Tribunal rules in favor of purified water manufacturer in duty demands case.

The Tribunal ruled in favor of the appellant, a purified drinking water manufacturer, in a case concerning duty demands on plastic scrap and control samples of purified water. It was held that selling damaged bottles as scrap does not amount to manufacturing plastic scrap, and waste generated during use or damage does not constitute excisable goods. Additionally, the control samples drawn for testing purposes were not subject to duty as they were not sold or cleared. The duty demands on both plastic scrap and control samples were deemed unsustainable, and the appeal was allowed with consequential relief.

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Issues:
1. Duty demand on plastic scrap
2. Duty demand on control samples of purified water

Analysis:

Issue 1: Duty demand on plastic scrap
The appellant, a manufacturer of purified drinking water, sold damaged polycarbonate bottles as scrap. The department alleged manufacturing of plastic scrap and demanded duty. The appellant argued that selling damaged bottles as scrap does not constitute manufacturing of plastic scrap. Citing precedents, the appellant contended that waste generated during manufacturing or use cannot be considered excisable goods. The Tribunal agreed, stating that waste arising during use or damage of bottles does not amount to manufacturing. Precedents were cited to support the conclusion that disposal of waste material does not imply manufacturing. The demand for duty on plastic scrap was deemed unsustainable in law.

Issue 2: Duty demand on control samples of purified water
The appellant failed to account for control samples drawn for testing shelf-life and customer complaints. The Revenue argued that the absence of records indicated clearance without duty payment. The Tribunal noted that the samples were drawn for testing purposes and not for sale, citing precedents where samples consumed during testing were not subject to duty. The lack of evidence showing clearance or consumption of control samples led the Tribunal to conclude that duty demand on control samples was not sustainable. The Revenue's reliance on a precedent was dismissed as the samples were not shown to have been removed from the factory. The appeal was allowed, setting aside the duty demands with consequential relief as per the law.

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