2017 (2) TMI 149 - AT - Central Excise

Use of waste material - Isobutyl Benzene, by-product in the form of spent water and propylene - whether these used propylene falls under chapter sub heading 2711.19 and attracts excise duty? - Held that - merely because waste material is put to some use, the same cannot be held to be excisable unless a requisite market for the same is shown by the revenue - appeal dismissed - decided against Revenue.

Summary

Issues:
- Manufacturing of Isobutyl Benzene with by-products cleared without duty payment
- Classification of used propylene and excise duty liability
- Appeal against order-in-original
- Tribunal's previous order in respondent's favor
- Cross-objection by respondent
- Consideration of gas supply to neighboring unit
- CBEC Circular No.246/80/96-CX
- Tribunal's findings on waste gas treatment
- High Court's dismissal of Revenue's appeal
- Final decision on the issue

Analysis:
The case involves the manufacturing of Isobutyl Benzene by the respondent, resulting in by-products like spent water and propylene cleared without payment of duty. The department claimed that the used propylene falls under a specific chapter subheading and attracts excise duty. The adjudicating authority upheld the duty demand, leading to an appeal by the respondent before the Commissioner (Appeals). The Commissioner, relying on a previous Tribunal order in the respondent's favor, allowed the appeal, prompting the Revenue to appeal before the CESTAT Mumbai.

During the proceedings, the Revenue reiterated its grounds of appeal, while the respondent filed a cross-objection citing the previous Tribunal order in their favor, which was also upheld by the Hon'ble High Court. The Tribunal carefully considered the submissions and records, including the cross-objection. The Tribunal referred to its previous order, emphasizing that the gas supplied to the neighboring unit, even without consideration, should not be considered excisable based on relevant circulars and legal precedents.

In light of the foregoing analysis, the Tribunal set aside the impugned order and allowed all appeals, providing consequential relief to the appellants. The Revenue's appeal against this decision was dismissed by the High Court, which concurred with the Tribunal's findings, stating that no question of law arose in the matter. Consequently, the issue was deemed no longer res integra, and the impugned order was upheld, leading to the dismissal of the Revenue's appeal and the disposal of the cross-objection.

Ultimately, the Tribunal's decision was upheld, and the Revenue's appeal was dismissed by the High Court, solidifying the legal position on the issue and providing clarity on the excisability of the waste gas supplied to a neighboring unit.