non foundry waste derived as a result of segregation cannot be used for the purpose of manufacture of brass articles and hence, cannot be said to be articles imported "as such", since the essential character of the scrap, viz. brass is absent. The Tribunal was therefore, wholly justified in holding that the segregated scrap, if cleared, cannot be considered to be clearance of inputs "as such". 6. The Tribunal has further held that the segrega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identity whereof is different from the goods imported. The said circular would, therefore, have no applicability to the facts of this case. 9. The appellant has also challenged the impugned order passed by the Tribunal on the ground that the Tribunal has wrongly placed reliance upon the Circular No.1029/2016-CX dated 10.05.2016. Insofar as the said Circular is concerned, it clarifies regarding segregation of impurities, viz., iron, steel, rubber, plastic, dust etc. from honey grade plastic scrap. The issue was when the category of waste, viz., foreign material segregated initially and not fed into the furnace is cleared by the brass manufacturers can be treated as inputs "as such" and accordingly were the manufacturers required to pay an amount equal to the credit availed in respect of such inputs in terms of rule 3(5) of the CENVAT Credit Rules, 2004. The Central Board of Excise and Customs has clarified thus: "3. The issue has been examined. Segregation from honey grade brass scrap in order to weed out other foreign materials before the process of melting in the furnace is an essential process relating to manufacture of brass articles. The foreign materials, emerging during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of the said notification. Clause (3) of the said notification to the extent the same is relevant for the present purpose provides that notwithstanding anything contained in that notification, the exemption therewith shall also apply to goods which on importation into India or procurement, are used for the purpose of manufacture of finished goods or services and such finished goods and services, (including byproducts, rejects, waste and scrap arising in the course of production, manufacture, processing or packaging of such goods) even if not exported, are allowed to be sold in Domestic Tariff Area in accordance with the Export and Import Policy and subject to such other limitations and conditions as may be specified in this behalf by Development Commissioner, or Board of Approval or the Inter Ministerial Standing Committee, as the case may be, on payment of appropriate duty of excise leviable thereon under section 3 of the Central Excise Act, 1944. Thus, waste and scrap arising in the course of production or manufacture of finished goods are also exempt from the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and the additional ..... X X X X Extracts X X X X X X X X Extracts X X X X
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