2017 (5) TMI 1332 - AT - Central Excise

Waste/by-product - whether Ferric Chloride waste is a manufactured product? - Held that - Board s circular dt. 25/04/2016 clarifying that the by-products/waste arising during the course of manufacture is not excisable - waste/by-product arising during the manufacture process is not a manufactured product and the same cannot be considered as excisable goods even after the introduction of Section 2(d) of the CEA, 1944 w.e.f. 10/05/2008 - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
- Interpretation of the definition of manufacture under Section 2(f) of the Central Excise Act, 1944.
- Classification of Ferric Chloride waste under chapter heading 2827.00.
- Taxability of waste/by-products arising during the manufacturing process as excisable goods.

Analysis:
1. Interpretation of the definition of manufacture: The appeal revolved around the interpretation of the definition of manufacture under Section 2(f) of the Central Excise Act, 1944. The Department contended that the impugned order misinterpreted the definition, leading to the dismissal of the Department's appeal and the allowance of the assessee's appeals. The Department argued that Ferric Chloride waste should be classified under chapter heading 2827.00 and duty should be charged on it. However, the counsel for the assessee defended the impugned order, citing a Board circular clarifying that waste arising during manufacturing is not excisable. The counsel also highlighted various decisions supporting the stance that waste/by-products are not excisable goods.

2. Classification of Ferric Chloride waste: The disagreement between the parties centered on the classification of Ferric Chloride waste. The Department claimed that the waste should be classified under chapter heading 2827.00 for duty imposition. Conversely, the counsel for the assessee argued that Ferric Chloride waste does not meet the preconditions for classification under the Central Excise Act, supported by relevant decisions and the Board's circular. The issue of classification was crucial in determining the taxability of the waste.

3. Taxability of waste/by-products: The main issue in the appeal was whether waste/by-products generated during the manufacturing process could be considered excisable goods. The counsel for the assessee relied on the Board's circular and judicial precedents to assert that such waste is not excisable. The circular clarified that waste arising during manufacturing is not a manufactured product and cannot be treated as excisable goods. The Tribunal upheld the impugned order, citing previous decisions and the Board's circular, thereby dismissing the Revenue's appeal. The decision was based on the understanding that waste/by-products from manufacturing processes do not qualify as excisable goods.

In conclusion, the judgment focused on the interpretation of the Central Excise Act, particularly regarding the taxability of waste products generated during manufacturing processes. The Tribunal's decision aligned with previous judicial interpretations and the Board's circular, emphasizing that such waste is not excisable and cannot be classified for duty imposition.