Custom, Excise & Service Tax Tribunal
3F Industries Ltd vs Guntur on 9 January, 2026
(1)
E/22093/2014
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Division Bench - Court No. - I
Excise Appeal No. 22093 of 2014
(Arising out of Order-in-Appeal No. 28/2014 (G) CE dt.22.04.2014 passed by Commissioner
of Customs, Central Excise & Service Tax (Appeals), Guntur)
M/s 3F Industries Ltd
(Formerly Foods Fats & Fertilizers Ltd), ......Appellant
Tanuku Road, PB No.15, Tadepalligudem,
W.Godavari Dist., AP - 534 101
VERSUS
Commissioner of Central Tax
Guntur - GST
PB No.331, CR Building, Kannavarithota,
......Respondent
Guntur, Andhra Pradesh - 522 004 Appearance Shri Y. Sreenivasa Reddy, Advocate for the Appellant. Shri M. Anukathir Surya, AR for the Respondent.
Coram: HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) HON'BLE MR. ANGAD PRASAD, MEMBER (JUDICIAL) FINAL ORDER No. A/30012/2026 Date of Hearing: 04.08.2025 Date of Decision: 09.01.2026 [Order per: A.K. JYOTISHI] M/s 3F Industries Ltd (formerly known as M/s Foods Fats & Fertilizers Ltd.,) (hereinafter referred to as appellant) are, inter alia, engaged in manufacture of palm oil, fatty acids, etc. The department, in the course of audit, noticed that while processing crude palm oil during the bleaching operation using bleaching earth (fuller earth), a 'good', 'waste mud' is generated, which even though a waste product, was being sold at a nominal price of about Rs.100/- per MT. Accordingly, keeping in view the amendment in the statutory provision defining 'excisable goods' in clause
(d) of section 2 of the Central Excise Act, 1944 in the Budget 2008, holding that there was no need to prove that it has actually marketed to become excisable goods and hence, waste mud, so generated, was an excisable good and duty is leviable.
(2)E/22093/2014
2. Learned Advocate has submitted that the issue is no longer res integra in view that demand has been confirmed relying on circular dt.28.10.2009, which was quashed by the Hon'ble High Court of Allahabad in the case of Balrampur Chini Mills Ltd Vs UOI [2014 (300) ELT 373 (All)] and subsequent thereto, the said circular itself was withdrawn by the CBIC after the decision of Hon'ble Supreme Court in the case of DSCL Sugars Ltd., vide Circular No. 1027/15/2016-CX dt.25.04.2016. Moreover, relying on the said circular, the Tribunals have also dropped similar demands in case of other units. He has relied on certain judgments, as under.
a) CCE, Hyd-III Vs Divis Lab [2017 (347) ELT 275 (Tri-Hyd)]
b) M/s Gemini Edibles & Fats India Pvt Ltd Vs CCE & ST, Guntur [2016 (6) TMI 990 - CESTAT Hyd]
c) CCE, Chandigarh-I Vs Marico Ltd [2022 (382) ELT 436 (SC)]
d) Ricela Health Foods Ltd Vs CCE, Chandigarh [2018 (361) ELT 1049 (Tri-LB)]
e) Arihant Solvex Pvt Ltd Vs CCE, Jaipur-I [2015 (316) ELT 290 (Tri-Del)]
f) Commissioner Vs Markfed Vanaspati & Allied Industries [2002 (145) ELT A250 (SC)]
3. He has also taken an alternative plea that spent fuller earth is specifically exempted vide Notification No.93/1989-CE dt.01.03.1989 and also as waste under Notification No.89/1995-CE dt.18.05.1995. Moreover, on the grounds of limitation also, he has submitted that demands are not sustainable.
4. Learned AR, on the other hand, has reiterated the findings of the Original Authority as upheld by the Commissioner (Appeals) vide OIA dt.22.04.2014 (impugned order).
5. Heard both sides and perused the records.
6. The short question for determination is whether the waste mud (spent earth) is chargeable to excise duty or otherwise. We find that the only ground taken by the department is that there has been an amendment in section 2 of Central Excise Act, 1944, whereby, certain explanation was inserted to decide as to what would be treated as 'excisable goods'. We find that the department has mainly relied on the circular dt.28.10.2009 issued by the CBIC to treat such goods as excisable goods, whereas, the Board (3) E/22093/2014 themselves have, vide their circular dt.25.04.2016, inter alia, directed that certain items like bagasse, dross and skimmings of non-ferrous metals or any such by-product or waste, which are non-excisable goods and are cleared for a consideration from the factory need to be treated like exempted goods for the purpose of reversal of credit of input and input services, in terms of Rule 6 of Cenvat Credit Rules (CCR), 2004. This was in view of certain amendments made in Rule 6 of CCR, 2004 w.e.f. 01.03.2015. Therefore, it is an undisputed fact that the directions contained in various circulars including Circular No.904/24/09-CX dt.28.10.2009, were withdrawn and rescinded. In the present case, it is not in dispute that the spent fuller earth has not emerged by way of any conscious effort and it has emerged involuntarily in the process of bleaching the crude palm oil and that the said emergence called waste mud (spent earth) during the course of bleaching. It is also not disputed that the adjudicating authority has relied on clarification issued vide circular dt.28.10.2009 to hold said waste mud as excisable good. We also find force in the judgments cited by the appellant, wherein, the demands have been dropped taking into account the rescindment of said circular. We also find that there is an omnibus Notification No.89/1995-CE dt.18.05.1995, which exempts all 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, from the whole of the duty of excise.
7. Therefore, having regards to the observations in the foregoing paras, we find merit in the appeal filed by the appellant and accordingly, the impugned order is set aside.
8. Appeal allowed.
(Pronounced in the Open Court on 09.01.2026) (A.K. JYOTISHI) MEMBER (TECHNICAL) (ANGAD PRASAD) MEMBER (JUDICIAL) Veda