COMMISSIONER OF CENTRAL EXCISE Vs. BHILWARA SPINNERS LTD.

JUDGEMENT

(1.) THE issue involved in this Appeal filed by Revenue is whether duty liability is to be dispatched by M/s. Bhilwara Spinners Ltd. while clearing the waste and scrap of capital goods and inputs.

(2.) WE heard Shri H.C. Verma, learned Departmental Representative for Revenue and Shri K.K. Anand, learned Advocate for the respondents. Learned Departmental Representative submitted that the Commissioner (Appeals) has set aside the demand on waste and scrap of capital goods i.e. MS scraps, plastic HDPE waste and paper scrap; that provisions of Rule 57F(18) and Rule 57S(2)(c) of the Central Excise Rules, 1944 provide for payment of Central Excise duty on waste arising from the processing of inputs in respect of which credit has been taken and payment of duty where capital goods are sold as waste and scrap; that the process of wear and tear and dismantling of inputs/capital goods amounts to manufacture because, as a result of this process a new and distinct commodity namely, waste and scrap which is distinct from various inputs/capital goods comes into existence.

(3.) ON the other hand, learned Advocate submitted that waste and scrap of capital goods is not liable to duty as these capital goods were very old and in respect of which the respondents had not taken any Modvat credit under Rule 57Q of the Central Excise Rules, that no duty is payable on paper scrap and HDPE scrap as these were received as packaging material; that the duty liability on such waste has been finally decided by the Supreme Court in the case of CCE v. West Coast Industrial Gases, 2003 (155) E.L.T. 11 (S.C.). He also relied upon the decision in the case of CCE, Jaipur v. Birla Corpn. Ltd., Final Order Nos. 760 -61/04 -C, dated 25 -10 -2004. In reply learned Departmental Representative has relied upon the decision in the case of Parle Biscuit Ltd. v. CCE, Delhi [2003 (155) E.L.T. 527 (Tri.)] wherein it has been held that duty is payable on the waste arising during the manufacture of goods on which Modvat credit was claimed; that, it has been also held in Parle Biscuits case that duty is payable on capital goods sold as scrap under Rule 57S(2)(c) of the Central Excise Rules, 1944.