TMI Blog2023 (2) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of manufacture of the final products, viz., lead ingots or lead rods. HELD THAT:- According to the respondent, manufacture begins after the scrap is segregated manually. This manual segregation of scrap is neither manufacture by itself nor can it be called a process ancillary to manufacture. Since there is no process of manufacture, no central excise duty can be charged. The submission of the respondent deserves to be accepted - We do not agree with the revenue that segregation of scrap to remove the unwanted components from the lead scrap is a process of manufacture. It is only a process of segregation of raw materials; manufacture begins thereafter. Therefore, no duty can be charged on the plastic and other scrap segregated from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Arvind Birla, Advocates for the Respondent. ORDER Revenue has filed this appeal to assail the Order in Appeal [impugned order] dated 14. 10.2019 passed by the Commissioner (Appeals) Central Excise and CGST, Jaipur whereby he allowed the assessee s appeal and set aside the order 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 manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was also felt that CBEC s circular No. 1029/17/2016-CX dated 10.5.2016 [Circular] squarely applies to this case. Therefore, a Show Cause Notice [SCN] dated 7.12.2019 was issued to the respondent proposing recovery of duty of Rs. 1,16,17,931 under section 11A(4) along with interest under section 11AA 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manual segregation of the scrap. He further submits that the CBEC s circular does not apply to this case as it was issued in a different context. 10. We have considered the submissions made and perused the records. The facts are not in dispute. The respondent manufactures lead ingots/lead rods and for this purpose 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 aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to reverse the credit. 13. The circular further states that the segregated foreign material in such situation, as has been explained above, shall be cleared on payment of Central Excise duty on transaction value as per its appropriate classification and rate of duty determined on merits. In the present case, no CENVAT 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 responden ..... X X X X Extracts X X X X X X X X Extracts X X X X
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