1999 (8) TMI 375 - AT - Customs

Appellate tribunal overturns duty demand on EOU, citing incorrect origin of waste chemicals.

The appellate tribunal set aside the impugned order and allowed the appeal, providing relief to the appellants. The tribunal found that the duty demand ... Demand Issues:1. Allegation of clearance of waste chemicals outside the factory.2. Classification and duty chargeability of waste chemicals.3. Failure to maintain statutory records.4. Determination of waste chemicals arising during manufacturing.5. Sustainability of duty demand against 100% EOU.Allegation of Waste Chemicals Clearance:The show cause notice alleged that waste chemicals were cleared outside the factory during the manufacture of Dane's salt in a 100% EOU. The notice stated that the waste chemicals were not classified under the appropriate chapter sub-heading, and duty was chargeable at a specified rate. Additionally, the unit failed to submit a price list or issue Central Excise Gate-passes for duty payment. The amount of duty evasion was calculated at a specific sum.Classification and Duty Chargeability:The adjudicating authority raised questions regarding the origin of the waste chemicals and the chargeability of Central Excise duty on them. The authority also considered whether the case involved suppression of facts and removal of goods without proper accounting. The Collector's finding indicated that the waste chemicals arose during the manufacture of bulk drugs in a unit other than the 100% EOU, contradicting the allegations in the show cause notice related to Dane's salt manufacturing.Failure to Maintain Statutory Records:The unit was accused of not maintaining statutory records for the production and disposal of waste chemicals. This failure to keep proper records was highlighted as part of the allegations against the unit.Determination of Waste Chemicals Origin:The adjudicating authority's finding that the waste chemicals arose during the manufacture of bulk drugs in a unit other than the 100% EOU led to the conclusion that the duty demand was not sustainable against the waste chemicals. This finding supported the argument that the impugned order was not valid, and the demand for duty against the 100% EOU was not justified based on the actual origin of the waste chemicals.Sustainability of Duty Demand Against 100% EOU:Considering the discrepancy between the allegations in the show cause notice and the actual origin of the waste chemicals as determined by the adjudicating authority, the appellate tribunal agreed with the appellant's contention. The tribunal set aside the impugned order and allowed the appeal, providing consequential relief to the appellants based on the findings regarding the origin of the waste chemicals during manufacturing.