Customs, Excise and Gold Tribunal - Delhi
Parle Biscuits Ltd. vs Commissioner Of Central Excise on 22 April, 2003
Equivalent citations: 2003(88)ECC747, 2003ECR635(TRI.-DELHI), 2003(155)ELT527(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. M/s. Parle Biscuits Ltd. have filed this appeal being aggrieved by the Order-in-Appeal No. 236/2002, dated 16-7-02 passed by the Commissioner of Customs (Appeals).
2. Shri Harbans Singh, learned Advocate, submitted that the Appellants manufactured Biscuits, flavour mix and printed laminated waxed paper and availed of the MODVAT credit of the duty paid on inputs and capital goods; that the duty has been demanded from them on waste sugar and waste paper cutting; that both these goods are not liable to duty as they are neither specified in Central Excise Tariff nor are manufactured product and have arisen during the course of manufacture of final products; that therefore, both these goods are non-excisable and not liable to duty; that the department has classified the waste sugar under Heading 1701.90 of the Schedule to the Central Excise Tariff Act, which is not correct as it is not sugar; that if at all it will be classifiable under Heading 23.01 of the Tariff and it carries nil rate of duty; that it is not marketable as only they are selling the same to one person. He relied upon the decision in the case of Commissioner of Central Excise Hyderabad v. Nizam Sugar Factory, 2000 (123) E.L.T. 210 (A.P.) wherein it has been held that dirty sugar is not marketable and the Act does not provide for levying any duty on dirty sugar. The learned Advocate, further, submitted that the Appellants purchased paper falling under Heading 48.05 and they got waste paper which is not excisable; that the Department has wrongly classified it under sub-heading 4702.90. He also mentioned that they had sent gravura printing cylinders which became useless after repeated use to the supplier company on returnable challans for replacing them against the new cylinder; that they have not followed the correct procedure. Finally, he submitted that out of the total duty of Rs. 2,28,834/- they have already deposited Rs. 1,89,803/- that some of the amount had been deposited even before the issue of show cause notice; that penalty under Section 11AC of the Central Excise Act is not imposable as part of the period is prior to the insertion of the said section in the Central Excise Act; that further, penalty under Section 11AC and Rule 9(1) of the Central Excise Rules cannot be imposed simultaneously. Finally, he submitted that the quantum of the penalty is on very high side.
3. Countering the arguments Shri U. Raja Ram, learned Departmental Representative reiterated the findings as contained in the Adjudication Order as well as impugned Order-in-Appeal.
4. We have considered the submissions of both the sides. The Appellants are availing Modvat credit of the duty paid on sugar, paper and various chemicals, etc., under Rule 57A the manufacture of Biscuits and printed laminated wax paper. During the process of manufacture, waste sugar and waste paper are generated which are being sold by the Appellants. The sale of these waste products has not been denied by the Appellants. Once they are selling these products, it cannot be claimed by them that the said products are not marketable. Once the waste products obtained during the process of manufacture are being sold, the appropriate duty of excise would be payable by the Appellants under Rule 57F of the Central Excise Rules, 1944. Heading 1701 of the Tariff applies to Cane or beat sugar or chemical sucrose in solid form. The waste sugar is appropriately classifiable under Heading 1701.90 and is not classifiable under Heading 2301 as sugar is covered by Chapter 17 only and Chapter 23 of the Tariff applies to residues and waste from the food industries including baggage, other waste or sugar manufacture and oil cakes; that the waste sugar is not, therefore, covered by Chapter 23 of the Tariff. There is no force in the contention of the Appellants that waste paper is not classifiable under sub-heading 4702.90. When the Heading 47.02 which covers recovered (waste and scrap) paper or paper board was shown to the learned Advocate, he, fairly, conceded that waste paper will be classifiable under sub-heading 4702.90. Accordingly, the duty of excise is payable by them in respect of both these products. The ratio of the decision of the Andhra Pradesh High Court in the case of Nizam Sugar is not applicable as the facts are completely different. In the said judgment, the respondents were claiming rebate in respect of duty on sugar under a notification. In that context, the High Court held that expression 'sugar produced by a manufacturer' in the notification would not take any other kind of sugar to entitle the manufacturer to claim the benefit of rebate and it is only by reprocessing that the dirty sugar has ultimately become marketable sugar and therefore, the expression sugar produced does not take in within its fold every kind of sugar in the process of transformation. Regarding Gravura printing cylinders, the Commissioner (Appeals) has given his finding that the Appellants had availed of MODVAT credit under Rule 57Q on these cylinders, and had sent them to the supplier who was adjusting the price of used cylinders towards the cost of the new cylinder supplied by him. The Commissioner (Appeals) has, therefore, held that the provisions of Rule 57S(2)(c) are attracted and duty is payable by the Appellants. We do not find any reason to interfere with the finding of the Commissioner (Appeals) as the said sub-rule clearly provides that where capital goods are sold as waste and scrap, the manufacturer shall pay the duty leviable on such waste and scrap. We, therefore, uphold the amount of duty confirmed against them. However, we agree with the learned Advocate that both penalties under Section 11AC of the Act and under Rule 9 of the Central Excise Rules, 1944 cannot be imposed simultaneously. In any case, the penalties imposed are on very high side. The ends of justice will be met if the Appellants are directed to pay penalty of Rs. 25,000/- only. We order so. The appeal is disposed of in these terms.