Involuntary manufacturing waste is not excisable merely because it is marketable or sold for consideration.

Waste mud or spent earth arising involuntarily during bleaching of crude palm oil is not treated as excisable goods under the amended Central Excise framework. The Tribunal noted that the earlier departmental circular treating such waste as dutiable had been withdrawn, and that later circulars and supporting decisions favoured exclusion of waste or by-products emerging without conscious effort in manufacture from central excise duty. It also relied on the exemption covering waste, parings and scrap arising in the course of manufacture. Accordingly, the demand was not sustainable because marketability or clearance for consideration alone did not make the waste dutiable.

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Issues: Whether waste mud or spent earth arising involuntarily during bleaching of crude palm oil is an excisable good liable to central excise duty.

Analysis: The Tribunal noted that the dispute turned on the amended definition of excisable goods under section 2 of the Central Excise Act, 1944. It found that the earlier departmental circular treating such waste as excisable stood withdrawn, and that the later circular and the line of decisions relied upon by the appellant supported the view that waste or by-product emerging without conscious effort in the course of manufacture is not to be treated as dutiable excisable goods. The Tribunal also noted the relevance of the exemption granted to waste arising in the course of manufacture under the notification covering such waste, parings and scrap.

Conclusion: Waste mud or spent earth arising in the process of bleaching crude palm oil is not exigible to central excise duty, and the demand could not be sustained.

Ratio Decidendi: A waste or by-product that emerges involuntarily in the course of manufacture, after withdrawal of the circular treating it as dutiable, is not to be assessed as excisable goods merely because it is cleared for consideration or is marketable.

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