1989 (10) TMI 175 - AT - Central Excise

Tribunal: Waste material not excisable. Collector's order overturned.

KAMATH PACKAGING (P) LTD. Versus COLLECTOR OF CENTRAL EXCISE

KAMATH PACKAGING (P) LTD. Versus COLLECTOR OF CENTRAL EXCISE - 1992 (60) E.L.T. 666 (Tribunal) Issues: Excisability of 'waste'In this case, the main issue revolves around the excisability of 'waste' generated during the manufacturing process. The appeals were filed against the order of the Collector of Central Excise confiscating HDPE bags/sacks and imposing penalties on the appellants for alleged contravention of Central Excise Rules. The central question is whether the waste material generated by the appellants is dutiable and should be accounted for in the Central Excise records.Detailed Analysis:The case involves two units, Unit-I and Unit-II, where waste was generated during the manufacturing of HDPE tapes, sacks, bags, fabrics, and laminated fabrics. The appellants transferred some quantity of waste from Unit-I to Unit-II. The show cause notice alleged contravention of various Central Excise Rules and penalized the appellants for removing HDPE bags/sacks without proper accounting, procedures, and payment of duty. The Collector of Central Excise found the seized goods fit for export and held them to be dutiable, imposing penalties on both units.Upon hearing arguments from both parties, it was noted that the goods in question were waste material, specifically HDPE circular bag waste and laminated fabric waste. The Collector concluded that the appellants failed to disclose information about the waste material generated and disposed of, only revealing it after the department initiated action. The appellants claimed to maintain a waste register, recording all waste generated, and explained that the waste bags were used as liners for an export order to the United Kingdom.The Tribunal considered previous decisions on the excisability of waste material and held that unless waste is specifically provided for in the Tariff, it is not excisable. Citing precedents from the Delhi High Court and the Tribunal, it was established that waste material not listed in the tariff is not subject to excise duty. Therefore, the Tribunal set aside the Collector's order and allowed the appeals, determining that the waste material in question was not excisable goods.In conclusion, the judgment focused on the excisability of waste material generated during the manufacturing process. By analyzing previous decisions and legal principles, the Tribunal ruled that the waste material, not specifically listed in the tariff, was not subject to excise duty. This decision overturned the Collector's order and provided relief to the appellants, emphasizing the importance of proper classification and excisability of goods under the Central Excise Rules.