TATA MOTORS LTD. Vs. CCE, JAMSHEDPUR

JUDGEMENT

(1.) THIS appeal has been filed against the order of the Commissioner of Central Excise, Jamshedpur dated 18th June, 2003. Brief facts of the case are that the appellants, M/s. Telco Ltd., Jamshedpur, are engaged in the manufacture of Motor Vehicles. They also manufactured various components and parts out of inputs procured from outside and availed modvat credit of duty paid on such inputs. During various operation undertaken on such inputs by Telco inside their factory, various type of M.S. Scraps were generated which was generally called as "internally generated scrap". M/s. Telco are also having a foundry for the manufacture of various castings for which scrap of iron and steel is one of the main ingredients. The scrap used in the Foundry Division is both bought out and internally generated. The internally generated scraps are long member trimmings and cut pieces, the same are required to undergo further processing such as baling, cutting etc. before they can be fed into the furnaces of the Foundry Division. M/s. Telco did not have such facility inside their factory premises. Therefore, internally generated scrap was sent outside to job workers such as M/s. Shyamlal Iron & Steel & Co. Ltd., Gamharia prior to 1993 for shearing, cutting and bailing processes. During the impugned period, M/s. Telco cleared such internally generated scrap to job -workers under Rule 57F(2) Challans in terms of the provisions of Rule 57F(2) of Central Excise Rules (CER), 1944 without payment of duty. The said scraps were sheared, cut, baled etc. in the premises of the job workers and were returned to M/s. Telco for charging into furnace of their Foundry Division. The allegation in the impugned show -cause notice is that since internally generated scrap for neither inputs nor partially processed inputs, the provisions of Rule 57F(2) of CER, 1944, were not applicable. Instead the said scraps should have cleared from the factory of M/s. Telco only on the payment of duty in terms of Rule 57F(4) of CER, 1944. M/s. Telco's contention is that since the said scraps were result of the processing of their inputs and the same could not be straight away charged into the furnace of their Foundry Division owing to their shape and size. They had sent it to job workers for shearing, cutting, baling etc. so as to render it fit for changing into the furnace. The Commissioner vide its order dated 18th June, 2003, confirmed the demand of Rs. 14,84,410.00 and imposed penalty of an equal amount under Section 11AC and also an another penalty of Rs. 15,00,000/ - under Section 173.

(2.) HEARD Shri Debasish Ghosh, ld. Consultant for the appellants and Shri T.K. Kar, ld. SDR for the Revenue.

(3.) LD . SDR, Shri Kar, while supporting the order of the authority below has submitted that waste and scrap cannot be considered as inputs in relation to the final product. As such, the provisions of Rule 57F(2) would not applicable. He submits that for such waste and scrap distinct provision exists in Clause (4) of the said Rule. He, therefore, submits that wider interpretations of the provisions are not needed and the appeal may be dismissed.