Waste wood from peeling process not classifiable as plywood cuttings; differential duty demand fails.

Sale proceeds reflected in the balance sheets were matched against goods described in records as wooden rollers, left over rollers, firewood and end cuttings arising from the peeling process. The material showed that the assessee manufactured veneer and plywood from timber logs, and that the disputed items were only remnants left after peeling was completed. As the department produced no independent evidence to show that the goods were cuttings or trimmings of plywood falling under Chapter Heading 4408.40, the appellate finding that they were waste material was upheld. The proposed classification therefore failed and the demand for differential duty was not sustainable.

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Issues: Whether the sale proceeds shown in the balance sheets represented excisable goods classifiable under Chapter Heading 4408.40 of the Central Excise Tariff Act, 1985, and whether differential duty was payable on wooden rollers, left over rollers, firewood and similar waste material arising from the peeling process.

Analysis: The demand was founded on the difference between the balance-sheet receipts and the ER-1 returns, but the records and cash memos described the goods as wooden rollers, left over rollers and firewood or end cuttings. The material showed that the assessee manufactured veneer and plywood from timber logs by peeling, and that the disputed goods were only remnants left after the peeling operation was completed. No independent evidence was produced by the department to establish that such waste wood was cuttings and trimmings of plywood falling under Chapter Heading 4408.40. In these circumstances, the appellate authority's finding that the items were waste and not classifiable as proposed by the department was correct.

Conclusion: The disputed goods were not classifiable under Chapter Heading 4408.40 of the Central Excise Tariff Act, 1985, and the demand for differential duty was not sustainable.

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