2012 (11) TMI 522 - AT - Central Excise

Non payment of duty - Used transformer & lubricating oil, MDEA (methyl diethanol amine) and nickel/copper/zinc/iron catalysts - Held that - For demanding duty on a excisable goods, firstly the same are to be classified under a tariff heading and thereafter applicable rate of duty is to apply but in the present case neither in the impugned order nor in the order-in-appeal there exists any finding regarding the classification of items in question. The matter requires re-consideration by the adjudicating authority thus impugned order is set aside after waiving the pre-deposit of the dues adjudged - in favour of assessee as directed.

Summary

Issues:
- Application for waiver of pre-deposit of duty
- Classification of goods for duty imposition

Waiver of Pre-deposit of Duty:
The appellant filed an application for waiver of pre-deposit of duty amounting to Rs.10,31,929 along with interest and penalty. The demand pertained to used transformer oil, spent lubricating oil, used MDEA, and spent nickel/copper/zinc/iron catalysts. The applicants, engaged in manufacturing fertilizers falling under specific chapters of the Central Excise Tariff Act, availed credit for duty paid on inputs used in manufacturing dutiable goods. However, these items were cleared without payment of duty after use, leading to the revenue demanding duty at a rate of 16% as scrap. The appellant contended that the demand was unsustainable due to the absence of a finding on the classification of goods in the adjudication order or the order-in-appeal. They argued that without a proper classification, the duty demand could not be upheld. On the other hand, the revenue argued that since the appellant availed credit for the mentioned items, duty imposition was justified.

Classification of Goods for Duty Imposition:
The Tribunal noted that for demanding duty on excisable goods, the items must first be classified under a tariff heading, followed by the application of the applicable duty rate. In this case, neither the impugned order nor the order-in-appeal provided any finding on the classification of the items in question. As a result, the Tribunal set aside the impugned order after waiving the pre-deposit of the dues adjudged and remanded the matter back to the adjudicating authority for a fresh consideration. The adjudicating authority was directed to decide on the issue of classification and the applicable duty rate after providing a reasonable opportunity of hearing to both parties involved.