2015 (7) TMI 423 - AT - Central Excise

Waiver of pre deposit - Excisability of edible refined palm oil - goods have become excisable goods inasmuch as the same are sold for a consideration in the market - Held that - Circular No.904/24/09-CX dated 28.10.2009 stands struck down by the Hon ble High Court of Allahabad in the case of Balrampur Chini Mills Ltd. vs. UOI reported as 2013 (1) TMI 525 - ALLAHABAD HIGH COURT . In a recent decision, the Hon ble High Court of Bombay in the case of Hindalco Industries Ltd. vs. UOI 2014 (12) TMI 657 - BOMBAY HIGH COURT has again held the said Circular to be bad and has observed that amendment in Section 2(d) of Central Excise Act, when corresponding amendment in Section 2(f) defining manufacture, will not bring the waste or by-products under the category of excisable goods. By observing so, the Larger Bench decision of the Tribunal in the case of Hindalco Industries Ltd. 2014 (11) TMI 385 - CESTAT MUMBAI (LB) stand set aside. - appellant has a good prima facie case in his favour so as to allow the stay petition unconditionally - Stay granted.

Summary

Issues:
Demand confirmation for spent earth used in manufacturing edible refined palm oil under excise duty due to amendment in definition of excisable goods.

Analysis:
The judgment by the Appellate Tribunal CESTAT Bengaluru concerns the confirmation of demands amounting to Rs. 4,29,885/- and Rs. 4,85,008/- for spent earth used in the production of edible refined palm oil from July 2010 to December 2012. The lower authorities imposed duty on these goods based on the amendment in the definition of excisable goods under Section 2(d) of the Central Excise Act, considering them as excisable goods since they are sold in the market. This decision was supported by Circular No.904/24/09-CX dated 28.10.2009, which classified waste products capable of being sold for consideration as excisable goods subject to excise duty.

However, it was highlighted that the Circular No.904/24/09-CX dated 28.10.2009 was invalidated by the Hon'ble High Court of Allahabad in the case of Balrampur Chini Mills Ltd. vs. UOI. Furthermore, the Hon'ble High Court of Bombay in the case of Hindalco Industries Ltd. vs. UOI reiterated the invalidity of the Circular, emphasizing that the amendment in Section 2(d) alone does not categorize waste or by-products as excisable goods unless corresponding changes are made in Section 2(f) defining manufacture. This led to the setting aside of the Larger Bench decision of the Tribunal in the case of Hindalco Industries Ltd.: 2014 (308 (E.L.T. 472) (Tri.-LB).

Consequently, the Tribunal found in favor of the appellant, acknowledging a strong prima facie case in their favor and allowing the stay petition unconditionally. The judgment serves as a significant clarification regarding the classification of waste products under excise duty regulations, emphasizing the necessity for alignment between different sections of the Central Excise Act for such categorizations.