Order Date: 10 June 2022

Facts:

• The appellant, M/s. Unimech Industries Private Limited were engaged in the manufacture of tractor parts and components on job work basis to M/s. TAFE Ltd.
• The Department was in the view that the appellants had not included the value of the scrap and have not discharged Excise Duty on the same. Show Cause Notices were issued proposing to demand Excise Duty on the value of scrap generated during the course of manufacture of tractor parts on job work basis.
• After due process of law, the Original Authority confirmed the duty along with interest and imposed  penalty. Therefore, the appellants filed appeals before the Commissioner (Appeals), who vide orders impugned herein, upheld the orders passed by the Adjudicating Authority. 

Issue:

• Whether, the value of scrap arising during the process of manufacture and retained by the job worker is includible in the value of the goods cleared by the job worker to the principal manufacturer?

Order:

• The Tribunal observed that while estimating the value of the goods cleared to the principal manufacturer, the appellant has taken the value of the entire raw materials received by them. The scrap generated during the process of manufacture has been cleared by them on payment of appropriate duty. The scrap is generated after the process of manufacture and the same is not includible in the assessable value of the goods cleared by the job worker to the principal manufacturer.
• In the appellant’s own case for a different period, The Tribunal has relied upon the decision and discussions in M/s. P.R. Rolling Mills Pvt. Ltd. (supra) where the said issue was considered in detail and set aside the demand.
• Hence, the scrap is generated after the process of manufacture and the same is not includible in the assessable value of the goods cleared by the job worker to the principal manufacturer. Accordingly, the impugned order is set aside and the appeal is allowed with consequential reliefs, if any, as per law.