TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 619
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....not in fibrous form and same was in solid irregular size small lumps shape composed of polyester and same merited to be classifiable under CETH 39076090 of CETA, 1985. It was also observed that the respondent were procuring 'polymer waste' falling under chapter sub heading 39076090 & 39159041 from M/s Reliance Industries Ltd., and were doing process like segregation/agglomeration process i.e popcorn processing, cleaning etc. on such "polymer waste". All such processes did not amount to manufacture under Section 2 (f) of Central Excise Act, 1944. 'Polymer waste' falling under CETH 3907 & 3915 did not merit classification under CETH 55.05 or 55.06 after carrying out such processes. Thus the Polymer waste' procured initially remained as "Polymer waste' only and there was no characteristic change in it even after such processes. Accordingly respondent was issued first show cause notice dtd. 26.12.2013 proposing the classification of Polyester Fibre waste/lumps/popcorn under CETH 39076090 instead of CETH 55051090 of Central Excise Tariff Act, 1985; classification of Polymer Waste under chapter heading No 39076090 and 39159041 of CETA, 1985 and penalty under Rule 25 of Central Excise Rul....
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..... 04/2006-CE dtd. 01.03.2006 & by virtue of Notification No. 12/2012-CE dtd. 17.03.2012. Further, the resultant product obtained from these goods on manual sorting was sold by them under guise of 'waste of polyester staple fibre' by classifying the same under Ch 55051090 of CETA, 1985. Also in ER-1 returns respondent has shown the clearances of the same as that 'waste of polyester Staple fibre'. Accordingly show cause notice dtd. 31.12.2014 was issued to the respondent proposing classification of Polyester Pop-Corn, Polyester Fibre Lumps/Oligomer under Ch 39079190 of the Central Excise Tariff Act, 1985 instead of Ch 55051090. The notice further proposed recovery of cenvat credit availed on raw materials and differential cenvat credit short paid on clearance of waste raw material as such; recovery of central excise duty; recovery of interest as also penalty under Section 11AC/Rule 25 of Central Excise Rules 2002. The notice also proposed the confiscation of disputed goods. Penalty under Rule 26 was also proposed on Shri Vipul Gupta, General Manager of M/s. Sunshine Fibre Pvt. Ltd. 3. After issuance of aforesaid show cause notice, the Superintendent, Central Excise, Range-V, Divisio....
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.....03.2006, as amended/superseded by Sl. No. 147 of Notification No. 12/2012-CE dtd. 17.03.2012, in terms of the Cenvat Credit Rules, 2004, the assessee were not entitled to avail cenvat credit of the duty paid on the raw materials. Therefore the Ld. Commissioner ought to have confirmed the recovery of the Cenvat Credit wrongly availed on their raw materials, alongwith consequential interest/penalty. 6. He further submits that the adjudicating authority ought to have confirmed the demand of amount collected by the respondent from buyers of said goods by representing it as "duty of excise", in contravention of provisions of Section 5A(1) of the Central Excise Act, 1944, as the same ought to have been deposited forthwith to the account of Central Government in terms of Section 11D of the Act. 7. As regard the demand of differential cenvat credit on clearances of waste raw materials as such he submits that the adjudicating authority concluded that the respondent had only cleared the residual waste emerged during the course of manufacturing processes, and not raw material as such, due to lack of investigation at the buyer's end it is not ascertainable whether it was waste of raw materi....
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.... of waste of Polyester Fibre at Re. 1/Kg, shown by Respondent to various individuals, were fake. Especially when the investigation officers had collected so much of evidences from various independent witnesses such as RTO authorities, vehicle owners whose vehicle were claimed to have used in transportation of the impugned goods etc, and when the same shown to Shri Vipul Gupta, GM of the respondent, his act of refraining from explaining the fact at the time of recording his statement clearly brings out their mala fide intent. Therefore, the adjudicating authority ought to have upheld and confirmed the demands and proposals as raised in the show cause notices. 10. On the other hand, Shri P.M. Dave the Ld. Advocate appearing on behalf of the respondent reiterates the finding of the impugned order. He submits that all type of waste purchased by the Respondent were generated by the suppliers during production of textiles fibers, textiles yarns and such textiles products; and the suppliers have classified such waste under Chapter heading 55051090 and paid excise duty accordingly. The Central Excise officers in charge of the supplier's factories have assessed excise duty on such waste un....
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....on their final products, and accordingly cenvat credit of inputs was admissible. He placed reliance on the following judgments. (i) Hicure Pharmaceuticals Pvt. Ltd. Vs. CCE, Belgaum 2024 (1) TMI 669 (ii) Macleods Pharmaceuticals Ltd. Vs. CCE & ST -2023 (7) TMI 360 -CESTAT, Ahmedabad. (iii) Macleods Pharmaceuticals Ltd. Vs. CCE & ST -2024 (1) TMI 387-CESTAT, Ahmedabad. (iv) Rainbow Papers Ltd. -2023 (10) TMI 288. 12. He further submits that it is found by the Commissioner on the basis of evidence including a statement of the General Manager of the Respondent, that only sorting or cleaning was not undertaken on the concerned waste, but the processes undertaken were segregation, cleaning, drawing, crimping, pop corn processing and packing and testing for qualities; and it was during these processes that many intermediate products, by products and residual products emerged. The process of sorting out usable products out of the waste was manufacture. 13. He also submits that by virtue of the adjudication order passed by the Commissioner, the waste products obtained by the respondent are classified under Tariff heading 3907/3915 ; whereas all the varieties of waste purcha....
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....ed out by the respondent for rendering the goods saleable. He placed reliance on the following judgments. (i) Baccarose Perfumes & Beauty Products Ltd. - 2006 (194) ELT 310. (ii) Dy. Commissioner Vs. Baccarose Perfumes & Beauty products Ltd. 2010 (257) ELT 177 (Guj.) (iii) Commissioner Vs. Baccarose Perfumes & Beauty Products Ltd. - 2016(338) ELT A 236(SC). 16. He also argued that it is a settled position that even if both the raw materials as well as the final products were classified in the same Tariff heading, still the final product can be considered to be goods 'manufactured' when saleable to particular class of customers whose requirements and purpose were served by such goods. In the present case, waste that the Respondent purchased were mixed waste comprising waste of different colours with impurities and foreign matter stuck to the waste materials, and such waste were not usable by textile processors; and therefore segregation, cleaning etc. were essential process for rendering the cleaned and good quality waste saleable to the textile processors. Classification of the raw materials and the products sold by the respondent was the same is not a ground for concluding ....
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....ived a higher price for such residual waste, and no evidence like any jottings or recording in diaries or note books of receiving unaccounted money as price of clandestinely removed goods is found, and the Respondent's employees have also not stated that usable waste in guise of residual waste was removed or about receiving unaccounted money towards price of clandestinely removed goods. Only on assumptions or presumptions or doubts, a case of clandestine removal cannot be made against the assessee. The entire basis of the Revenue's case is that the Respondent's employee could not explain further details of sale and clearance of about 12,53,754 Kgs of residual waste and that his statement was the evidence casting doubt about genuineness of sale of the above quantity of residual waste at Rs. 1 per Kg. But this statement is not proved in the adjudication proceedings by following the mandatory procedure laid down under Section 9D of the Central Excise Act, and therefore this statement was not relevant as evidence in the adjudication proceeding. This statement of the Respondent's General Manager was liable to be discarded in view of Section 9D of the Act, and there has been no evidence ....
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....f textiles fibers, textiles yarns. The suppliers have classified such waste under Tariff heading 55051090 and paid excise duty accordingly. However in the present matter revenue try to re-classify the product under different chapter heading. To our mind this proposition of the law is incorrect. The assessee/respondent purchased the disputed raw materials from their suppliers and suppliers had classified their final products as per the classification indicated on the invoices. There is no dispute at the supplier end as regards the classification of the products purchased by the respondent. It is settled law that once the classification is not challenged at the end of the seller, the same goods cannot be re-classified at the recipient end. The decisions relied upon by the respondent in this context squarely covers the issue involved, in favour of the assessee/respondent on this point. 22. Further, we find that it is the revenue's case that the finished products of the Respondent being fully exempted and unconditionally exempted goods by virtue of Sl. No. 78 of the Notification No. 4/2006- CE, the respondent were not entitled to avail Cenvat Credit of the raw materials. The Commissio....
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....evenue's other contention is that as per Section 5A (1A) of the Central Excise Act where an exemption in respect of any excisable goods from the whole of duty of Excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods cannot pay the duty and since for the clearance of disputed goods duty prescribed is nil as per above notification, the respondent -assessees are not required to pay the duty and whatever duty they have paid is to be recovered from them under Section 11D of the Central Excise Act. The relevant portion of Section 5A is reproduced below:- "Section 5A. Power to grant exemption from duty of Excise. - (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified description from the whole or any part of the duty of Excise leviable thereon: ...... (1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisa....
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....aw material as such. We find that the process of conversion of waste input into staple fibre involves a number of manufacturing processes like segregation, cleaning, drawing, crimping, popcorn processing, packing and testing for qualities and in the course of conversion many intermediate products, by-products and residual products emerge. The products so separated have now obtained as separate and new identity in the market terms and distinctly different from the waste input received. Further we have also gone through the finding recorded by the Ld. Commissioner in this regard, in the present disputed matter Ld. Commissioner after scrutiny of the relevant Invoices, daily stock register (RG-1) and Stock Account of Inputs/ Raw materials (RG 23A Pt. I) found that the description of the goods shown in invoices is 'residual waste' and the relevant entry in respect of the such invoices is made in the RG-1 register and there is no entry of clearance of such 'residual waste' in their RG 23A Pt.I register which clearly show that the assessee had cleared the residual waste as finished goods and they had not cleared any raw materials as such, as alleged in the show cause notices. We also find....
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....ugned matter revenue has not interrogated any single buyer of the alleged cleared Polyester Staple Fibre clandestinely in the guise of waste of polyester fibre (residual waste). There is no evidence to prove that the goods under these invoices were actually usable polyester waste. There is no evidence by which it can be proved that respondent actually received a higher price for such residual waste. Further we have also gone through statement of respondent's employees wherein he has also not stated that usable waste in guise of residual waste was removed, or received any unaccounted money towards price of clandestinely removed goods. We find that in the present matter revenue has not produced any evidence to show that the respondent had cleared Polyester Staple Fibre in guise of residual waste. As Tribunal in the case of Kothari Pouches Ltd. v. CCE, New Delhi reported as 2001 (135) E.L.T. 531 (Tri.-Del) held that confirmation of demand entirely on the basis of documents of the transporters, without any independent corroborating evidence cannot be upheld. The Tribunal further observed that in the absence of any questioning of the consignee of the goods about receipt of clandestine r....