No Excise Duty on Waste and Scrap from Insulated Wires and Cables Manufacture: CESTAT [Read Order]

In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh Bench, allowed the appeal and set aside a demand for reversal of credit and penalty imposed on waste and scrap generated during cable manufacturing.

The Revenue had alleged that the appellant company, Delton Cables Ltd, engaged in the manufacture of insulated wires and cables under Chapter Heading 8544,cleared waste and scrap without payment of duty.

A show cause notice dated 01.09.2015 sought recovery of ₹4.71 lakh, later confirmed by the adjudicating authority along with interest and penalty. The Commissioner (Appeals) upheld the demand, prompting Delton Cables to approach the Tribunal.

The appellant argued that the issue was already settled in its favour in earlier orders, including Final Orders, which held that waste and scrap arising during manufacture do not qualify as excisable goods under Section 2(d) of the Central Excise Act, 1944.

They also relied on the precedents such as Finolex Cables (1996), Balrampur Chini Mills Ltd. (2014), and DSCL Sugar Ltd. (2015), where courts and tribunals consistently held that rejects and by-products are not liable to duty.

On the other hand, the revenue reiterated the findings of the commissioner (appeals) and pressed for recovery.

After hearing both sides, the bench comprising S.S. Garg (judicial member ) and P. Anjani Kumar (technical member) observed that the matter was no longer res integra. It noted that waste and scrap generated during cable manufacturing are not “manufactured goods” and therefore cannot attract a reversal of 10% of the value of exempted goods.

Since similar rulings had already been given in the company’s own earlier cases, the Tribunal concluded that no reversal or duty payment was required.

The tribunal held that “The appellant is not required to reverse 10% of the value of exempted goods or to pay duty on waste and scrap cleared by the appellant.”

Accordingly, the impugned order was set aside, and the appeal was allowed.

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