UNION OF INDIA Vs. GRASIM INDUSTRIES LTD

JUDGEMENT

(1.) THIS appeal has been filed by the Revenue against the judgment of the learned Tribunal dated 9. 8. 2005, allowing the appeal of the assessee, and setting aside the demand of Rs. 4,75,335/-, as demanded by the Revenue in respect of the scrap, so also the penalties.

(2.) NECESSARY facts are, that the assessee is engaged in manufacture of white cement. The officers of the Central Excise Range Jodhpur, while conducting surprise inspection on 30. 10. 1999 noticed, that the assessee had cleared various types of waste and scrap without payment of duty on the private invoices (other than those issued under Rule 52a) during the period October, 1995 to July 1999. Accordingly show cause notice was issued, demanding duty on scrap, calling upon the assessee to show cause, as to why the duty may not be recovered, and interest, and penalty etc. may not be imposed. The statement of the Vice President Shri P. K. Jain were recorded on 8. 4. 1999 under Section 14 (2) of the Central Excise Act, 1944, and he stated that various types of scrap viz. M. S. Scrap, Conveyer scrap, scrap of Wooden Boxes, Cartoons scrap, Bearing scrap, Cement bags scrap etc. had arisen in their factory, and that said scrap had arisen from packaging material of goods received for use in the factory, and from machine and parts, bearing, conveyer belts etc. , which became unusable in the plant, during the course of manufacture of cement, that welding machine scrap, Heat Casting scrap, Liner plate scrap, steel scrap, 5 Kg. Packing machine scrap, Blow Bar Scrap, Grinding segment, Grinding Media, Electrical scrap, Cable scrap, Aluminum etc. were generated out of items used in the manufacturing machinery, and of white cement which became unusable on account of wear and tear, and various types of scrap were sent to scrap yard from various parts of the plant, and related department used to maintain a return pass which was sent to stores. The statement of Shri H. R. Kapoor, DGM (Mechanical) of the Unit was also recorded, wherein he admitted that M. S. Scrap and iron scrap are generated in the workshop as well as in the plant during the process of repairing and maintenance, and for this purpose they were using welding electrodes, Mild Steel, M. S. Channel Beams, M. S. Angles and cutting tools.

(3.) THE learned Tribunal found, that in the instant case the scrap cleared by the assessee during the period did not arise out of any manufacturing activity, but arose during wear/ tear of the machine and machinery, and that, no credit had been availed by the assessee in respect of those machines and machinery. Under these circumstances, no duty could be demanded or confirmed in respect of scrap. THE learned Tribunal for this purpose relied upon another judgment of the learned Tribunal in Commissioner of Central Excise vs. Birla Corporation reported in 2005 (181) ELT- 263. With these findings the appeals were allowed, and the entire demand was set aside.