Order date – 14 November 2022

 Facts –

• The appellant, Shreno Ltd, is engaged in the manufacture of glass and glassware items.
• During the audit it was noticed that some value against the sale of scrap is appearing in the balance sheet of the appellant.
• The range superintendent vide letter dated 06.03.2013, asked the appellant to furnish the details of all scrap cleared from their factory premises that reflected in their balance sheets for the period from 2008-09 to 2012-13. The appellant submitted the details of all the scrap cleared by them from the factory, wherein they have clarified that they have discharged the Excise Duty in respect of the manufacturing scrap and scrap generated out of covetable input/capital goods.
• A Show Cause Notice was issued, wherein the demand of Excise Duty on all the scraps was raised.
• Aggrieved appellant had filed an appeal

Issue –

• Whether the appellant have availed the Cenvat Credit in respect to the scrap which were cleared without payment of duty and also the manufacturing scrap?

Order –

• The Tribunal found that the demand was raised on all the scrap sold by the appellant value of which is reflected in the balance sheet.
• The Tribunal observed that the submission made by the appellant clearly states that they have paid the excise duty on manufacturing scrap and cenvatable scrap, they also stated that on the general scrap which is neither manufacturing scrap nor inevitable scrap, they have not paid the duty.
• In the case of Alembic Ltd the Ahmedabad Tribunal held that the appellant is only a manufacturer of pharmaceutical products. They are not in the manufacture of scrap out of old and used machinery; that their case is covered by the decisions relied upon by the learned Advocate. Tribunal held that the scrap of packing material and of old and used capital goods which are cleared by them cannot be considered as scrap arising out of the manufacture of pharmaceutical products and hence they are not liable to excise duty.
• In the case of Gujarat State Fertilizers & Chemicals Ltd the hon’ble supreme court has find that it is clear that the process of repair and maintenance of the machinery of the cement manufacturing plant, in which M.S. scrap and Iron scrap arise, has no contribution or effect on the process of manufacturing of the cement, which is the excisable end product, as since welding electrodes, mild steel, cutting tools.
• In view of the above judgments and also in the facts of the present case, it is clear that the demand raised in the SCN is not sustainable. 
• The appeal is allowed.