Scrap Generated After The Process Of Manufacture Is Not Includible In Assessable Value Of The goods Cleared By The Job Worker: CESTAT

The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that 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.The appellants/assessee are engaged in the manufacture of tractor parts and components on a job work basis for M/s. TAFE Ltd. and are clearing it to M/s. TAFE Ltd. The department was of the view that the appellants had not included the value of the scrap and had not discharged excise duty. The Show Cause Notices were issued proposing to demand excise duty on the value of scrap generated during the course of the manufacture of tractor parts on a job work basis. After due process of law, the original authority confirmed the duty along with interest and imposed a penalty. The appellants filed appeals before the Commissioner (Appeals), who upheld the orders passed by the Adjudicating Authority. The appellant argued that the appellant is a job worker for M/s. TAFE Ltd. and is converting cast articles into tractor parts. The appellant was receiving raw materials from the principal manufacturer for the manufacture of components on a job-work basis. The appellant paid excise duty based on the value determined on a cost-construction basis under CAS-4, in which the landed cost of the cast articles was taken into account. During the course of manufacture on a job work basis, certain waste and scrap of metal were generated. The appellant cleared the scrap on payment of appropriate duty. The appellant submitted that the department has objected to the method of valuation adopted by the appellant, alleging that the value of scrap which was sold on payment of Central Excise Duty has to be included in the value of parts cleared to the principal manufacturer. Since the appellant has already discharged duty on the scrap, the demand cannot be sustained. The issue raised was 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. The CESTAT noted that while estimating the value of the goods cleared to the principal manufacturer, the appellant took 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. Case Title: M/s. Unimech Industries Private Limited Versus The Commissioner of Central Excise Citation: Excise Appeal No. 42787 of 2014 Dated: 10.06.2022 Counsel For Appellant: Advocate N. Viswanathan Counsel For Respondent: Authorized Representative Sridevi Taritla Click Here To Read/Download Order

Scrap Generated After The Process Of Manufacture Is Not Includible In Assessable Value Of The goods Cleared By The Job Worker: CESTAT

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Scrap Generated After The Process Of Manufacture Is Not Includible In Assessable Value Of The goods Cleared By The Job Worker: CESTAT

Mariya Paliwala

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INR 1099+GST

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Mariya Paliwala

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