2015 (12) TMI 1623 - AT - Service Tax

Clearance of molasses - demand of duty on the ground that the sludge had reportedly been used in the castings units for preparing binders/cores as the same could not be used anywhere else and the same is correctly classifiable under Tariff sub-heading 3824.90 and attracting Central Excise duty @ 16% adv - whether the appellant is liable to pay duty on sludge during the period or not? - Held that - the reliance is placed on the decision of Apex Court in the case of Bajaj Auto Ltd. 2015 (8) TMI 197 - SUPREME COURT wherein the Apex Court hold that aluminium dross and ash emerged only as by-products during die-casting of aluminium parts as no manufacturing process involved and hence no excise duty is payable thereon. We hold that as molasses is not manufactured item the duty is not payable thereon - In this case also as molasses/sludge emerges without any manufacturing process and in that case the excise duty is not payable by the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against duty demand, interest, and penalty imposition on clearance of molasses and sludge without payment of duty.

Analysis:
1. Facts of the Case: The appellant, engaged in manufacturing sugar molasses, was accused of clearing molasses and sludge without paying duty. A show cause notice was issued, resulting in the imposition of duty on clearances of molasses/sludge and a penalty of Rs. 1 lakh.

2. Appellant's Submission: The appellant argued that the molasses sold without duty payment was not a manufactured item as it got diluted with rainwater due to storage conditions, citing the decision in the case of Bajaj Auto Ltd. v. CCE, Aurangabad - 2015 (322) E.L.T. 419 (S.C.).

3. Revenue's Stand: The Revenue, represented by the learned AR, supported the findings in the impugned order demanding duty on the clearance of molasses/sludge.

4. Judgment: The Tribunal deliberated on whether the appellant was liable to pay duty on the sludge. It was concluded that the molasses/sludge did not emerge as a result of a manufacturing process, akin to the decision in Bajaj Auto Ltd., where no excise duty was payable on by-products. Therefore, as the molasses was not a manufactured item, duty was not payable. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

5. Conclusion: The Tribunal's decision rested on the interpretation of the manufacturing process and the emergence of molasses/sludge, ultimately absolving the appellant from the duty payment obligation due to the non-manufactured nature of the item in question.