Order Date: 15 June 2022

Facts:

• This appeal is filed by the revenue under Section 35 H (1) of the Central Excise Act, 1944.
• The assessees  have imported copper bars or rods through canalizing agencies like MMTC or Hindustan Copper Limited.
• The show cause notice has been issued for the appellant  in that notice it shown that the amount of Rs. 1,32,42,800.02/- should not be recovered from under Section 11 A of the Act and why penalty should not be imposed under Rule 209 read with Rule 173 of the Central Excise Rules 1944.
• It was alleged that the assessee neither returned the waste and scrap to their factory nor the Central Excise duty at appropriate rate was paid and that such short-received quantity has been shown as “process loss”.
• As the assessee without obtaining any permission from the competent authority under Rule 57 F (2) of the rules and therefore the assessee  is liable for payment of Central Excise duty.
• The assessee after the introduction of MODVAT Scheme have opted for availing of MODVAT from 1986 in terms of Rule 57 G (I)
• under Rule 57 F (2) subject to condition that waste, if any arising in the course of manufacture of intermediate products should be returned to their factory.
• The show cause notice was barred by limitation and the ingredients required to invoke power under Section 11 A (1) of the Act was absent and therefore such power could not have been invoked.
• It was stated that scrap/ waste generated in the course of proceedings should be either returned to the manufacturer or appropriate excise duty has to be paid on the same the power under Section 11A of the Act was invoked as the assessee committed an irregularity which was wilful.

Issues:

The removal of the order passed was unauthorised or the demand of the applicant was barred by the laws of limitation was correct?

Order: 

• The decision of the tribunal was relied on by the case of Commissioner of Central Excise Versus Chemical Process Equipments Pvt. Ltd. The Court found a clear infraction of the procedure required to be followed / adopted under Rule 57A of the act thus the said decision will not render any assistance to the case of the revenue.
• The Tribunal took note of the important fact that the assessee has opted for clearance of waste and scrap under Rule 57 F(2) of the rules by obtaining permission from the jurisdictional Central Excise Officer and if that be so, no duty could have been demanded from the assessee.
• As There was no allegation of any wilful mis-statement or suppression of fact by the assessee with an intent to avoid payment of duty and therefore, the power under Section 11A of the Act could not have been invoked by the authority.
•  The decision will not render any assistance to the case of the revenue. 
• The appeal is dismissed and the substantial questions of law are answered against the revenue, No cost.