Marketable waste transformer oil was held dutiable under excise rules after use of Modvat-credit inputs.

Waste transformer oil and waste trichloroethylene arising after use of Modvat-credit inputs were treated as dutiable when marketability was established. Evidence showed the waste oil was actually traded in the market, so the contention that it was merely unusable waste failed. Applying Rule 57F(4)(a) of the Central Excise Rules, 1944, the authorities held that such waste could be removed on payment of duty and classified it under heading 2710.90. The demand on the waste oil was therefore upheld.

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Issues: Whether waste transformer oil and waste trichloroethylene cleared after use of inputs on which Modvat credit had been taken were exigible to duty as marketable goods under heading 2710.90.

Analysis: The goods emerged as waste after processing of inputs on which Modvat credit had been availed, and the record contained evidence that such waste oil was actually traded in the market. Once marketability was established, the contention that the material was mere waste and not dutiable could not succeed. Under Rule 57F(4)(a) of the Central Excise Rules, 1944, waste arising from processing of inputs on which Modvat credit had been taken could be removed on payment of duty, and the authorities below were justified in classifying the item under heading 2710.90 and demanding duty.

Conclusion: The demand of duty on the waste oil was upheld and the appeal failed.

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