2016 (6) TMI 990 - AT - Central Excise

Excisability of Spent Earth arising as a residue in the process of refining crude palm oil - Marketability of the goods - Scopeo of Section 2(d) as well as in Section 2(f) of Central Excise Act - edible refined palm oil an exempted finished product - Held that - In view of the decision in the case of M/s Union of India and Ors vs M/s DSCL Sugar Ltd 2015 (10) TMI 566 - SUPREME COURT and Circular dated 25-04-2016, Spent Earth arising as a residue cannot be held as excisable goods. - Decided in favor of assessee.

Summary

Issues:
1. Chargeability of Central Excise duty on a by-product arising during the manufacturing process of edible refined palm oil.
2. Interpretation of the definition of excisable goods post the amendment in the Central Excise Act, 1944.
3. Relevance and applicability of CBEC clarifications and circulars on excisability of by-products.
4. Impact of recent case laws and judgments on the excisability of certain waste products.
5. Amendments in the Cenvat Credit Rules, 2004 and their implications on non-excisable goods.

Analysis:

1. The primary issue in this case revolves around the chargeability of Central Excise duty on a by-product, Spent Earth, generated during the manufacturing process of edible refined palm oil. The department contended that the Spent Earth falls under Chapter Heading 1522-00-90 and is subject to excise duty. The appellant, however, challenged this view, leading to a demand for duty, interest, and penalty.

2. The interpretation of the definition of excisable goods under the Central Excise Act, 1944 post the amendment was a crucial aspect of the case. The appellant argued that the definition now includes any article, material, or substance capable of being bought or sold for consideration, making it chargeable to excise duty. This interpretation was supported by CBEC clarifications, emphasizing the marketability of such goods.

3. The relevance and applicability of CBEC clarifications and circulars on the excisability of by-products played a significant role in the arguments presented. The appellant highlighted the withdrawal of earlier circulars by the CBEC and the impact of recent judgments by the Hon'ble Supreme Court and High Court, which reaffirmed the non-excisability of certain waste products.

4. Recent case laws and judgments, such as the DSCL Sugar Ltd. case and the Hindalco Industries Ltd. case, were cited to support the appellant's position on the non-excisability of specific waste products like bagasse, dross, and skimmings of non-ferrous metals. These judgments influenced the decision-making process and led to the conclusion that certain waste products are not chargeable to excise duty.

5. The amendments in the Cenvat Credit Rules, 2004, particularly Rule 6, were analyzed to understand their implications on non-excisable goods. The insertion of explanations in Rule 6 clarified that non-excisable goods cleared for consideration should be treated like exempted goods for the purpose of credit reversal. This amendment further supported the argument against the chargeability of duty on certain waste products.

In conclusion, considering the various legal interpretations, case laws, CBEC clarifications, and recent amendments, the Appellate Tribunal allowed the appeal, setting aside the impugned order and providing consequential reliefs to the appellant.