Case Law Details
Vasan Engineering Industries P. Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
Counsel submitted that during the manufacture of excisable products the scrap are generated. The appellant does not have any intention to manufacture scrap and their final product is not scrap. The scrap generated is inevitable during the course of manufacture. So, Section 2(f) of the Central Excise Act, 1944 is not attracted for levy of service tax. Ld. Counsel adverted to the decision of the Larger Bench of the Tribunal in the case of Hindalco Industries Ltd. Vs CCE Mumbai – 2014 (308) ELT 472 (Tri.-LB) and submitted that the Larger Bench had held that scrap is exigible to excise duty. The assessee therein preferred an appeal against such order of the Larger Bench before the Hon’ble High Court of Bombay. As per the decision reported in 2015 (315) ELT 10 (Bom.), the High Court held that the decision of the Hon’ble Supreme Court in the case of Grasim Industries Ltd. – 2011 (273) ELT 10 (SC) had analysed the very same issue after discussing Section 2(d) and 2(f) of the Central Excise Act, 1944 and held following the Apex Court decision that no excise duty is leviable on the scrap generated in the course of manufacture. The department preferred an appeal against the judgement passed by the Hon’ble High Court of Bombay before the Supreme Court. The appeal was dismissed by the Hon’ble Supreme Court upholding the decision of the High Court of Bombay as reported in UOI Vs Hindalco Industries Ltd. – 2019 (367) ELT A246 (SC). It was held by the Supreme Court that waste and scrap are emerging as by-products during the course of manufacture of other products and therefore are not exigible to excise duty.
The issue is whether the scrap generated during the process of manufacture if liable to excise duty stands decided by the decision of the Hon’ble Bombay High Court in the case of Hindalco Industries Ltd. (supra). The said decision was maintained by the Hon’ble Apex Court by dismissing the appeal filed by the Department. In view thereof, we find that the demand of duty cannot sustain.
FULL TEXT OF THE CESTAT CHENNAI ORDER
The issue involved in this appeal is whether the scrap generated during the course of manufacture is liable for payment of excise duty.
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