1995 (11) TMI 192 - AT - Central Excise

Tribunal rules waste liquor not excisable, duty demand time-barred

GUJARAT STATE FERTILIZERS Versus COLLECTOR OF C. EX., VADODARA

GUJARAT STATE FERTILIZERS Versus COLLECTOR OF C. EX., VADODARA - 1996 (84) E.L.T. 539 (Tribunal) Issues Involved:1. Whether waste liquor I and waste liquor II obtained as by-products are excisable and dutiable.2. Whether the demand is hit by limitation.3. Whether there was an estoppel for changing the approved classification.Detailed Analysis:Issue No. 1: Excisability and Dutiability of Waste Liquor I and Waste Liquor IIThe main contention revolves around whether waste liquor I and waste liquor II, generated as by-products in the manufacture of caprolactum, are excisable and subject to duty. The appellants argued that these by-products are hazardous, toxic, and not marketable, emphasizing that they are destroyed in a combustion unit to prevent pollution. They cited several judgments to support their claim that the by-products are not excisable, including the case of UOI v. Indian Aluminium Company, where the Supreme Court held that aluminium dross and skimmings, despite being sold occasionally, were not considered marketable goods.The Tribunal noted that the waste liquors were occasionally sold, but this did not necessarily make them marketable commodities. Citing the Supreme Court's definition of 'goods' and the necessity for them to be marketable, the Tribunal concluded that waste liquor I and waste liquor II do not qualify as goods for the purpose of excise duty. Therefore, they are not excisable.Issue No. 2: LimitationThe appellants argued that the demand for duty was time-barred since the show cause notice was issued on 2-1-1989 for the period 1-3-1986 to 31-3-1987. They contended there was no suppression of facts, as they had consistently communicated with the Central Excise authorities about the production and destruction of waste liquors and the generation of steam. The Tribunal agreed, noting that the appellants had disclosed all relevant information to the Department, and there was no evidence of willful suppression or misstatement. Consequently, the demand was deemed to be hit by limitation and unsustainable in law.Issue No. 3: Estoppel for Changing the Approved ClassificationThe appellants had initially classified the waste liquors under sub-heading 2909.90 of CETA, 1985, and later contested this classification. The Tribunal noted that the concept of estoppel does not apply in cases of classification. Given that the primary issues were resolved in favor of the appellants, the question of estoppel became academic and was not further addressed.ConclusionThe Tribunal set aside the impugned order, ruling that waste liquor I and waste liquor II are not excisable goods and that the demand for duty was barred by limitation. The appeal was allowed.