Press-mud not excisable under central excise rules, so Rule 57CC demand and penalty were unsustainable.

Press-mud generated in sugar manufacture was treated as residual waste, not as a final product or by-product, and was found not marketable and therefore not excisable. On that basis, Rule 57CC of the Central Excise Rules, which applies where a manufacturer clears both dutiable and exempted or nil-rated final products, was considered inapplicable because an item that is not excisable does not become an exempted product. The related demand of 8% of sale value and the connected penalty were therefore unsustainable.

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Issues: Whether press-mud arising in the manufacture of sugar is an excisable commodity so as to attract Rule 57CC of the Central Excise Rules and the demand of 8% of its sale value.

Analysis: Press-mud was held to be only residual waste arising during sugar manufacture and not a final product or by-product. Since the Tribunal had already held that press-mud is not marketable and, therefore, not excisable, the condition for invoking Rule 57CC, which applies where a manufacturer clears both dutiable and exempted or nil-rated final products, was not satisfied. If the product is not excisable at all, the question of it being exempted from duty does not arise.

Conclusion: Rule 57CC was held inapplicable to press-mud, and the duty demand and connected penalty were unsustainable.

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