2012 (11) TMI 119 - AT - Central Excise

Appellant's Exemption Denied, Soap Stock Not Waste, SEZA Act Violation Upheld

The appellant was found ineligible for exemption under Notification No.8/2003-Central Excise due to exceeding clearance value limits in previous financial ... Whether Soap Stock which arises in the manufacturing process of the appellant is waster or by-product – Following the decision of court in case of [CCE vs.Priyanka Refinary Ltd. 2009 (5) TMI 419 - CESTAT, BANGALORE] held that:- the soap stock which arises/emerges during refining of the edible oil is a waste, though the Revenue in that case had called this product as by-product. Be that as it may, there cannot be any dispute that the appellant is not manufacturing the soap stock from fatty acid. If the said soap stock is considered and held as waste the impugned order is liable to be set-aside - in favour of the assessee. SEZ - Import for the purpose of export - Benefit of exemption of additional duty of customs for clearance of goods from SEZ to DTA without carrying out manufacturing process – Held that:- Adjudicating Authority after following due process of law did not agree with the contentions raised by the appellant and confirmed the demands on the appellant along with penalty and interest on the amount of demand confirmed and personal penalty on the Director of the Company. Issues:1. Eligibility for exemption under Notification No.8/2003-Central Excise.2. Classification of Soap Stock as waste or by-product.3. Correct interpretation of manufacturing activity under SEZA Act, 2005.Eligibility for exemption under Notification No.8/2003-Central Excise:The case involved the appellant's eligibility for exemption under Notification No.8/2003-Central Excise due to exceeding the clearance value limit in preceding financial years. The Central Excise officers found that the appellant's clearances of excisable goods exceeded the prescribed limit, leading to the demand for Central Excise Duty and penalties. The appellant argued that the issue was covered by previous Tribunal decisions and judgments upheld by the Apex Court. The Department Representative contended that the issue was identical to previous cases, relying on Tribunal and Apex Court findings. The Tribunal analyzed the facts and held that the appellant was not eligible for the exemption, leading to the setting aside of the impugned order and allowing the appeal.Classification of Soap Stock as waste or by-product:The crucial issue revolved around determining whether Soap Stock arising in the manufacturing process was waste or a by-product. The lower authorities classified it as a by-product, not waste. The Tribunal referenced a previous decision involving Morbi Vegetable Products Ltd., where it was established that the soap stock arising during the manufacturing process was a by-product peculiar to the industry. The Tribunal emphasized that the appellant processed the soap stock further to manufacture Acid Oil, which was cleared as a final product. Relying on precedent and factual analysis, the Tribunal concluded in favor of the appellant, setting aside the impugned order and allowing the appeal.Correct interpretation of manufacturing activity under SEZA Act, 2005:In a separate case, the appellant company within the Kandla Special Economic Zone faced scrutiny regarding the correct interpretation of manufacturing activity under the SEZA Act, 2005. The Revenue authorities contended that the appellant did not conduct manufacturing activities as required by the Act, leading to clearance of goods into DTA without compliance. After issuing a show-cause notice, the lower authorities confirmed demands, penalties, and personal penalties on the Director of the Company. The Tribunal reviewed the facts and legal provisions, ultimately disagreeing with the appellant's contentions and upholding the demands and penalties imposed by the Adjudicating Authority.---