2016 (6) TMI 1088 - AT - Central Excise

Duty liability on waste removed by appellant as floor sweepings - appellant submitted that almost 90% of the waste generated during the process of manufacture is recycled and captively used. The remaining 10% of the waste is sold in the market. - Held that - The appellant have filed detailed reply denying the liability to pay duty. It is seen that there is no evidence to establish that the floor sweepings cleared contained waste generated in process of manufacture. It is seen stated in the reply of the appellant that these items are not generated in manufacture, but are collected from the dustbins of various departments of their unit. The items include, waste of stationery papers, carbon papers, old used dhoties, wooden scrap, lose polythene waste (scrap of wrappers of packing inputs) and M.S.scrap (scarp of civil works item of iron and steel). Normally these cannot be said to be waste generated in the process of manufacture of BOPP films. Further, the appellants are clearing waste generated in process of manufacture and paying duty on the same. Taking note of the facts, we do not find any legal basis for the demand raised. - Decided in favour of assessee

Summary

Issues:
Whether the appellant is liable to pay duty on waste removed as floor sweepings.

Analysis:
The case involved the question of duty liability on waste cleared by the appellant as floor sweepings during the period from 1.09.1999 to 31.8.2004. The appellant, engaged in manufacturing BOPP films, was accused of clearing waste without paying duty, amounting to Rs. 4,48,127. The show cause notice issued in 2005 resulted in an order-in-original upholding duty payment, interest, and penalty. The Commissioner (Appeals) also affirmed this decision. The appellant contended that most waste generated was recycled, with only 10% sold in the market. They argued that waste like stationery, old dhoties, and wooden scrap, sold as floor sweepings, were not excisable items. The appellant disputed the value of floor sweepings cleared, stating it was Rs. 3,34,070, not Rs. 4,48,127 as claimed in the notice.

Upon review, the Commissioner (Appeals) upheld the duty payment, citing that the appellant only contested the value of floor sweepings, not the duty liability. However, the appellant had denied duty liability in detail, asserting that the items cleared were not generated in the manufacturing process but collected from various departments' dustbins. These items included stationery waste, old dhoties, and lose polythene scrap, which were not part of BOPP film manufacture waste. The appellant was already paying duty on waste generated during manufacturing. The Tribunal found no legal basis for the duty demand, noting the lack of evidence that the cleared floor sweepings contained manufacturing waste. Consequently, the impugned order was deemed unsustainable, and the appeal was allowed, setting aside the original decision.