Fire Brick After Use In Kiln Is Not Liable To Excise Duty As Waste And Scrap: CESTAT

The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the use of fire brick that is dismantled from the undershell of a kiln is not liable to duty as waste or scrap.

The bench of Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) has observed that periodically, fire bricks from the kiln are to be dismantled and then removed as they become useless. The process of dismantling is also not in dispute. The firebricks that are being dismantled from the inner shell of the kiln can be treated only as waste and scrap. It is not disputed that the waste and scrap of fire bricks are not dutiable commodities.

The appellant/assessee submitted that after the use of the fire brick on which credit was taken on capital goods, it became waste and scrap and was not usable even as waste and scrap, and the same was thrown outside the factory. Excise duty under Rule 3(5A) of the Cenvat Credit Rules, 2004 by calculating the same and deducting 2.5% per quarter is not required to be paid.

The issue raised was whether the appellant is liable to pay duty on waste and scrap of fire brick after use in the kiln during the period 2010–11 (up to February 2015) in terms of Rule 3 (5A) of the Cenvat Credit Rules, 2004.

The assessee contended that it had correctly paid the duty on the transaction value.

Though Rule 3 of the Cenvat Credit provides that in the case of the removal of capital goods as waste and scrap, the assessee is required to pay the duty after reducing 2.5% per quarter for the period of use of capital goods.

The provisions of Rule 57S(2)(c) of the Central Excise Rules, 1944, deal with the manner of utilisation of the capital goods and the credit allowed in respect of duty paid.

The tribunal noted that the firebricks, which became waste and scrap, are being sold. It can be used only for the purpose of reprocessing to extract the chemicals that can be recycled and used in the manufacture of fresh firebricks. There is no entry in the tariff imposing any duty on waste and scrap of firebricks, and, therefore, it is a non-excisable commodity.

Counsel For Appellant: Anil Gidwani

Counsel For Respondent: P. Ganesan

Case Title: Orient Glaze Pvt Limited Versus Commissioner of Central Excise & ST, Anand

Case No.: Excise Appeal No. 12157 Of 2016

Click Here To Read The Order