2016 (5) TMI 1048 - AT - Central Excise

Demand of duty - equivalent to duty foregone on the inputs (diesel/furnace oil) procured availing benefit of Notification 22/03-CE dated 21.03.2003-CE thereof - Waste of sesame seeds cleared without payment of duty although the same resulted from use of diesel/furnace oil - sesame seeds among others are allowed clearance on payment of nil rate of duty vide Notification No.23/2003-CE dated 31.03.2003. This confirms that waste of sesame seeds is not a non-excisable item. As the above quoted proviso to para 6 of Notification 22/03-CE is applicable only when the articles are not excisable, the said proviso is not applicable to the impugned goods.

Summary

Issues:
- Duty demand upheld on clearance of waste of sesame seeds without payment of duty
- Applicability of Notification No. 23/2003-CE
- Interpretation of proviso to para 6 of Notification No. 22/2003-CE

Analysis:
The appellant challenged duty demands upheld on clearing waste of sesame seeds without duty payment, arguing exemption under Notification No. 23/2003-CE. The respondent contended that the exemption under Notification No. 23/2003-CE is subject to achieving positive NFE, which the appellant did not assert. The Tribunal examined the proviso to para 6 of Notification No. 22/2003-CE, which requires duty payment on non-excisable articles. However, Notification No. 23/2003-CE exempts waste from food industries, including sesame seeds, from duty payment, indicating their excisability.

The Tribunal referred to a CBEC Circular expanding the list of zero-duty items under Notification No. 6/97-CE to include waste from food industries like sesame seeds. This circular clarified that waste of sesame seeds can be cleared without duty payment under Notification No. 23/2003-CE. Since the waste of sesame seeds is excisable as per this notification, the proviso to para 6 of Notification No. 22/2003-CE, which applies to non-excisable items, is deemed inapplicable.

Based on the analysis, the Tribunal concluded that the demands were unsustainable. Consequently, the impugned orders were set aside, and the appeals were allowed. The judgment highlighted the importance of correctly interpreting the excisability of waste materials under relevant notifications to determine the applicability of duty demands.