TELCO LTD. Vs. CCE, JAMSHEDPUR

JUDGEMENT

(1.) THE appellants are engaged in the manufacture of motor vehicles and parts thereof. They also manufacture Iron Castings falling under Chapter 73 of the Central Excise Tariff Act, 1985 in their foundry which, in turn, are used captively in the manufacture of the final products i.e., motor vehicles and parts thereof. The appellants availed modvat credit of duty paid on the inputs used in the manufacture of the final products. During the manufacture of castings, runners and risers arise. These were sent to the job workers for processing by following the procedure under Rule 57F(4) of Central Excise Rules. After processing the job workers returned the runners and risers to the appellants. Such returned goods were again used in the manufacture of castings. The appellants debited an amount equal to 10% of the value of the runners and risers in terms of Rule 57F(6) of Central Excise Rules, when they sent them to the job worker. After receipt of the runners and risers from the job workers under Rule 57F(7), the appellants look back this amount (10%) debited initially. The department's contention is that the appellants should have paid duty on the runners and risers when they removed them instead of following Rule 57F(4) procedure. The Department's contention is that the runners and risers are nothing but waste and scrap, liable to duty under Sub -heading No. 7204.10. The Commissioner in the impugned order demanded Rs. 69,58,668/ - towards duty on the runners and risers removed for job work. Heard both sides.

(2.) THE issue for consideration is whether the Rule 57F(4) is applicable in a situation narrated above. The Larger Bench of the Tribunal in the case of Wyeth Laboratories Ltd. reported in, 2000 (120) ELT 218 : 2000 (92) ECR 474 (T), considered this very issue and held that Rule 57F(4) cannot be read to be applicable only to partially processed inputs or inputs which are required to be sent for repairs, refining, reconditioning or carrying out any other operation as long as procedure prescribed under Rule 57F(2) is followed. In the present case the Commissioner contends that the runners and risers are nothing but scrap and therefore are liable to duty as scrap and can be cleared only on payment of duty applicable to scrap. He held that Rule 57F(4) is not applicable when runners and risers (scrap) are cleared to a job worker for further processing. The Commissioner's contention is not in accordance with the Larger Bench's decision cited supra. Following the ratio of the decision of the Larger Bench of the Tribunal. We allow the appeal and set aside the order of the Commissioner.