2013 (7) TMI 51 - AT - Central Excise

Residues classified as waste eligible for exemption under Notification No. 89/95-CE

The tribunal ruled in favor of the appellants, holding that the residues classified as Gums/Waxes and Recovered Oil/Fatty Acids were eligible for ... Duty on waste / scrap - exemption under notification 89/95-CE - Gums/waxes and Recovered Oil/Fatty Acids - The ground taken by the Department in the Show-cause notices to deny the benefit was that, the said goods are neither waste nor scrap in as much as the said goods have marketability & the said goods have been sold to the manufacturer of washing soap. - Held that – The impugned goods are waste for the purpose of benefit of Notification No. 89/95 can not be decided on the basis of markebality. This is for the simple reason that exemption pre-supposes excisability which, in its turn, pre-supposes marketability. Non-marketability cannot, therefore, be the test for deciding whether the goods in question satisfy of the definition of 'waste' for the purposes of Notn 89/95-CE. Else, the exemption itself would become redundant and futile. Also word 'waste' has to be read as being similar character to the words 'Scrap and parings are marketable and having the value in commercial trade. Conflicting decisions by the Courts of co-equal Benches and Co- ordinate benches – As per The State of Gujarat Versus Raipur manufacturing co. Ltd. [1966 (9) TMI 82 - SUPREME COURT OF INDIA] - the judgment which states the law accurately has to be followed and mere incidence of time whether the judgments of co-equal benches are earlier or later is hardly relevant. - Decided in favor of assessee. Decision in A G Flats (2011 (7) TMI 968 - CESTAT, NEW DELHI) distinguished wherein it was held that, the spent earth arising in course of refining of oil, being of no value, is not a new product or a by-product. Issues Involved:1. Denial of benefit under Notification No. 89/95-CE dated 18.5.1995.2. Classification of residues (Gums/Waxes and Recovered Oil/Fatty Acids) as waste or by-products.3. Marketability and excisability of residues.4. Interpretation of exemption notification and its application to the appellant's case.5. Conflicting decisions of co-equal benches.Detailed Analysis:1. Denial of Benefit under Notification No. 89/95-CE dated 18.5.1995:The appellants challenged the denial of the benefit of Notification No. 89/95-CE, which exempts waste, parings, and scrap arising in the course of manufacture of exempted goods, on the grounds that the residues in question are marketable and thus not considered waste. The department issued show-cause notices, confirmed the proposals, and imposed duty, interest, and penalties on the appellant.2. Classification of Residues (Gums/Waxes and Recovered Oil/Fatty Acids) as Waste or By-products:The primary issue was whether the residues arising during the manufacture of refined rice bran oil could be classified as waste eligible for exemption under Notification No. 89/95-CE. The appellant argued that these residues are waste, while the department contended they are by-products due to their marketability.3. Marketability and Excisability of Residues:The tribunal found that the residues are excisable goods falling within the schedule of the Central Excise Tariff Act, 1985, and would be leviable to duty if not exempted. The tribunal emphasized that marketability cannot be the sole criterion to determine whether the goods qualify as waste under the exemption notification, as the exemption presupposes excisability and marketability.4. Interpretation of Exemption Notification and Its Application to the Appellant's Case:The tribunal referred to the dictionary meanings and judicial interpretations of the term 'waste,' concluding that waste includes unwanted, unusable items, remains, or by-products arising from the manufacturing process. The tribunal held that the residues in question are waste within the scope of the exemption notification, despite being marketable and usable by others. The tribunal also noted that the exemption notification does not expressly exclude by-products from its ambit.5. Conflicting Decisions of Co-equal Benches:The tribunal acknowledged conflicting decisions by different benches on similar issues, specifically the cases of CCE Hyderabad vs. Priyanka Refineries Ltd. and CCE Jalandhar vs. A.G. Flats Ltd. The tribunal preferred the interpretation that aligns with the statutory provisions and the authoritative pronouncement in Raipur Manufacturing Co. Ltd., which held that waste includes marketable by-products not usable for the original manufacturing process.Conclusion:The tribunal concluded that the appellants are entitled to the benefit of Notification No. 89/95-CE for the clearance of residues in the form of Gums/Waxes and Recovered Oil/Fatty Acids. The impugned orders were set aside, and the appeals were allowed with consequential relief.Pronouncement:The judgment was pronounced in court on 13/05/2013.