Delton Cables Ltd. Vs Commissioner of Central Goods & Service Tax (CESTAT Chandigarh)
The CESTAT Chandigarh examined an appeal concerning the levy of central excise duty and reversal of Cenvat credit on waste and scrap generated during the manufacture of insulated wires and cables. The appellant was engaged in manufacturing dutiable goods under Chapter Heading 8544. During audit, the department alleged that waste and scrap generated in the manufacturing process were cleared without payment of duty and, since the appellant was producing both dutiable and exempted goods, it was required to reverse 10% of the value of such exempted goods. A show cause notice was issued seeking recovery of ₹4,71,546 along with interest and penalty, which was confirmed by the adjudicating authority and upheld by the Commissioner (Appeals).
Before the Tribunal, the appellant argued that the issue was already settled in its favour by earlier Tribunal decisions, which held that waste and scrap arising during manufacture of wires and cables are not manufactured goods and therefore not liable to excise duty. It relied on judicial precedents, including Tribunal decisions, High Court rulings, and the rescinding of earlier CBIC circulars.
The Tribunal noted that the issue was no longer res integra and had been consistently decided in favour of the appellant in earlier orders. It observed that waste and scrap generated during manufacture are not “manufactured goods” within the meaning of Section 2(d) of the Central Excise Act, 1944. Consequently, such waste cannot be treated as exempted final products requiring reversal of Cenvat credit or payment of duty.
