9911796707
TMI Blog2023 (2) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... rder in original dated 22.5.2019 passed by the Additional Commissioner. 2. The respondent manufactures lead ingots/lead rods and is registered with the Central Excise department and has been paying central excise duty. One of the raw materials used by the respondent is the lead scrap which is not duty paid and no CENVAT credit was availed on it. This scrap needs cleaning to separate non-lead elements such as plastics before it can be molten to manufacture lead ingots/lead rods. The respondent sold the plastic scrap so removed. 3. During audit of the respondent by the department, it was felt that duty should be paid on the plastic scrap so separated and sold by the respondent because it had arisen during the process of manufacture of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and proposing to impose penalty under section 11AC. 6. These proposals in the SCN were confirmed by the Additional Commissioner in his Order in Original. On appeal, the Commissioner (Appeals) passed the impugned order setting aside the order in original. He observed that the respondent was purchasing non-dutiable scarp lots from various auctions and was segregating them and extracting various types of scrap through a manual process and this process does not satisfy the definition of manufacture under section 2(f) of the Act and therefore, no duty is liable to be paid. He also found that the CBEC's circular dated 10.5.2016 does not apply to this case. 7. Revenue filed this appeal assailing the impugned order on the following grounds: a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose uses lead scrap obtained from the market on which no duty is paid and the appellant also does not avail any CENVAT credit on the scrap. However, to use the scrap, plastic and other material must be separated and this is done manually and only the lead scrap goes into manufacture and the other scrap (of plastic, etc.) is sold by the respondent. Revenue wants to charge excise duty on this other scrap on the ground that it arises during the process of segregation of the scrap which process is ancillary to the manufacture of goods and therefore, qualifies as manufacture itself. 11. On the other hand, according to the respondent, manufacture begins after the scrap is segregated manually. This manual segregation of scrap is neither manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VAT credit was availed at all on the input scrap. If duty has to be determined on merits, it needs to be first of all examined if the charging section of the Act applies. Section 3 levies duties of excise on "excisable goods produced or manufactured" in India. In the factual matrix of this case, the respondent is neither manufacturing nor is it producing the plastic scrap. The plastic scrap already exists and the respondent is only separating it manually from the rest of the scrap. Therefore, even if this circular is considered, no central excise duty can be charged. 14. We, therefore, find that the impugned order is correct and calls for no interference. The impugned order is upheld and Revenue's appeal is dismissed. (Order dictated and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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