Tribunal upholds demand for misdeclaration of inputs as lead waste, penalty reduced for small-scale appellants

SIDDHARTHA PIGMENTS (P) LTD. Versus COLLECTOR OF CENTRAL EX., GUNTUR

SIDDHARTHA PIGMENTS (P) LTD. Versus COLLECTOR OF CENTRAL EX., GUNTUR - 1996 (82) E.L.T. 316 (Tribunal) Issues:
1. Misdeclaration of inputs for availing Modvat credit.
2. Interpretation of Tariff Heading 7802.00.
3. Suppression of facts and eligibility for Modvat Credit.
4. Knowledge of material supplied and manufacturing process.

Analysis:
1. The appeal challenged the Collector of Central Excise's order, which found that the appellants wrongly availed of Modvat credit by misdeclaring inputs as lead waste. The inputs were tested and found to be lead ash/residue, not lead scrap as declared, falling under Chapter 26 of Central Excise Tariff, ineligible for Modvat Credit.

2. The appellants argued that the inputs could be considered as lead waste due to the absence of a specific definition. However, the Tribunal noted that the chemical composition of the goods did not align with the declared category under Tariff Heading 7802.00, which covers Base Metals and Articles of Base Metal, not chemical waste.

3. The Departmental Representative contended that the appellants declared battery waste as lead waste and scrap, leading to suppression and ineligibility for Modvat Credit. The Tribunal agreed, emphasizing that the goods did not qualify as metal waste and scrap, as required under the relevant Tariff Heading.

4. The Tribunal analyzed the manufacturing process and the appellants' knowledge of the material supplied. It concluded that the appellants knowingly received ineligible materials for Modvat Credit, misdeclaring them to take advantage. The Tribunal found no merit in the appellants' argument regarding the variability of chemical composition in different lots of battery waste.

In conclusion, the Tribunal upheld the demand against the appellants, reducing the penalty due to their small-scale status. The judgment highlighted the deliberate misdeclaration of inputs, the mismatch between declared and actual goods, and the appellants' knowledge of the material received for manufacturing processes.