2018 (3) TMI 400 - AT - Central Excise

Levy of excise duty - distilled methanol cleared by appellant - Held that - The adjudicating authority has only relied upon the statement of various buyers but has not considered the binding judgment of Hon ble High Court of Andhra Pradesh in the case of CCE, Hyderabad-I vs. Aurobindo Pharma Limited 2010 (10) TMI 175 - ANDHRA PRADESH HIGH COURT , where it was held that the spent solvent is not a marketable product after process of manufacture. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Excisability of spent methanol.
2. Reliance on previous judicial precedents.
3. Marketability and excisability of purified solvents.
4. Consistency in the department's stance on similar issues.

Issue-wise Analysis:

1. Excisability of Spent Methanol:
The primary issue in the appeals was whether the spent methanol, purified through a distillation process by the appellant, was excisable. The adjudicating authority had determined that the spent methanol, being of 90% purity and used by purchasers for manufacturing bulk intermediates, paints, and thinners, was excisable. This decision was based on statements from various buyers.

2. Reliance on Previous Judicial Precedents:
The Tribunal noted that the adjudicating authority did not consider the binding judgment of the Hon'ble High Court of Andhra Pradesh in the case of CCE, Hyderabad-I vs. Aurobindo Pharma Limited [2010(259) E.L.T. 673 (A.P.)], which dealt with an identical issue. In that case, the High Court had ruled that spent solvents, purified and reused, were not excisable. The Tribunal reproduced the entire judgment to emphasize its relevance and binding nature.

3. Marketability and Excisability of Purified Solvents:
The Tribunal referenced several precedents, including the cases of CCE, Hyderabad v. Everest Organics Ltd. and CCE, Hyderabad-IV v. Sreepathi Pharmaceuticals Ltd., where it was held that spent solvents, after purification, were not new goods but merely spent solvents that had undergone a certain purification process. This process did not amount to manufacture, and thus, the solvents were not excisable. The Tribunal reiterated that the excisability of a product determines the liability to pay excise duty, and since spent solvents were considered non-excisable, no duty was applicable.

4. Consistency in the Department's Stance on Similar Issues:
The Tribunal highlighted the principle that the department cannot take a different stand in subsequent cases if it had accepted a particular principle in an earlier case. This principle was supported by several Supreme Court judgments, including Indian Oil Corporation Ltd. v. CCE, Baroda and CCE, Hyderabad v. Novapan Industries Ltd. The Tribunal emphasized that allowing the department to take contradictory positions would lead to confusion and inconsistency in the application of the law.

Conclusion:
The Tribunal concluded that the adjudicating authority's order was unsustainable due to the binding precedent set by the High Court of Andhra Pradesh. The impugned order was set aside, and the appeals were allowed. The Tribunal's decision was pronounced in the open court, emphasizing the importance of adhering to judicial precedents and maintaining consistency in legal interpretations.