SOUTHERN AGRIFURANE INDUSTRIES Vs. COMMR. OF C. EX.

JUDGEMENT

(1.) This appeal is directed against the Order -in -Appeal No. 72/02 (M -III), dated 4 -6 -02, by which the Id. Commissioner (Appeals) has rejected their appeal by holding that the item "Waste and Scrap" sold by the appellant has a relation to the chapter headings which relates to waste and scrap and has been held by him liable to duty on its clearance.

(2.) Aggrieved by the above order, the appellants have come in appeal on the ground that the Commissioner (Appeals) had not decided the issue in terms of the Order No. 1110/01, dated 13 -7 -2001 of the Hon'ble Tribunal. Ld. Advocate, Shri Nassar Abdullah, invited our attention to page 31 of the paper book in which vide their letter, dated 27 -5 -98, they have referred the letter of the Superintendent of Central Excise, dated 12 -3 -98 and 5 -5 -98 and their letter, dated 28 -3 -98, by which the appellants intimated to the Superintendent that the wastes and scrap of materials does not arise in the course of manufacture from base metal, since all these materials are replacement articles in lieu of unserviceable valves and corroded steel plates from storage tanks and machinery spares and worn out bolts and nuts. They had also clarified that at the time of original receipt of spares, duty had been paid under various chapter heads. They had also informed that the capital goods have been received prior to insertion of Rule 57Q and as such no Modvat credit had been availed by them. Further, they had informed that the notification could not be pressed for levy of duty, since they were not manufacturers of articles from base metals and hence inapplicable. In the case of metal articles Note 6 under Section (xv) of the Tariff schedule defines waste and scrap as metal waste and scrap from the manufacture or mechanical working of metal goods. Hence, they were not manufactures of metal articles. They had therefore, pleaded that the notification could not be made applicable to them. This letter sent by the appellants was received by the Superintendent of C.E., Villupuram Range on 27 -5 -98, as could be seen from the endorsement of receipt made on this letter dated 27 -5 -98 by the O/o. The Superintendent of C.E., Villupuram Range. Ld. Advocate, also invited our attention to the Tribunal's judgment rendered in the case of ACC Ltd. v. CCE, Bhopal, reported in 2001 (133) E.L.T. 375 (Tri. - Delhi), in which it has been held that the scrap generated by dismantling of used machinery is not excisable and therefore duty demanded in respect of such scrap is not tenable. The Id. Advocate relied on the judgment rendered by the Tribunal in the case of Diesel Components Works v. CCE, Chandigarh, reported in 2000 (120) E.L.T. 648 (T). The Ld. Advocate also relied on the judgment rendered by the Tribunal in the case of Hindalco Industries Ltd. v. CCE, Allahabad, reported in 2002 (144) E.L.T. 339 (Tri. - Del.) = 2002 (101) ECR 357 (T) wherein it has been held that the metal scrap arising from dismantling of buildings, repair of machinery etc. is not liable to duty. He also invited our attention to the judgment rendered by the Tribunal in the case of Syndet and Chemical Industries Ltd, v. CCE, New Delhi, reported in 1999 (108) E.L.T. 85 (T), wherein it has been held that the poly bags in question not manufactured by the assessee, but received from the manufacturing unit for filling the final product and in the process certain bags got damaged and rejected and such damage and rejection of plastic Carboys cannot be treated as falling under Central Excise Net, since mere use of goods does not attract excise. Ld. Advocate also relied on the judgment by the Tribunal rendered in the case of Diesel Components Works, Patiala v. CCE, Chandigarh, 2000 (120) E.L.T. 648 (Tri.) = 2000 (40) RLT 641 (CEGAT), in which it has been held that the scrap generated during dismantling of locomotives is not dutiable as scrap and it is only the scrap which arises during the manufacture or mechanical working of metals or metal goods is that alone is liable to duty.

(3.) In view of the above cited cases and the factual position stated, the Ld. Advocate submitted that no duty on such waste and scrap, arising as a result of discarded and inserviceable and worn out capital goods on which, no modvat credit has been taken, duty is not leviable, since they are falling outside the purview of the Central Excise Net.