CESTAT quashes Central Excise Duty Demand on Scrap produced and consumed by Jindal Saw Ltd [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the central excise duty demand on scrap produced and consumed by Jindal Saw Ltd.

The appeal has been filed by Jindal Saw Limited against demand of central excise duty on scrap produced and consumed by the appellant captively.

The appellant is engaged in manufacture of iron and steel products. During the process of manufacture, scrap is generated and the same is either used within the factory of production for manufacture of goods or cleared on payment of duty. In so far as the goods are used captively for manufacture of other goods, benefit of Notification 67/1995- CE dated 16.03.1995 has been claimed.

The Counsel for the appellant pointed out that in respect of such clearance they are complying with the provision of rule 6(3) of the Cenvat Credit Rules and that if the appellant is fulfilling the requirement of Rule 6 of the Cenvat Credit Rules, then the benefit of Notification 67/1995-CE dated 16.03.1995 cannot be denied in terms of clause-vi of the Proviso to the Notification 67/1995-CE dated 16.03.1995.

The Notification 67/1995-CE dated 16.03.1995 prescribes exemption for goods captively consumed subject to the condition that the finished goods produced out of the same are cleared on payment of duty. The Notification 67/1995-CE dated 16.03.1995 also prescribes that in case the obligation under Rule 6(3) of the Cenvat Credit Rules is fulfilled in respect of the goods cleared under full exemption then the benefit of Notification 67/1995-CE dated 16.03.1995 cannot be denied.

The Tribunal of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “A perusal of proviso of clause – vi indicates that in case the obligation under Rule 6 of the Cenvat Credit Rules is fulfilled than the exemption to Notification 67/1995-CE dated 16.03.1995 cannot be denied.”

“In the instant case a categoric claim has been made before the lower authorities that the appellant has fulfilled their obligation under Rule 6 of the Cenvat Credit Rules. In view of these facts, benefit of Notification 67/1995-CE dated 16.03.1995 cannot be denied to the appellant” the Bench opined.

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