The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that excise duty is not demandable on scrap cleared on which CENVAT credit is not availed.
The appellants are engaged in the manufacture of glass and glassware items. During the audit, it was noticed that some value against the sale of scrap is appearing in the balance sheet of the appellant. As a reply to the letter from the range superintendent, the appellant submitted the details of all the scrap cleared by them from the factory.
The appellants have clarified that they have discharged the Excise Duty in respect of the manufacturing scrap and scrap generated out of cenvatable input/capital goods. They have not paid duty on others since they are not liable to pay the duty. The Adjudicating Authority confirmed the demand and Commissioner(Appeals) upheld the same by an order in appeal.
It was argued that the appellant clarified that they have not paid duty on the scrap which is other than manufacturing scrap and cenvateable scrap. He submits that the scrap which is not generated during manufacture but general scrap on which no Cenvat Credit was taken excise duty is not payable.
The CESTAT viewed that as per the submission of the appellant the duty is not payable and observed that the Show Cause Notice was baldly issued without carrying out any investigation that whether the appellant has availed the Cenvat Credit in respect to the scrap which was cleared without payment of duty and also the manufacturing scrap.
The CESTAT viewed that in the absence of any investigation as mentioned above, the allegation made in the Show Cause Notice is bald and without any support of any evidence.
A Coram of Mr Ramesh Nair(Judicial) and Mr Raju member (technical) held that“it is clear that the appellant hahasleared the scrap which is neither generated from the manufacturing nor generated from the cenvatable input or capital goods. Therefore, the same is not liable to any duty.”
While allowing the appeal, the CESTAT set aside the impugned order. Shri Saurabh Dixit, Advocate appeared for the Appellant and Shri. Prakash Kumar Singh, Superintendent appeared for the Respondent.
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