TaxTMI 
TaxTMI 
1999 (12) TMI 213
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....he appellants a certain amount of 'waste solvent' is generated as a by-product in the course of the manufacture of insulating varnish. According to them, this does not amount to 'manufacture' of the said product nor is the said waste solvent, being a waste by-product, an excisable item. Further, the said waste solvent, being not an excisable commodity, did not require any prior permission for its disposal nor did its generation require filing of any returns, keeping of production records, etc. The Department's case is that the waste solvent was nothing but methanol falling under sub-heading 2905.10. Being an excisable item, production and clearance thereof without complying with the provisions of the Central Excise Act and the Rules would make the appellants liable under Rule 9(2) of the Central Excise Rules as well as for confiscation of the said goods under Rule 173Q(1) and Rule 226 of the Central Excise Rules as well as for penalty under Rule 173Q. 3. We have heard Shri K.K. Anand, ld. Counsel appearing for the appellants and Shri H.K. Jain, ld. DR appearing for the Respondent Commissioner. 4. Ld. Counsel contended that 'waste solvent' was a by-product emer....
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.... (iv) Gujarat State Fertilisers v. C.C.E. - 1996 (86) E.L.T. 539 (T). 6.  The ld. DR contended that the so called 'waste solvent' which is claimed by the appellants as a waste or scrap was chemically tested. The chemical test showed that the product contained about 80% methyl alcohol by volume. The Test Report further revealed that the item was in the form of a clear, colourless liquid with a small quantity of white sediment settling at the bottom of the container. Hence, it was clear that 80% of the goods by volume was methyl alcohol which is nothing but methanol. Ld. SDR submitted that the question was whether the so called waste solvent can be considered as a mere waste product or whether it was methanol excisable under S.H. 2905.10. 7.  We have considered the submissions and have perused the record. On the question of limitation, the appellants have contended that there was no suppression, fraud or mis-statement on their part as they were under a bona fide impression that their waste solvent was not excisable. Since this was a mere by-product it was their impression that they were not required to declare the said goods in their Classification List. Failure to....
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....on List and the said ommission would amount to fraud, wilful mis-statement and suppression. 9. We find that the Additional Collector is right to the extent of every assessee being under an obligation to file a classification list under Rule 173B(l)(a) showing-  "the full description of (i) all excisable goods produced or manufactured by him,(ii) all other goods produced or manufactured by him and intended to be removed from his factory, and (iii) all the excisable goods already deposited or likely to be deposited from time to time without payment of duty in his warehouse;.........." (Italics supplied) However, the further question whether their non-declaration amounted to fraud, wilful mis-statement or suppression for purposes of invoking the extended period of limitation needs to be considered in the light of the case law on the subject. In the case of Hindalco Industries v. C.C.E. [1996 (86) E.L.T. 571] the extended period of limitation was invoked on the ground of non-declaration of aluminium dross and skimming for purposes of Rule 57G. There was dispute about the said items being 'goods' within the meaning of Section 2(d). It was held that non-declarati....
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....arate chemically defined organic compound whether or not containing impurities " vide Note 1(a) of Chapter 29. Once this was the legal position the product was classifiable under Heading 2905.10 which specifically covers Methanol by name. 15. The appellants have not denied the clearance and sale of the product but they have referred to low price fetched by it. However, the price one is able to obtain at a particular time is a different matter since prices may fluctuate from time to time. 16. Since the Methanol of 80% purity was produced in the appellant's factory during the course of manufacture of their final product and it was technically and chemically Methanol which was required to be treated as an excisable product in view of Chapter Note 1(a) of Chapter 29 mentioned above, the appellants were required to observe all the Central Excise formalities and to clear the goods accordingly on payment of appropriate duty,which they had not done, the impugned order was required to be upheld on merits. 17. The appellants have pleaded that they were under bonafide belief that it was a non-excisable waste product. However, Methanol is a well known chemical product and 55,943.00 kg....
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....tries Ltd. as in 1996 (86) E.L.T 571 (Tri.) which held that merely because something was 'sold', it did not become goods. 21. Ld. JDR stresses that product contained 80% methanol, hence, fitted tariff description (as found by Hon'ble Vice President) and reiterates findings in order impugned on suppression with intent. 22. I have carefully considered these rival submissions, the orders recorded above and the facts of the case. I find that while Hon'ble Member (J) has clearly allowed the appeal only on time-bar (without considering the merits), Hon'ble Vice President (since retired) devotes more attention to merits. He denies benefit of limitation merely on the ground that no prudent businessman would throw away an item of such high value. With due respect to Hon'ble Vice President, I am unable to accept this reasoning. The value of goods was Rs. 1,67,829.66, but the same has to be considered for the long time-frame of about 3¼ years . Viewed in this perspective and when compared to the quantum of the main business of appellants of manufacture and sale of varnish, this amount pales into insignificance. No other reason or evidence is given by Hon'ble Vice President to set....