2008 (1) TMI 757 - AT - Central Excise

Spent solvent - Marketability/excisability - Scope of Show Cause Notice - Held that - the item has lost its utility and has become spent solvent . The product is required to be disposed of as they are hazardous under the Pollution control norms. Therefore, such removal cannot be held to be marketable goods and they are subjected to excisability - Since the question of excisability is fundamental to the matter, the Commissioner (A) was justified in taking up this issue and deciding it in the light of the earlier judgment - appeal dismissed - decided against appellant.

Summary

Issues: Excisability of spent solvent and valuation dispute

Excisability of spent solvent:
The appeal arose from an Order-in-Appeal setting aside the Order-in-Original confirming demands on spent solvent removed by the assessee, which had lost its value after being utilized in manufacturing. The Commissioner held that spent solvents do not qualify as new products emerging from manufacturing processes and are not marketable goods. The solvents, recovered with impurities after manufacturing bulk drugs, are reused in the process and eventually discarded as hazardous waste. The Commissioner applied the ratio of an earlier judgment and set aside the demands. Revenue argued that since the items were removed at a certain value, they should be considered marketable and excisable. The Tribunal noted that the Revenue did not appeal the earlier order and that the Commissioner was justified in addressing the excisability issue, as it was fundamental to the matter. The Tribunal rejected the appeal, affirming the Commissioner's decision.

Valuation dispute:
The learned SDR contended that the dispute before the Commissioner was regarding valuation, not excisability, and that the Commissioner exceeded the show cause notice terms. However, the respondents argued that excisability was indeed raised, and the Commissioner's decision should be upheld based on a previous judgment. The Tribunal observed that although the Revenue focused on valuation, the assessee contested excisability, which was a crucial aspect. As excisability was a fundamental issue, the Commissioner rightly addressed it, considering the earlier judgment. Consequently, the Tribunal found no merit in the appeal and rejected it.

This judgment clarifies the distinction between excisability and valuation in the context of spent solvents, emphasizing the importance of addressing fundamental issues raised by the parties during legal proceedings.