2007 (9) TMI 482 - AT - Central Excise

Summary

Issues:
1. Demand of duty on 'Lime Sludge' for the period March, 2005 - November, 2005.
2. Interpretation of Board's Circular on excisability of Lime Sludge.
3. Applicability of previous court judgments on excisability of similar commodities.
4. Prima facie case against the demand of duty on Lime Sludge.

Analysis:

1. The appellate tribunal examined the demand of duty amounting to Rs. 4,68,768 on 'Lime Sludge' generated during the period March, 2005 - November, 2005. The tribunal noted that the commodity in question arises during the recovery of sodium hydroxide from 'black liquor' in the process of manufacturing paper and paperboards. Reference was made to a Board's Circular dated 5-1-1987, which declared that Lime Sludge would not be considered as 'goods' for the purpose of levy of excise duty.

2. The tribunal considered the arguments presented by both sides regarding the applicability of the Board's Circular. While the counsel for the appellant emphasized the continued validity of the circular, the learned SDR contended that the circular lost its binding effect with the transition from 6-digit to 8-digit classification under the new Tariff. The tribunal acknowledged the decision of the Hon'ble Madras High Court in a similar case where Lime Sludge was held to be excisable, but the appellant argued against the validity of this decision based on subsequent Supreme Court judgments.

3. The tribunal delved into the legal precedents cited by both parties to support their arguments on the excisability of Lime Sludge. The appellant's counsel referenced various Supreme Court judgments, including the case of Collector of Central Excise, Patna v. Tata Iron & Steel Co. Ltd., where certain commodities were deemed non-excisable. The tribunal acknowledged the need for further arguments on these points but indicated that the Board's circular should be considered binding unless withdrawn or superseded.

4. Ultimately, the tribunal found that the appellant had made a prima facie case against the demand of duty on Lime Sludge based on the continued validity of the Board's Circular and the arguments presented. As a result, the tribunal ruled in favor of the appellant, waiving the pre-deposit and staying the recovery of the duty demanded. The tribunal highlighted that the conflicting case laws cited by both parties would be addressed in the final hearing stage, emphasizing the importance of the Board's circular in the current context.