2016 (12) TMI 1690 - AT - Central Excise

Dutiability - sludge generated in the course of manufacture - whether what that came out in the course of manufacture of principal goods whether shall amount to manufacture? - Held that - reliance placed in the case of UNION OF INDIA Versus DSCL SUGAR LTD. 2015 (10) TMI 566 - SUPREME COURT , where it was held that it is not in dispute that Bagasse is only an agricultural waste and residue, which itself is not the result of any process. Therefore, it cannot be treated as falling within the definition of Section 2(f) of the Act and the absence of manufacture, there cannot be any excise duty. Revenue raised the plea that the sludge generated was capable of being marketed stating that the waste generated was sold. It may be stated that amendment to the Section 2(d) of the Central Excise Act, 1944 was made with effect from 10-5-2008 to bring the capability of the goods being marketable to satisfy the twin test - But present case is prior to this amendment to law. The law came into force at a later stage does not fasten the appellant to the liability. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of whether sludge generated in the course of manufacture amounts to dutiable goods.
2. Application of legal precedents and judgments to determine liability for excise duty.
3. Consideration of marketability of goods generated during manufacturing process.
4. Impact of legislative amendments on the liability for excise duty.

Analysis:
1. The judgment revolves around the question of whether the sludge generated during the manufacturing process should be considered dutiable goods. The appellant argued that a change in the law, as per the Apex Court's judgment in the case of Union of India v. DSCL Sugar Ltd., supported their position that the sludge should not be subject to excise duty.

2. The Tribunal analyzed the legal precedents and judgments to determine the liability for excise duty on the sludge. The Tribunal referred to the essential facts of the DSCL Sugar Ltd. case, where bagasse was classified under a specific tariff entry with a nil rate of duty. Drawing parallels to this case, the Tribunal concluded that the sludge in the present case should not attract excise duty.

3. The issue of marketability of the sludge was also raised by the Revenue, claiming that the waste generated was capable of being marketed. However, the Tribunal highlighted that the law at the time of the case did not include provisions regarding marketability as a criterion for excise duty liability. Therefore, the Tribunal rejected the Revenue's argument based on the timing of legislative amendments.

4. Additionally, the Tribunal considered the impact of legislative amendments on the liability for excise duty. The Tribunal emphasized that the law in force at the time of the case should be applied, and any subsequent amendments should not be retroactively enforced to impose liability. By aligning with the principles established in relevant legal judgments, the Tribunal ruled in favor of the appellant, allowing the appeal and relieving them from the duty liability.

This detailed analysis of the judgment showcases the Tribunal's thorough consideration of legal principles, precedents, and legislative provisions to arrive at a well-reasoned decision regarding the excise duty liability concerning the sludge generated during the manufacturing process.