Order date – 17 November 2022

 Facts –

• The Appellant, M/s Forgings (India) Iron and Steel Limited, is engaged in the manufacture of various steel forgings as per drawing and specification of customers falling under Chapters 72, 73 & 84 of the First Schedule to the Central Excise Tariff Act, 1985.
• The Appellant got some of their goods manufactured through job-workers for which they sent inputs/semi-finished inputs from their factory to various job-workers in terms of Rule 4(5)(a) of the Cenvat Credit Rules, 2004.
• Five Show Cause Notices were issued covering the period from April, 2011 to March, 2013. It was alleged that the assessee had never disclosed the exact quantum of goods, which were short received by them after job work as well as they did not reverse any such amount. Show-cause Notice further observed that a part of the goods sent for job work by the Assessee under Rule 4(5)(a) of Cenvat Credit Rules, 2004, were not returned even after expiry of 180 days.
• Being aggrieve the appellant had filed an appeal.

Issue –

• Whether the credit attributable to the inputs contained in waste and scraps, which have not been received from the job-worker, is required to be reversed or not ?

Order –

• The Tribunal relied on the decision in the case of M/s. Rocket Engg. Corpn. Ltd. v. CCE, wherein it was held that waste and scrap used at the end of job worker cannot be held to be dutiable in the principal manufacturer’s hand.
• It finds that the waste and scrap are not manufactured goods whether they are generated at the premises of the principal manufacturer or at the premises of job-worker and accordingly, legislature have consciously not made any provisions for reversal of any credit taken on duty paid inputs in case of clearance of waste and scrap and/or, their non-return from the job worker’s premises under the Central Excise Rules, 2002 read with Cenvat Credit Rules, 2002/2004.
• Hence, the Tribunal set aside the confirmation of demand of duty.
• The appeal is allowed.