M/S. U.P. Twiga Fiberglass Ltd. Vs. Commissioner of Central Excise, - Court Judgment

Excerpt:
1. appellant filed this appeal against the order in appeal passed by the commissioner (appeals).2. brief facts of the case are that appellants are engaged in the manufacture of articles of glass fibre and are availing the benefit of modvat credit. the appellant were sending the inputs to the job workers under rule 57f of the central excise rules and on receipt of the goods from job workers, appellants were taking themodvat credit in respect of the inputs excluding the waste arisen in the manufacture as provided under rule 57f of the central excise rules. the waste generated in the manufacture of the goods at the hands of the job workers was allowed to be accumulated at the hands of the job workers. two show cause notices were issued to the appellant for demand of duty in respect of the waste for the period october, 1996 to february, 1997 and march, 1997 to august, 1997.3. adjudicating authority confirmed the demand. appellant filed an appeal and the same was rejected.4. learned counsel appearing on behalf of the appellants submits that rule 57f of the central excise rules provides that any waste arisen from processing of inputs in respect of which credit has been taken can be removed on payment of duty and can be removed without payment of duty where the central government issued orders and was cleared under chapter x procedure rules. the rule further provides that the waste can be destroyed in the presence of proper officer on the application by the manufacturer and if found not fit further use. learned counsel submits that the appellants vide letter dated 23.8.87 made a request to the assistant commissioner for destruction of waste arisen out of the manufacture on fibreglass tissue on job works and, thereafter, on 25.11.97, the appellants issued reminder to the assistant commissioner in respect of their request made for destruction and waste arisen out of the manufacture on fibreglass on job work. learned counsel submits that no action was taken no these request which were in accordance with the provisions of rule 57f of the central excise rules. his submission is that without deciding their application, the demand was confirmed.he submits that as appellants made a request for destruction of waste as per provisions of rule 57f of the central excise rules no duty can be demanded. he, therefore, submits that the appeal be allowed. learned sdr appearing of behalf of the revenue submits that rule 57f of central excise rules provides that the waste arisen in the course of any job work operation shall be returned to the factory of the manufacturer of final product. his submission is that in the present case neither the waste has been received by the appellant from the job workers nor any duty was paid on such waste. he, therefore, submits that the appeal be dismissed.6. in this case of duty was demanded on the waste arisen at the hands of job workers. rule 57f of the central excise rules in respect of waste arisen at the hands of job workers provides as under :- "any waste, arising from the processing of inputs, in respect of which credit has been taken may- (a) be removed on payment of duty as if such waste is manufactured in the factory; or (b) be removed without payment of duty, where it belongs to such class or category of waste as the central government may from time to time by order specify for the purpose for being used in the manufacture of the class or categories of goods as may be specified in the said order, subject to the procedure under chapter x being followed; or (c) be destroyed in the presence of proper officer on the application by the manufacturer, and if found unfit for further use, or not worth the duty payable thereon, the duty payable thereon being remitted: provided that such waste may be destroyed by the manufacturer governed by chapter viia after informing the proper officer in writing regarding the quantity of such waste and the date on which he proposes to destroy, at least seven days in advance and after observing all such conditions as may be prescribed by the [commissioner of central excise] by a general or special order with regard to the manner of disposal of such waste." that appellant vide letter dated 23.8.97 made a request for destruction of waste arisen at the hands of the job workers. alongwith this letter the appellant also supplied the details of scrap generated during the period 13.7.96 to 31.7.97. the appellant vide letter dated 25.11.97 sent a reminder to the assistant commissioner in respect of destruction of waste. revenue is not disputing this letter. no order by the competant authority was passed on these requests before confirming the demand. as the rule 57f of the central excise rules provides that the manufacturer can ask for destruction of waste, if found unfit for further use or, worth the duty payable theiron being remitted and no order has been passed in respect of these requests made by the appellants. therefore, the impugned order is set aside and the matter is remanded to the adjudicating authority for deciding afresh after taking decision on the request made by the appellants in respect of destruction of waste. the appeal is disposed of by way of remand.

Judgment:
1. Appellant filed this appeal against the order in appeal passed by the Commissioner (Appeals).

2. Brief facts of the case are that appellants are engaged in the manufacture of articles of glass fibre and are availing the benefit of MODVAT credit. The appellant were sending the inputs to the job workers under Rule 57F of the Central Excise Rules and on receipt of the goods from job workers, appellants were taking theMODVAT credit in respect of the inputs excluding the waste arisen in the manufacture as provided under Rule 57F of the Central Excise Rules. The waste generated in the manufacture of the goods at the hands of the job workers was allowed to be accumulated at the hands of the job workers. Two show cause notices were issued to the appellant for demand of duty in respect of the waste for the period October, 1996 to February, 1997 and March, 1997 to August, 1997.

3. Adjudicating authority confirmed the demand. Appellant filed an appeal and the same was rejected.

4. Learned Counsel appearing on behalf of the appellants submits that Rule 57F of the Central Excise Rules provides that any waste arisen from processing of inputs in respect of which credit has been taken can be removed on payment of duty and can be removed without payment of duty where the Central Government issued orders and was cleared under Chapter X procedure Rules. The Rule further provides that the waste can be destroyed in the presence of Proper Officer on the application by the manufacturer and if found not fit further use. Learned Counsel submits that the appellants vide letter dated 23.8.87 made a request to the Assistant Commissioner for destruction of waste arisen out of the manufacture on Fibreglass Tissue on job works and, thereafter, on 25.11.97, the appellants issued reminder to the Assistant Commissioner in respect of their request made for destruction and waste arisen out of the manufacture on Fibreglass on job work. Learned Counsel submits that no action was taken no these request which were in accordance with the provisions of Rule 57F of the Central Excise Rules. His submission is that without deciding their application, the demand was confirmed.

He submits that as appellants made a request for destruction of waste as per provisions of Rule 57F of the Central Excise Rules no duty can be demanded. He, therefore, submits that the appeal be allowed. Learned SDR appearing of behalf of the Revenue submits that Rule 57F of Central Excise Rules provides that the waste arisen in the course of any job work operation shall be returned to the factory of the manufacturer of final product. His submission is that in the present case neither the waste has been received by the appellant from the job workers nor any duty was paid on such waste. He, therefore, submits that the appeal be dismissed.

6. In this case of duty was demanded on the waste arisen at the hands of job workers. Rule 57F of the Central Excise Rules in respect of waste arisen at the hands of job workers provides as under :- "Any waste, arising from the processing of inputs, in respect of which credit has been taken may- (a) be removed on payment of duty as if such waste is manufactured in the factory; or (b) be removed without payment of duty, where it belongs to such class or category of waste as the Central Government may from time to time by order specify for the purpose for being used in the manufacture of the class or categories of goods as may be specified in the said order, subject to the procedure under Chapter X being followed; or (c) be destroyed in the presence of proper officer on the application by the manufacturer, and if found unfit for further use, or not worth the duty payable thereon, the duty payable thereon being remitted: Provided that such waste may be destroyed by the manufacturer governed by Chapter VIIA after informing the proper officer in writing regarding the quantity of such waste and the date on which he proposes to destroy, at least seven days in advance and after observing all such conditions as may be prescribed by the [Commissioner of Central Excise] by a general or special order with regard to the manner of disposal of such waste." That appellant vide letter dated 23.8.97 made a request for destruction of waste arisen at the hands of the job workers. Alongwith this letter the appellant also supplied the details of scrap generated during the period 13.7.96 to 31.7.97. The appellant vide letter dated 25.11.97 sent a reminder to the Assistant Commissioner in respect of destruction of waste. Revenue is not disputing this letter. No order by the competant authority was passed on these requests before confirming the demand. As the Rule 57F of the Central Excise Rules provides that the manufacturer can ask for destruction of waste, if found unfit for further use or, worth the duty payable theiron being remitted and no order has been passed in respect of these requests made by the appellants. Therefore, the impugned order is set aside and the matter is remanded to the adjudicating authority for deciding afresh after taking decision on the request made by the appellants in respect of destruction of waste. The appeal is disposed of by way of remand.