1992 (10) TMI 214 - AT - Central Excise

Appellate Tribunal rules 'Spent Earth' excisable under Central Excise Tariff Act

The Appellate Tribunal CEGAT, New Delhi allowed the appeals, ruling that 'Spent Earth' is excisable under the Central Excise Tariff Act, 1985. The ... Classification Issues:1. Excisability of 'Spent Earth' under the Central Excise Tariff Act, 1985.Detailed Analysis:The judgment by the Appellate Tribunal CEGAT, New Delhi involved two appeals arising from the same order of the Collector of Central Excise (Appeals), Chandigarh, focusing on the excisability of 'Spent Earth' under the Central Excise Tariff Act, 1985. The Collector (Appeals) had ruled that 'Spent Earth,' being a baser material than activated earth, was not excisable as the manufacturing process did not transform the baser material into a superior product, citing the decision in the case of Hindustan Lever Ltd. v. Collector of Central Excise. However, the Department contended that a different decision by the Tribunal in the case of HMT v. CCE, Hyderabad supported the excisability of 'Spent Earth' under the Central Excise Tariff Act, 1985.The Department argued that the specific mention of 'residues resulting from the treatment of fatty substances' under sub-heading No. 1507.00 of the new tariff covered items like 'Spent Earth,' meeting the test of marketability prescribed by the Supreme Court for excisability. The Department referenced the Supreme Court judgments in the cases of Khandelwal Metal Engineering Works v. Union of India and Bhor Industries v. Collector of Central Excise to support their position that waste material with a specific entry in the tariff and fulfilling marketability criteria should be excisable.On the other hand, the respondent company contended that 'Spent Earth' was not a residue of fatty substances but a residue of itself after discoloring vegetable oil in the manufacturing process. They argued that 'Spent Earth' was not a manufactured item and was not marketable, citing the Tribunal's decision in the case of Modi Vanaspati Manufacturing Co. v. Collector of Central Excise, which classified Spent Bleaching Earth as waste material not liable to duty.After considering both sides' submissions, the Tribunal noted that the Central Excise Tariff Act, 1985 had a specific entry for 'residues resulting from the treatment of fatty substances' in sub-heading No. 1505.00, unlike the old tariff. The Tribunal rejected the argument that 'Spent Earth' should be classified under the residuary Item 68, emphasizing that waste material meeting excisability conditions and being marketable should be liable to duty. The Tribunal concluded that 'Spent Earth' qualified as residue resulting from the treatment of fatty substances and should be assessed under sub-heading No. 1507.00, hence allowing the appeals.