TaxTMI 
TaxTMI 
2018 (2) TMI 1395
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....nate benches on the same dispute, framed the following reference to be considered and decided by a Larger Bench of this Tribunal :- "Whether fatty acids, wax and gum arising in course of manufacture of refined vegetable oil are to be treated as "waste" for the purpose of exemption Notification No. 89/95-CE and would be exempt from duty under this notification and whether in this regard, the Apex Court's order affirming the Tribunal's judgment in the case of CCE, Jalandhar vs. A.G. Fats Ltd. (supra) by dismissing the civil appeal filed against the Tribunal's judgment, would be a binding precedent ". 2. The brief facts of the case are the appellants were engaged in the manufacture of refined vegetable oil by processing of crude oil. During the course of such refining, fatty acids, wax and gums emerged as by-products. During the material period, refined vegetable oil was either exempted or subjected to nil rate of duty. Notification 89/1995-CE dated 18/05/1995 exempted "waste, parings and scrap arising in the course of manufacture of exempted goods and falling within the schedule to the Central Excise Tariff Act, 1985". The expression "exempted goods" means excisable goods which a....
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....hus, the merits of each judgment of the co-ordinate benches of Hon'ble Tribunal need to be examined before following any of the judgments. In view of the wordings of the Notification, read with the law laid down in Raipur Manufacturing Co. Ltd. (supra), it is clear that the view in A.G. Flats (supra), to the effect that "waste", under the Notification, has to refer to goods of no value or of little value, cannot be preferred, as goods of no value would not command any duty at all in the first place. Besides, this would amount to adding words to the Notification where they do not exist". 4. The referral Central Excise Bench noting the different views taken in the above two decisions on a similar dispute, observed that Notification 89/1995-CE would apply only to those byproducts which are in the nature of refuse, are of no or little commercial value and which are generally discarded. It was further recorded that none of the products now in dispute, fatty acids, wax and gums, satisfy the above criteria. The Tribunal noted that these are known commercial products with considerable value. With this observation, the referral bench referred the matter for a decision by a Larger Bench. ....
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.... the decision of the Larger Bench on the referred dispute. 8. The learned AR submitted that waste and by-product have different scope and meaning. There is a clear distinction between these two. By-products emerge as unavoidable outcome of a manufacturing process and do have significant commercial value. Waste on the other hand is such type of by-product which is generally in the nature of rejects or refuse, fit to be discarded. They have little or no commercial importance. All products emerging during the course of main final products cannot be considered as waste, eligible for exemption under the said notification. 9. We have heard both the sides and perused the appeal record to examine the reference made by the Division Bench. Since the appellants submitted on the excisability itself the first point for decision is the excisability of the products, in question. The appellants strongly contended that even before examining the admissibility of exemption under Notification 89/1995-CE, the point to be decided is the excisability of the product, in question. It is the case of the appellant that if it can be established that these goods are not manufactured goods then the question o....
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.... by the Revenue is that when a product is capable of being sold for a significant consideration the same cannot be considered as waste. We are unable to accept such summary presumption. Admittedly, in chemical and metallurgical industry when the raw materials are processed with an intended purpose of manufacturing certain final products by a chemical reaction, refining, melting etc. multiple products will result. These products either emerged in the final stage or any of the intermediating stages also. The point for consideration is whether these are to be considered as manufactured goods for excise levy based on the statutory definition for manufacture or should be considered as manufactured goods based on the likely value they may command while selling. We are clear that the value that a product may or may not fetch cannot be a determinative factor to decide whether the same is a manufactured final product/by product or a waste/refuse arising during the course of manufacture of final products. This much is clear from the ratio of the Apex court decision in Indian Aluminium Co. (supra). While no general guidelines can be laid down to decide when a product will be treated as a wast....