Customs, Excise and Gold Tribunal - Mumbai
Indo Rama Synthetics (I) Ltd. vs Commissioner Of Central Excise on 23 April, 2004
Equivalent citations: 2004(178)ELT188(TRI-MUMBAI)
ORDER Moheb Ali M., Member (T)
1. The application for waiver of pre-deposit of duty and penalty arose out of the order of Commissioner of Central Excise Nagpur.
2. In the impugned order the Commissioner demanded Central Excise duty of Rs. 1,21,32,329/- being the duty on Furnace Oil/Mineral Oil Sludge, Waste and Scrap arising from inputs and packing material and Waste and Scrap arising from capital goods, cleared by the applicant without payment of duty and imposed a penalty of Rs. 82,68,059/- under Section 11AC. These clearances without payment of duty were made during the period 1.4.96 to 30.6.03. In all 12 show cause notices were issued. Two of such notices were issued invoking larger period of limitation under proviso to Section 11A(1). The amount involved in these two notices was Rs. 86,94,014/-.
3. Heard both sides.
4. The Ld. Advocate argued that duty demanded on the clearance of sludge is not warranted, as this product is not excisable according to Board's Circular dt.23.03.87. The question of payment of duty on sludge which is not excisable does not arise.
5. In so far as demand for duty on waste and scrap of inputs on which credit has been availed, it is argued that some of the waste material like Titanium dioxide is not excisable, G.I. wire scrap arises out of packing materials of inputs, some the scrap cleared did not arise out of any manufacturing activity and some of the scrap cleared is not a marketable commodity.
6. In regard to waste and scrap of capital goods the contention is that provisions of Rule 57S(2)(c) of Central Excise Rules arc not applicable to capital goods which are removed after use and after wear and tear.
7. In regard to limitation it was argued that the bulk of the demand pertained to period which is beyond the normal period of limitation. As there was no willful suppression with an intent to evade duty on the part of the applicant proviso to Section 11A (1) of Central Excise Act is not applicable.
8. And in regard to penalty under Section 11 AC it was argued that since proviso to Section 11 (A) (1) is not invokable no penalty under Section 11 AC can be imposed.
9. The Ld. Jt. CDR Shri M.K. Gupra argued that the applicant removed mineral oil in the from of sludge after availing MODVAT credit and so duty has to be paid when it is removed from the applicants' factory. In regard to other waste and scrap he argued that this scrap has arisen out of the inputs and capital goods on which the applicant availed of MODVAT credit. In terms of Rule 57F (18) and the erstwhile Rule 57F (5) duty has to be paid when such waste and scrap is removed. In regard to the plea that the waste and scrap is not marketable, he argued that the very fact that the sludge, waste and scrap were sold shows that they are marketable.
10. We observe that excisability of sludge is a subject matter of Board's Circular cited Supra wherein the Board opined that it is non excisable. Duty prima facie cannot be demanded on non excisable goods. In so far as duty demanded on scrap and waste we observe that some of the goods is in the form of packing material and the others like Titanium Dioxide is held to be non-excisable. On the aspect of marketability we observe that the Hon'ble Supreme Court in the case of CCE Patna v. TISCO [2004 (165) ELT 386 (SC)] held that mere selling of a commodity does not mean it is marketable. It can be sold as rubbish. The Hon'ble court held that marketability means selling of a commodity known to the commerce and which may be worthwhile to trade.
11. Further it appears that some of the scrap in this case is such that it has not resulted out of any process of manufacture. On the limitation as well, the applicants' case needs a careful consideration. All in all, we hold that the applicant succeeded in making a strong prima facie case in their favour. Having regard to the facts and case the law cited we hold that the applicants' plea for waiver of predeposit of duty and penalty has prima facie merit.
12. Pre-deposit of duty and penalty waived and recovery thereof stayed.
(Pronounced in court)