The Mumbai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the value of scrap need not be included in the assessable value.The bench of Suvendu Kumar Pati (Judicial Member) and Anil G. Shakkarwar (Technical Member) has observed that for two other periods, pre- and post-2007, demand against the appellant has been set aside for the reason that the value of...
The Mumbai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the value of scrap need not be included in the assessable value.
The bench of Suvendu Kumar Pati (Judicial Member) and Anil G. Shakkarwar (Technical Member) has observed that for two other periods, pre- and post-2007, demand against the appellant has been set aside for the reason that the value of scrap cannot be included in the assessable value.
The appellant/assessee is a manufacturer of rolled products of iron and steel, and it has also undertaken job work of the same for other manufacturers and suppliers on receipt of inputs free of charge from them. The disputed period relates to the manufacture of rolled products on a job-based basis by the appellant for Steel Authority of India Limited (SAIL).
On receipt of raw material from SAIL, the appellant manufactured rolled products and cleared the same either to the depot of SAIL or to the customer of SAIL.
The assessable value was determined on the basis of the sale price adopted by SAIL, and the same was claimed to be in accordance with Rule 10A of the Central Excise Valuation Rules, 2000.
During the process of manufacturing, certain waste and scrap of iron and steel were generated, which were cleared as scrap upon payment of the applicable duty on them. The claim of the respondent or department is that the appellant retained the scrap in respect of job work done for SAIL, for which sale proceeds of the same, being an additional consideration, should have been included in the value of rolled products.
The demand was raised through show-cause notice, the matter was adjudicated upon, the demand with consequential penalty and interest was confirmed in the adjudication order, and the appellant's unsuccessful attempt before the Commissioner (Appeals) brought the dispute to the forum.
The tribunal has held that the value of scrap should not be included in the assessable value, and the appellant had rightly placed the following judgments, namely SRF Limited vs. CCE, affirmed by the Supreme Court.
Counsel For Appellant: Saurabh Bhise
Counsel For Respondent: P.K. Acharya
Case Title: M/s. Shilpa Steel & Power Ltd. Versus Commissioner of Central Excise
Case No.: Excise Appeal No. 89946 of 2014