2017 (4) TMI 329 - AT - Central Excise

Excisability - spent solvents/industrial waste - Whether spent solvents/industrial waste cleared by the respondent are non-excisable goods of lesser purity obtained as by-products during the manufacturing process or whether they are cleared as distilled solvents such as methanol, toluene, IPA, acetic acid, etc., with purity ranging from 90% to 97%? Held that - the retesting of the impugned goods was not possible due to its non-availability - This Tribunal in the case of M/s. Gemini Edibles & Fats India Pvt. Ltd. v. CC, CCE & ST, Guntur 2016 (6) TMI 990 - CESTAT HYDERABAD had occasion to consider the dutiability of spent earth arising as residue in the process of refining crude palm oil. The issue was held in favor of assessee after analyzing the C.B.E. & C. Clarification No. 904/24/2009-CX., dated 28-10-2009 - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Dispute over the excisability of spent solvents/industrial waste cleared by the respondent.
2. Allegation of undervaluation of spent solvents.
3. Adjudicating authority's analysis and decision based on remand directions.
4. Applicability of excise duty on the cleared goods.

Issue 1 - Dispute over Excisability:
The core issue in this case revolves around whether the spent solvents/industrial waste cleared by the respondent are non-excisable goods obtained as by-products during the manufacturing process or if they are cleared as distilled solvents with varying purity levels. The Tribunal had previously remanded the matter for testing the purity level, but the High Court directed the adjudicating authority to proceed based on available evidence. The adjudicating authority correctly determined that the spent solvents were industrial waste and not goods of high purity as claimed by the Department.

Issue 2 - Allegation of Undervaluation:
The Department contested the order primarily on the grounds of undervaluation of spent solvents by the respondents. Despite the absence of the respondent during the proceedings, the appeal was not adjourned due to its age and the matter being brought before the forum for the second time. The Department's argument focused on the undervaluation aspect rather than the excisability of the goods.

Issue 3 - Adjudicating Authority's Analysis:
The adjudicating authority conducted de novo adjudicating proceedings as per the Tribunal's remand directions and High Court's instructions to base decisions on available evidence. The authority thoroughly analyzed both parties' contentions, input specifications, and facts before concluding that the spent solvents were industrial waste cleared by the appellants and not excisable goods of high purity as claimed by the Department.

Issue 4 - Applicability of Excise Duty:
The key aspect considered was the excisability of the spent solvents cleared by the respondents. The adjudicating authority emphasized that the spent solvents were by-products of the manufacturing process, not distinct and new identifiable commodities subject to excise duty. The authority highlighted that subsequent uses of the solvents in other processes did not make them excisable goods. Ultimately, the authority dropped the proceedings due to the non-availability of the goods for retesting, relying on the evidence and facts available, leading to the dismissal of the Department's appeal.

In conclusion, the judgment upheld the adjudicating authority's decision that the spent solvents cleared by the respondents were industrial waste and not excisable goods, dismissing the Department's appeal based on the available evidence and legal analysis.