ORDER
P.K. Das, Member (J)
1. The relevant facts of the case, in brief, are that the appellants are engaged in the manufacture of sugar and molasses falling under Heading No. 1701 and 1703 of the Central Excise Tariff Act, 1985. It has been alleged that on perusal of the Annual Report for the year 2001-2002, it is noticed that during the financial year 2000-2001 and 2001-2002, the appellants sold scraps. The appellants explained by letter dated 16.3.2004 that during the said period they cleared scrap of M.S. used ball bearing/used choke/used Drums/C.I. powder/Nickel Screen etc. but Modvat credit was availed on Nickel Screen and bearing only. It has been alleged that the appellants contravened the provisions of Rule 3(4) of the Cenvat Credit Rules, 2001 and, therefore, it was proposed to demand the duty, penalty alongwith interest. The adjudicating authority confirmed the demand of duty and imposed penalty of equal amount along with interest, which has been upheld by the Commissioner (Appeals).
2. Ld. Counsel on behalf of the appellants submits that this issue is squarely covered by the decision of the Tribunal in the case of CCE, Jaipur-II v. Birla Corporation Ltd. and Ors. Reported in 2005 (67) RLT 51 (CESTAT-Delhi)
3. Ld. DR reiterates the findings of the Commissioner (Appeals).
4. After hearing both the sides and on perusal of the records, it is seen that the adjudicating authority observed that there is no doubt about the fact that there are inbuilt provisions in Cenvat Credit Rules, 2001-2002 for charging Central Excise duty on waste and scrap of capital goods (on which Cenvat Credit was taken/availed). The Tribunal in the case of Birla Corporation Ltd. & Ors. held as under:
7. We find that scrap in question was cleared by the respondents during the period 1.6.2000 onwards. Therefore, their case is governed by the Cenvat Credit Rules, 2000/2001, wherein no provision for the demand of duty on the waste and scrap of the capital goods has been made. Rule 3(4) of the Cenvat Credit Rules, 2001 only enacts that where inputs/capital goods as such have been cleared by the assessee, he will be liable to reverse the credit/pay duty in respect thereof. But this rule does not speak of reversal of credit or payment of duty by the assessee on the waste and scrap of the capital goods at the time of clearance.
5. In view of the above, I find that the adjudicating authority accepted the legal position that there is no provisions raising demand for charging central excise duty for waste and scrap of capital goods during the period 2001-2002, under the Cenvat Credit Rules. Hence, respectfully following the decision of the Tribunal in the case of Birla Corporation Ltd. (supra), I set aside the impugned order. The appeal is allowed with consequential relief.
Order dictated & pronounced in open court on 17.10.2007.
