2016 (8) TMI 302 - AT - Customs

100% EOU clearance of waste/remnants/scraps SCN demanding duty on clearance Notification No. 53/97-CE dated 3.6.1997 - Held that - the charges made in the show-cause notice cannot be upheld. Demand confirmed on a totally new ground not alleged in the show-cause notice appeal allowed.

Summary

Issues:
- Interpretation of para 7 of Notification No. 53/97 for duty payment on waste/remnant of Furnace Oil Sludge
- Applicability of the exemption under Notification No. 53/97 for imported goods
- Jurisdiction of Commissioner (Appeals) to confirm demand on new grounds not alleged in show-cause notice

Analysis:
1. Interpretation of para 7 of Notification No. 53/97: The case involved a dispute regarding the duty payment on Furnace Oil Sludge (F.O. Sludge) sold by M/s Indo Count Industries Ltd., an EOU, without duty payment. The demand was raised under para 7 of Notification No. 53/97, treating the sludge as waste/remnants/scraps. The lower authorities confirmed the demand based on this interpretation. However, the Commissioner (Appeals) held that the F.O. Sludge was not waste/scrap but remnants of furnace oil, thus questioning the application of para 7 of the Notification.

2. Applicability of the exemption under Notification No. 53/97: The Commissioner (Appeals) analyzed the situation and clarified that para 7 of Notification No. 53/97 did not apply to the dispute at hand. He noted that the sludge was a waste arising before furnace oil was consumed in the power plant, thereby excluding it from the purview of the notification. However, he concluded that since the imported goods in the sludge were not utilized as required by the notification, the exemption was not applicable, and customs duty was deemed payable.

3. Jurisdiction of Commissioner (Appeals) to confirm demand on new grounds: The Tribunal observed that while the Commissioner (Appeals) correctly determined that the charges in the show-cause notice could not be sustained, he confirmed the demand on a new ground not raised in the notice. The Tribunal emphasized that the Commissioner (Appeals) could not go beyond the scope of the show-cause notice. Consequently, the Order-in-Appeal was set aside, and the appeal was allowed in favor of the appellant, highlighting the importance of adherence to the principles of natural justice and due process.

In conclusion, the judgment delves into the intricate interpretation of statutory provisions, specifically para 7 of Notification No. 53/97, to determine the liability for duty payment on the sale of Furnace Oil Sludge. It underscores the significance of adherence to procedural fairness and the limitations on authorities to raise new grounds beyond the scope of show-cause notices.