1988 (7) TMI 186 - AT - Central Excise

Tribunal remands waste classification dispute for fresh review; directs thorough examination of relevant laws

KESORAM RAYON Versus COLLECTOR OF CENTRAL EXCISE, CALCUTTA

The Tribunal set aside the orders of the Collector (Appeals) and remanded the matter to the Assistant Collector for de novo consideration and ... Adjudication Issues Involved:1. Classification of waste products under Central Excise Tariff.2. Applicability of Notifications No. 53/72 and 172/72.3. Nature of waste products and their excisability.4. Estoppel against changing classification claims.5. Requirement for detailed adjudication by lower authorities.Issue-wise Detailed Analysis:1. Classification of Waste Products under Central Excise Tariff:The appellants, M/s. Kesoram Rayon, submitted classification lists claiming full exemption from Central Excise duty for 'undersize cakes, reeling and coning waste, and other waste of cellulosic origin' under Notification No. 172/72-C.E., dated 21st July 1972. The Department issued a notice to assess these goods under Notification No. 53/72, dated 17th March 1972, as amended by Notification No. 277/77-C.E., dated 12th August 1977, which imposed a duty of Re. 1/- per kg., additional duty at 15%, and special duty at 10%.2. Applicability of Notifications No. 53/72 and 172/72:The Assistant Collector and the Collector (Appeals) held that the goods were covered under Notification No. 53/72 and not under Notification No. 172/72, which only referred to waste rayon (hard waste). The appellants argued that the goods in question were waste products and not manufactured goods, hence not excisable. They cited various case laws to support their contention that waste products are excisable only when specifically incorporated in the Central Excise Tariff.3. Nature of Waste Products and Their Excisability:The appellants argued that the waste products are rejections or refuse obtained during the manufacture of man-made filament yarn of cellulosic origin and cannot be equated with man-made filament yarn. They emphasized that the waste is not commercially known or used as man-made filament yarn. The Department, however, argued that all cellulosic waste should be classified under Item 68 of the Central Excise Tariff, citing the Bombay High Court decision in Indian Vegetable Products Ltd. v. Union of India and Others.4. Estoppel Against Changing Classification Claims:The Department contended that there was an estoppel against the appellants changing their stand from previous classifications under Notification No. 53/72 to claiming exemptions under Notification No. 172/72 or asserting non-excisability. The Tribunal rejected this contention, noting that the appellants had consistently argued that the goods were waste and not manufactured products, and had only alternatively claimed exemption under Notification No. 172/72 if classified under Item 18.5. Requirement for Detailed Adjudication by Lower Authorities:The Tribunal found that the orders of the Assistant Collector and the Collector (Appeals) lacked detailed consideration of the appellants' submissions and the nature of the waste products. The Tribunal emphasized that adjudicating authorities must fully address all points raised to ensure natural justice and clear understanding of the issues. The Tribunal noted that the certificate from the Association of Man-Made Fibre Industry, which was dismissed by the lower authorities, was crucial and should have been considered.Conclusion:The Tribunal set aside the orders of the Collector (Appeals) and remanded the matter to the Assistant Collector for de novo consideration and adjudication, directing a thorough examination of the nature of each variety of waste and the applicability of relevant notifications and case laws. The appeals were allowed by remand.