Excise duty on scrap of plastic drum or teen drum

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Sarvesh

Sarvesh (Querist)
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23 July 2011 dear sir,

please reply me that above subject which is applicable

regards

sarvesh

CA Suresh Jain

CA Suresh Jain (Expert)
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24 July 2011 I understand that you are not in business of the manufacture of plastic drums and Tin containers. These are the packing material in which the input is received. on Clearance of which on cenvat credit is required to be revered or duty is required to be paid. Please refer following circular

Containers/waste package used for packing inputs cleared from manufacturer using such inputs, not dutiable and reversal of credit not warranted

Circular No. 721/37/2003-CX., dated 6-6-2003

F.No. 267/135/96-CX.8

Government of India

Ministry of Finance (Department of Revenue)

Central Board of Excise & Customs, New Delhi

Subject : Central Excise - Payment of duty on waste package/containers used for packing modvatable inputs when cleared from the factory of the manufacturer availing Modvat/Cenvat credit - Regarding.

I am directed to refer to Board's Circular No. 470/36/99-CX, dated 19-7-99 [1999 (112) E.L.T. T12] on the above subject whereby the field formations were informed that the Department’s appeal against the CEGAT order in case of M/s. West Coast Industrial Gases Ltd. v. Commissioner of Central Excise has been admitted by the Supreme Court. Accordingly, they were asked to take necessary action to safeguard revenue interest.

2. The said appeal has now been decided by Supreme Court. The Apex Court has held that no duty could be demanded on the containers used for the packing of inputs, on which credit has been taken, when cleared from the factory of the manufacturer availing credit as these containers could not be treated as scrap or waste arising out of the manufacturing process. Similarly, reversal of credit either on proportionate basis or otherwise is also not required as the utilization of input on which credit has been taken is not in dispute.

3. Accordingly, it is clarified that no duty shall be payable and no reversal of credit is also warranted on waste package/containers used for packing inputs, on which credit has been taken, when cleared from the factory of the manufacturer availing Modvat/Cenvat credit. Consequently, Circular No. 470/36/99-CX, dated 19-7-99 may be treated as withdrawn. Pending cases if any, may be decided accordingly.