2007 (7) TMI 163 - AT - Central Excise

Considering the nature of waste (mixed sweepings) arising out of mfg. of cigarettes it is held that it is non-dutiable Circular of central excise dated 28.11.97 is applicable to waste paper not to mixed waste.

Summary

Issues:
Recovery of duty on waste arising in the course of cigarette manufacturing.

Analysis:
The case involved two appeals - one filed by the Jurisdictional Commissioner and the other by M/s ITC Ltd regarding the recovery of duty on waste arising during the manufacturing of cigarettes. The Department argued that the sweepings, which included various materials like cigarette paper, filter rod, and aluminum foil, were waste liable to duty since they were derived from inputs on which duty credit was taken. On the other hand, the Appellant Company contended that the waste was heterogeneous, had no market value, and could not be considered a manufactured product.

The Appellant's senior advocate highlighted that a Board's Circular on waste paper did not apply to the mixed waste generated during cigarette manufacturing. After considering the arguments and the nature of the mixed sweepings, the Tribunal concluded that the decision of the Lower Appellate Authority, which deemed the sweepings non-dutiable, was sound. Therefore, the Department's appeal was dismissed, and the appeal filed by the Appellant Company was allowed, setting aside the earlier order in their favor.

This judgment underscores the importance of distinguishing between waste materials generated during manufacturing processes and their classification for duty purposes. The Tribunal's decision was based on the lack of homogeneity and market value of the waste sweepings, leading to the conclusion that they did not qualify as dutiable products. The interpretation of relevant circulars and the nature of the waste materials played a crucial role in determining the outcome of the appeals.