2004 (4) TMI 498 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty and penalty arising from the order of Commissioner of Central Excise, Nagpur.

Analysis:
The impugned order by the Commissioner demanded Central Excise duty and penalty for clearances made without payment of duty during a specific period. The duty was demanded on various items such as Furnace Oil/Mineral Oil Sludge, Waste and Scrap arising from inputs and packing material, and Waste and Scrap arising from capital goods. The penalty was imposed under Section 11AC, with 12 show cause notices issued, including two invoking a larger period of limitation under the proviso to Section 11A(1).

The arguments presented by the appellant's advocate focused on challenging the duty demanded on sludge, waste, and scrap. It was contended that certain materials were not excisable, some waste material did not arise from manufacturing activities, and some scrap was not marketable. Additionally, it was argued that the provisions of Rule 57S(2)(C) of Central Excise Rules did not apply to capital goods removed after wear and tear.

On the other hand, the respondent's representative argued that duty had to be paid on mineral oil sludge removed after availing Modvat credit, and duty was also applicable to waste and scrap arising from inputs and capital goods on which Modvat credit was availed. The respondent emphasized that the waste and scrap were marketable based on their sale.

The Tribunal observed that the excisability of sludge was addressed in a Board's Circular, indicating it as non-excisable. Regarding duty demanded on scrap and waste, the Tribunal noted that some items were in the form of packing material, and others like Titanium Dioxide were considered non-excisable. The issue of marketability was discussed, referencing a Supreme Court case which clarified that marketability required a commodity to be known to commerce and worthwhile for trade.

The Tribunal found that the appellant had made a strong prima facie case in their favor. Considering the facts and case law cited, the Tribunal held that the appellant's plea for waiver of pre-deposit of duty and penalty had prima facie merit. Consequently, the pre-deposit of duty and penalty was waived, and the recovery thereof was stayed.