Removal of scrap generated during manufacture without payment of duty for job work justified

YKK India Pvt Ltd Vs Commissioner of Central Excise (CESTAT Chandigarh)

CESTAT Chandigarh held that scrap generated during manufacture can be removed without payment of duty for job work and can be used as inputs.

Facts- M/s YKK India Pvt. Ltd is engaged in the manufacture of Slide Fastereners (Metallic and Non-Metalic), chains and sliders (“Final Products”) failing under chapter heading 9607 19, 9607 11 and 9607 20 respectively of the Central Excise Tariff Act, 1985. During the relevant period, the appellant discharged duty @ 10% and availed CENVAT credit on the duty paid on inputs/capital goods.

During the relevant period, the appellant sent brass cutting waste (“Brass Scrap”) generated during the manufacture of the Final Products to job worker under job work challans issued in terms of Rule 4(5)(a) of the CENVAT Credit Rules, 2004 read with Notification No. 214/86-CE dated 25.03.2086 without payment of duty for remelting and conversion into brass wires. The brass wires were then returned to the appellant’s factory for use in the manufacture of the final products.

The audit raised the objection that the appellant should have paid duty on the removal of the Brass Scrap to job worker.

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