Excise duty on waste chemicals failed where the factual basis shifted from the export unit to another manufacturing unit.

Excise duty demand on waste chemicals failed because the adjudicating authority found that the waste arose in manufacture at the assessee's other unit, not in the 100% export oriented unit alleged in the notice. That factual finding displaced the very basis of the demand, which had proceeded on the premise that the waste was generated in the export unit. As the demand could not be sustained on the facts as finally found, the excise levy on the waste cleared from the export-oriented unit was held unsustainable.

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Issues: Whether the duty demand on waste chemicals was sustainable when the adjudicating authority found that the waste arose in the course of manufacture in the assessee's other unit and not in the 100% export oriented unit alleged in the show cause notice.

Analysis: The adjudicating authority's own finding displaced the factual of the notice, which proceeded on the footing that the waste had arisen during manufacture of Dane's salt in the 100% export oriented unit. Once the waste was found to have arisen in the other factory unit, the basis for fastening the excise demand on the waste cleared from the 100% export oriented unit disappeared. The demand could not therefore be sustained on the facts found by the authority itself.

Conclusion: The duty demand was not sustainable and the appeal succeeded.

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