Unimech Industries Private Limited Vs Commissioner of Central Excise (CESTAT Chennai)
No Excise duty on Scrap generated at Job worker’s end, when duty is discharged by principal manufacturer
The CESTAT, Chennai in the matter of M/s. Unimech Industries Private Limited v Commissioner of Central Excise [Excise Appeal No. 42787 of 2014 and 41588 of 2017 dated June 10, 2022] has held that the value of scrap arising during the process of manufacture by the job worker is not included in the value of the goods cleared by the job worker to the principal manufacturer for the purpose of levying excise duty.
Facts:
M/s. Unimech Industries Private Limited (“the Appellant”) has engaged in the converting cast articles into tractor parts on job work basis to M/s. TAFE Ltd (“the principal”). The appeal has been filed by the Appellant against the order-in-Appeal (“the impugned order”) passed by the Commissioner (Appeals), Central Excise, Customs and Service Tax, confirming the duty and penalty imposed on the value of the scrap generated during the course of manufacturing of tractor parts on the job work basis.
The Appellant contented that he is a job worker and receiving raw materials from the principal and had paid excise duty based on the value determined on cost construction basis. During the course of his business, certain waste and scrap of metals is generated on which the appropriated duty has been paid by the Appellant.
The department objected the method of valuation adopted by the Appellant alleging that the value of scrap which was sold on payment of Excise duty has to be included in the value of parts cleared to the principal.
Issue:
