The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the value of scrap arising during the process of manufacture and retained by the job worker is includible in the value of the goods cleared by the job worker to the principal manufacturer for the purpose of levying excise duty.
The appellants, M/s. Unimech Industries Private Limited, are engaged in the manufacture of tractor parts and components on job work basis to M/s. TAFE Ltd. and are clearing the same to M/s. TAFE Ltd. The Department was of the view that the appellants had not included the value of the scrap and have not discharged Excise Duty on the same. Show Cause Notices were issued proposing to demand Excise Duty on the value of scrap generated during the course of manufacture of tractor parts on job work basis.
A division bench of the CESTAT consisting of Mrs. Sulekha Beevi C.S., Member (Judicial) and Mr. P. Anjani Kumar, Member (Technical) has observed that while estimating the value of the goods cleared to the principal manufacturer, the appellant has taken the value of the entire raw materials received by them.
“The scrap generated during the process of manufacture has been cleared by them on payment of appropriate duty. The scrap is generated after the process of manufacture and the same is not includible in the assessable value of the goods cleared by the job worker to the principal manufacturer,” the Tribunal said.
Concluding the order in favour of the assessee, the Tribunal added that “In the appellant’s own case for a different period, the Tribunal has relied upon the decision and discussions in M/s. P.R. Rolling Mills Pvt. Ltd. (supra) and set aside the demand.”
Shri N. Viswanathan, Advocate appeared for the Appellant.
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