2007 (10) TMI 3 - SC - Central Excise

Manufacture - Revenue contended that waste/ scrap/ parings of paper board which is generated during the manufacturing activity is amount to manufacture - Held that revenue contention was justified and matter remanded for reconsideration and decided afresh

Summary

Issues:
Challenge to order passed by CEGAT regarding levy of duty on waste/scrap/parings of paper board generated during manufacturing process.

Analysis:
1. The appeal challenged the CEGAT order allowing the respondent's appeal, holding that waste/scrap/parings of paper board generated during the manufacturing process were not distinct enough to levy duty, resulting in no chargeable duty.
2. Background facts revealed that waste/scrap/parings were generated during the manufacture of printed paper board boxes, leading to a show cause notice demanding duty, penalty, and interest from the respondent.
3. Respondent contended that the waste generated was not a result of the manufacturing process, as it did not result in a new substance with distinctive characteristics, hence not constituting manufacture.
4. The revenue argued that the waste/scrap/parings were distinct items under a specific heading in the Central Excise Tariff, thus dutiable due to their unique name, character, and use post-manufacture.
5. CEGAT noted that the waste generated during the manufacturing process was still paper and paper board, which, if charged duty, would amount to double taxation on the same product without value addition.
6. The appellant raised concerns over the classification list filed and the sale of waste/scrap/parings, while the Commissioner denied the benefit of exemption to the respondent.
7. The adjudicating authority emphasized that the waste generated during manufacturing was dutiable, as it was distinct from the raw materials used and could not be considered pre-manufacturing waste.
8. The judgment referred to previous cases to establish that mere inclusion in a tariff entry does not make a product excisable unless there is a clear process of manufacture and marketability.
9. The matter was remitted to CEGAT for a detailed review in light of relevant legal precedents, as the initial conclusion lacked a thorough analysis of the manufacturing process involved.

This comprehensive analysis delves into the core issues of the case, addressing the arguments presented by both parties and the legal principles governing the levy of duty on waste/scrap/parings generated during the manufacturing process of paper board products.