2002 (11) TMI 415 - AT - Central Excise

Summary

Issues:
- Whether the benefit of exemption under Notification No. 8/97-C.E. is available for Churi Korma.

Analysis:
The appeal filed by the Revenue raised the issue of whether the benefit of exemption under Notification No. 8/97-C.E. dated 1-3-97 applied to Churi Korma, a by-product obtained during the manufacturing process of 'Guar Gum Powder' by M/s. Neelkanth Polymers, an Export Oriented Undertaking. The Deputy Commissioner initially denied the benefit of the notification, considering Churi Korma as a finished product being sold in the market. However, the Commissioner (Appeals) reversed this decision, stating that the benefit of the notification applied as long as the main product, Guar Gum Powder, was not chargeable to Nil rate of duty. The Revenue argued that Churi Korma, being a by-product sold without further processing, should be considered a finished product attracting the proviso to the notification.

The Respondent's representative, a Chartered Accountant, contended that Churi Korma was waste material separated during the screening of guar seeds, and thus, could not be classified as a finished product subject to the proviso of Notification No. 8/97-C.E. The Chartered Accountant highlighted that the Department of Industrial Policy and Promotion recognized Churi Korma as waste in a specific communication.

Upon considering the arguments presented by both sides, the Tribunal analyzed the provisions of Notification No. 8/97-C.E., which exempted finished products, rejects, waste, or scrap produced in a 100% Export Oriented Undertaking from excess excise duty. The Tribunal noted that the impugned product, Churi Korma, was a waste material obtained during the manufacturing process without further processing. The Tribunal agreed with the Respondents that selling Churi Korma as waste without additional treatment did not transform it into a finished product. Citing a precedent, the Tribunal emphasized that not all items sold in the market were marketable commodities, and the mere act of selling waste did not elevate it to a finished product status. Consequently, the Tribunal concluded that the proviso to Notification No. 8/97-C.E. did not apply to Churi Korma, as it was categorized as waste and not a finished product, leading to the rejection of the Revenue's appeal.