2007 (7) TMI 460 - AT - Central Excise

Waste and scrap - Excisability - Held that - both the lube oil waste, spent activated carbon and spent activated aluminia which had lost their original property and had become industrial waste cannot be treated as manufactured goods exigible to duty - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Classification of lube oil sludge, spent activated alumina, and spent activated carbon for excise duty liability.

Analysis:
The appeals filed by the Revenue challenged the orders of the Commissioner of Central Excise (Appeals) regarding the excise duty liability of lube oil sludge, spent activated alumina, and spent activated carbon. The Commissioner had ruled that these products, after losing their original properties and utility due to continuous usage, were not excisable. The lower authorities noted that the lube oil was used as a lubricating agent in the assessee's captive power plant and was removed as waste when it lost its lubricating property. Similarly, the activated alumina and activated carbon were cleared as waste after losing their properties in the manufacturing process. The Commissioner concluded that these products were not excisable.

In response, the respondent's counsel cited previous decisions, including one by the Tribunal in a similar case involving waste lube oil, where it was held to be non-excisable. The counsel also referred to a Special Bench decision stating that industrial waste arising in the manufacturing process cannot be considered excisable. The Revenue argued that waste generated during the manufacturing process, for which Modvat credit was taken, should be subject to duty payment. They contended that lube oil sludge, spent activated carbon, and spent alumina, being waste of inputs on which Modvat credit was availed, were liable to duty under the respective classifications.

The Tribunal analyzed the situation and found that the lube oil waste, spent activated carbon, and spent activated alumina, having lost their original properties and becoming industrial waste, could not be considered as manufactured goods subject to duty. Therefore, the appeals filed by the Revenue were dismissed based on the lack of merit in treating these waste products as excisable goods. The Tribunal upheld the Commissioner's decision that these items were not liable to pay excise duty, considering their status as waste materials with no excisable characteristics.