EOU liable for duty on waste clearance, directed to deposit confirmed duty amount, pending compliance.

The Tribunal upheld the duty liability on waste cleared by the 100% EOU to DTA, directing the applicants to deposit a portion of the confirmed duty while waiving the rest, pending compliance. The judgment emphasizes the duty liability on waste and the specific procedures governing EOUs under relevant notifications.

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Issues involved:
Waiver of pre-deposit of total duty, interest, and penalties for a 100% EOU engaged in manufacturing bulk drugs and intermediates importing solvents without payment of duty and procuring from the DTA market without duty payment. The dispute arises from the clearance of impure solvents to DTA without duty payment and the demand for duty on inputs contained in such solvents.

Analysis:
The applicants, a 100% EOU, imported solvents without duty payment and procured inputs duty-free, leading to the clearance of impure solvents to DTA without duty payment. The Revenue issued show cause notices demanding duty on the mixture of solvents and inputs contained in them. The adjudicating authority dropped the demand for duty on inputs, citing the duty demand on solvents. The applicants argue that the cleared solvents are waste from bulk drug manufacturing, not liable for duty, supported by the fact that the solvents were used in exported bulk drugs.

The applicants rely on Notification No. 22/2003-CE, claiming the waste is not a manufactured product and not subject to duty. They refer to tribunal decisions supporting their stance. The Revenue contends that the applicants availed inputs duty-free under the notification, emphasizing the specific procedures for 100% EOUs. They argue that duty demands on inputs in waste were upheld in previous cases, unlike the present scenario where the demand on inputs was dropped.

The Tribunal notes the applicants' status as a 100% EOU availing duty exemptions for inputs. Special procedures apply to EOUs under relevant notifications. The Tribunal reproduces para 6 of Notification 22/2003, allowing clearance of waste to DTA on payment of excise duty. The waste, rejects, scrap, and remnants are deemed liable for duty when cleared to DTA for consideration, indicating the applicants must deposit 25% of confirmed duty within eight weeks, with the remaining dues waived upon compliance.

In conclusion, the Tribunal upholds the duty liability on waste cleared by the EOU to DTA, directing the applicants to deposit a portion of the confirmed duty while waiving the rest, pending compliance. The judgment emphasizes the duty liability on waste and the specific procedures governing EOUs under relevant notifications.

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