2018 (5) TMI 1192 - AT - Central Excise

Tribunal rules waste from refining process not subject to duty

Raghuvar India Ltd Versus C.C.E. & S.T. -Jaipur-i

Raghuvar India Ltd Versus C.C.E. & S.T. -Jaipur-i - TMI Issues:- Appeal against Order-in-Appeal No. 91/2013 dated 13/08/2013 regarding demand of duty on waste arising during manufacture of refined oil.- Determination of whether waste arising during the refining process of vegetable oil can be considered as manufactured excisable goods.- Application of exemption Notification 89/95-CE to the waste generated during the manufacturing process.The judgment pertains to an appeal against Order-in-Appeal No. 91/2013 dated 13/08/2013, where the appellant, engaged in the production of exempted goods like Edible Oil, Refined oil, and Vanaspati Oil, faced a demand for duty on waste generated during the refining process of the oil products. The Tribunal considered the argument put forth by the Revenue that waste, when capable of being sold for a significant amount, should not be considered as waste but as a manufactured product subject to excise duty. However, the Tribunal rejected this notion, emphasizing that the value a product may fetch cannot solely determine its classification as waste or a by-product. Citing the Indian Aluminium Co. case, the Tribunal highlighted that products emerging during the manufacturing process may not necessarily be deemed as manufactured goods based on their potential selling value. In the specific context of refining vegetable oil, the Tribunal concluded that the incidental products like gums, waxes, and fatty acids with odor resulting from the removal of unwanted materials during the refining process cannot be considered as products of manufacture themselves. These by-products were deemed as waste arising during the refining process and were held to be covered under the exemption Notification No. 89/95-CE. The Tribunal referenced previous cases, such as M/s Vinayak Agrotech Ltd. and State of Gujarat v/s Raipur Manufacturing Co. Ltd., to support its decision that waste is not subject to excise duty and can be exempted under relevant notifications.In alignment with the precedents set in various cases, including M/s Ricela Health Foods Ltd & others v/s CCE, Chandigarh, the Tribunal concluded that the waste generated during the refining process of vegetable oil cannot be categorized as manufactured excisable goods subject to duty. The Tribunal emphasized that the removal of unwanted materials during the refining process does not transform these incidental products into manufactured goods, but rather classifies them as waste arising during the manufacturing process. By applying the principles established in earlier judgments and considering the specific nature of the refining process for vegetable oil, the Tribunal set aside the impugned order, ruling in favor of the appellant and allowing the appeal. The decision reaffirmed that waste generated during manufacturing processes can be considered as exempted under relevant notifications and is not subject to excise duty, providing clarity on the treatment of such waste in excise law.