2003 (1) TMI 467 - AT - Central Excise

Summary

Issues:
Classification of waste filament for excise duty under Chapter 54 of Central Excise Tariff.

Analysis:
The case involved a dispute over the classification of waste filament generated during the manufacturing process by M/s. Sanghi Polyesters Ltd. for excise duty purposes under Chapter 54 of the Central Excise Tariff. The Commissioner of Central Excise, Hyderabad, had adjudicated the matter and concluded that the waste material in question, which was in a rigid and lump form, did not possess the essential characteristics of filament and hence should be classified as 'polymer waste' rather than 'waste of filament.' The Commissioner's decision was based on the fact that the waste arose before the material was converted into filament, and therefore, it did not qualify as filament waste.

The Revenue, dissatisfied with the Commissioner's order, filed an appeal challenging the decision. The Revenue argued that any waste generated during the manufacturing process of man-made fibers, such as at the spinneret stage, could not be considered waste of filament under Chapter 54. They contended that the waste material, even if solidified, should be classified as waste of synthetic filament based on Interpretation Rules to the Central Excise Tariff, 1985. The Revenue also pointed out Note 1 to Chapter 39, which excludes material regarded as textile material from Chapter 39.

Upon reviewing the submissions and records, the Appellate Tribunal found that the waste material in question, being in lump form and arising before the conversion into filament, did not possess the essential characteristics of filament. The Tribunal emphasized that Chapter 54 of the Central Excise Tariff specifically covered man-made filament and not the synthetic or artificial material or waste from which filaments are produced. The Tribunal rejected the Revenue's argument that the waste had essential qualities of the finished product, stating that goods must be classified based on their current state, not potential future processing. The Tribunal concluded that the waste material did not qualify as filament or filament waste and upheld the Commissioner's decision to classify it as 'polymer waste.'

In light of the above analysis, the Appellate Tribunal dismissed the Revenue's appeal, affirming the Commissioner's order and holding that the waste material in question should be classified as 'polymer waste' rather than 'waste of filament' for excise duty purposes under Chapter 54 of the Central Excise Tariff.