No Excise duty on Scrap generated at Job worker’s end, when duty is discharged by principal manufacturer


The CESTAT, Chennai in the matter ofM/s. Unimech Industries Private Limited v Commissioner of Central Excise [Excise Appeal No. 42787 of 2014 and 41588 of 2017 dated June 10, 2022] has held that the value of scrap arising during the process of manufacturere by the job worker is not included in the value of the goods cleared by the job worker to the principal manufacturer for the purpose of levying excise duty.


M/s. Unimech Industries Private Limited (“the Appellant”) has engaged in the converting cast articles into tractor parts on job work basis to M/s. TAFE Ltd (“the principal”). The appeal has been filed by the Appellant against the order-in-Appeal (“the impugned order”) passed by the Commissioner (Appeals), Central Excise, Customs and Service Tax, confirming the duty and penalty imposed on the value of the scrap generated during the course of manufacturing of tractor parts on the job work basis.

The Appellant contented that he is a job worker and receiving raw materials from the principal and had paid excise duty based on the value determined on cost construction basis. During the course of his business, certain waste and scrap of metals is generated on which the appropriated duty has been paid by the Appellant.

The department objected the method of valuation adopted by the Appellant alleging that the value of scrap which was sold on payment of Excise duty has to be included in the value of parts cleared to the principal.


  • Whether the value of scrap arising during the process of manufacturing by the Appellant is includible in the value of the goods cleared by him to the principal manufacturer?


The CESTAT, Chennai in [Excise Appeal No. 42787 of 2014 and 41588 of 2017 dated June 10, 2022] held as follows:

  • Relied upon, the judgement of CESTAT, Bangalore in the case of M/s. P.R. Rolling Mills Pvt. Ltd. v. Commissioner of C.Ex., Tirupathi reported in 2010 (249) E.L.T. 232 wherein it was held that the value of scrap need not be included in the assessable value of the products manufactured by the Appellant.
  • Noted that, while estimating the value of the goods cleared to the principal, the Appellant has taken 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.
  • Stated 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.
  • Held that, impugned orders are set aside.

(Author can be reached at

DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.

CA Bimal Jain
A2Z Taxcorp LLP is a boutique Indirect Tax firm having its offices at New Delhi and Guwahati specializing in GST, Central Excise, Custom, Service Tax, VAT, DGFT, Foreign Trade Policy, SEZ, EOU, Export – Import Laws, Free Trade Policy, etc. It is a professionally managed firm having a team of experienced and distinguished Chartered Accountants, Company Secretary, Lawyers, Corporate Financial Advisors and Tax consultants to provide various services like litigation and representation, transaction advisory, diagnostic reviews/ health checks, audit defense & protection, retainership & compliance, configuration of tax efficient business model etc. Its clientele consists mainly of Foreign MNC, large/mid-sized Indian companies which includes exporters, FMCG, consumer durables, automobiles, aerated beverages, ceramic tiles, real-estate, hospitality, etc. Our clients include Varun Beverages Limited, Kajaria Ceramics Limited, L.G. Electronics India Private Limited, Shipra Hotel Limited, Multani Pharmaceuticals Limited, Shangri-La Eros Hotel etc. Flat No. 34B, Ground Floor, Pocket - 1, Mayur Vihar, Phase–I, Delhi – 110091 India Desktel:+91-11-42427056 Mobile:+91 8076563802
Posts created 26

Leave a Reply

Your email address will not be published.

Related Posts

Begin typing your search term above and press enter to search. Press ESC to cancel.

Back To Top